Pay transparency– in the news ~ Management 2.0 developing social capital

Thursday 2 December 2010

Pay transparency– in the news

Sir David Walker never actually suggested publishing details on each individual bankers’ pay, fearing that this would jeopardise their privacy (ah, poor dears!). And he’s since pulled back from his milder suggestion that banks publish ‘bands’ showing the pay and bonuses of all employees earning over £1m while hiding individual employees’ names. It seems this can’t be done unless all countries do the same thing (which was never going to happen anyway).

But the topic of pay transparency has not gone away.

Hutton Review

Today’s interim report from the Hutton Fair Pay Review (which I’m still reading) suggests that no civil servant should get paid more than twenty times the lowest paid worker in that organisation.

As the name of the review suggests, this focuses on fairness. But most of the reporting of the review, if not so much the review itself, seems to interpret fairness as showing tax payers that their investments are being protected, and that the 20,000 public servants who earn more than £117k per year (including heads of Universities on £200k and CEOs of NHS trusts on £150k) deserve their salaries. This is about managing perception – about ensuring everyone seems to be sharing the effects of austerity. And it’s why Hutton recommends setting principles and greater transparency in what people get paid.

I’m more interested in the effect of internal pay differentials. I think John Humphrys got it right on the Today programme this morning (as he usually does), quoting Peter Drucker’s concerns that differentials over 20 x can lead to resentment, falling morale and could become socially corrosive.

I think socially corrosive organisations is exactly what we’ve got – in the private as well as the public sector, and steep pay differentials have had their role to play in this.