This week I am launching the first of a regular round-up of recent developments of interest to people with responsibility for HR strategy. The idea is to pull out a key story affecting HR strategy each week and summarise other stories that could have practical implications for HR directors, linking to the original source.
Fair pay review links top pay to performance in public services
The highest paid public sector employees face losing 10% of their basic pay if they fail to meet performance targets, under proposals in the Fair Pay Review published this week.
Will Hutton, who did the review at the government's request, rejected suggestions that top pay in the sector should be capped. Hutton, executive vice chair of the Work Foundation, rejected a previous suggestion that the multiple of the highest and lowest paid in the sector should be no higher than 20:1. But he wants the Senior Salaries Review Body to publish pay multiples across public services every year based on median average pay.
The review calls for more transparency about senior executives' full pay and an explanation of how it relates to performance. And Hutton proposes that public limited companies should also be required to track and publish pay multiples.
Key implications and issues:
- If the proposals are accepted, HR managers will need to work out how they manage the performance senior executives, in particular the areas that relate to the 10% of pay that will be at risk. The sector has less experience of performance-related pay than the private sector.
- A clear explanation of the rationale behind senior pay will be needed taxpayers they are getting value for money.
- In the XpertHR Pay Intelligence blog, Sarah Welfare points out that the government seems unlikely to extend the proposals to cover the private sector at a time when the government "is seeking to weaken various employment protections for employees transferred from the public to the private sector". On the other hand, Duncan Brown, principle at Aon Hewitt, says in People Management that the review has "significant implications for the private sector". He draws attention to the discrepancy of remuneration of executives in companies with outsourced public sector contracts with public sector senior managers. * Duncan Brown also suggests organisations will need to look at increasing the competition for executive posts, with HR implications for the talent pipeline and succession planning.
- Peter Boreham, head of executive remuneration for Hay Group UK, writing in the Guardian, said Hay's research showed no consistent correlation between a low CEO to average employee pay ratio and company performance.
Other news
The CBI has called on George Osborne to boost exports, investment and jobs with an "all-action" budget on 23 March.
Take part in the XpertHR benefits and allowances survey 2011 and benchmark the scope and value of your organisation's benefits and allowances against those offered by other organisations. All participants will also be entered into a prize draw.
The Aon Hewitt HR Barometer shows that HR leaders' confidence is growing about business growth.
Chris Last, HR director general at the Department for Work and Pensions, is to be the first head of government HR operations.
XpertHR Conference on Employee Engagement 12 May 2011, London: Nearly two years on from the MacLeod report, employers are well aware of the link between an engaged workforce and productivity.
Asda is embarking on a company-wide leadership programme - the Asda Leadership Event - in partnership with Cirrus.
The CIPD has launched a "think tank" partnership on people issues for business leaders.
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