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- Bill Cole (4)
- Dean Shoesmith (2)
- Jacqueline M. Wehmeyer, IPMA-CP, SPHR, PPP (1)
- Jim Lowery, IPMA-CP (1)
- Joe Lunt (4)
- Marnie E. Green (12)
- Steve A. Harman (4)
- Tina Chiappetta (5)
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Fairer Fare?
December 15, 2010
Posted by Dean Shoesmith
Will Hutton, adviser to the United Kingdom government on public pay policy issued an interim report in December 2010 ‘Hutton review of fair pay in the public sector’ that looks to tackle the thorny issue of senior pay and pay ratios in the public sector.
I anticipated the publication of the report with trepidation and braced myself for the next wave of media frenzy over the so-called ‘town hall fats cats’.
However, after reading the report I was pleasantly relieved to see some of the conclusions (in my opinion) made eminent sense and Will Hutton seeks to lay certain ghosts to rest, such as,
‘There are widespread myths. In general pay at the top of the public sector …is lower than in comparably sized listed companies…yet many public organisations pose no less managerial challenge than their similarly sized private sector counterparts’
Will Hutton also makes the point about the exponential increase in chief executive pay over the last 20 years in the FTSE top 100 companies – something I highlighted in my recent blog post ‘Big Bucks’ on the Public Sector People Managers’ Association (PPMA) website, http://www.ppma.org.uk.
Much has been made of pay ratios in the press between the lowest paid employee and the chief executive role. Will Hutton’s report also raises this issue and the ratio of 20:1 is featured.
If you read my article ‘Top Pay Poppycock’ in Management Journal magazine, September 2010, I covered the fact that most public sector chief executives’ pay would represent a ratio nearer 10:1 than 20:1 – and the highest paid Local Government chief executive has a pay ratio disparity of 1:40 compared with the chief executives of Tesco and Sainsbury.
I’m not convinced a rigid pay ratio cap would be the answer – and in fairness Will Hutton whilst obviously contemplating this approach recognises that, ‘…it would need careful design to avoid harming recruitment and retention’
Why not use the ‘comments’ feature and let me have your views?
Comments
Fairer Fare in the US
Thank you for the interesting post, Dean. It is always good to get a different perspective on HR issues.
The issue of executive compensation in government was moved to the front burner after the Bell, California pay scandal broke in the late spring of this year. As you may recall this is when the City Manager of a small community (38,000 residents) was being paid over $800,000 per year. The Chief of Police and Assistant City Manager were earning $450,000 and $400,000 respectively. In response to this scandal, there has been a move to limit government employee compensation and benefits. States such as New Jersey have put forward initiatives to cap the compensation of state government employees. New Jersey’s Governor Chris Christie has also signed several pieces of legislation that have amended the public pension system.
Your comparison of the wages of public sector employees to their private sector counterparts is very interesting, but I don’t think would get much traction in the United States. There was some outcry against private sector executive compensation after the banking collapse, but in my opinion there has never been a desire to compare what we make in the public sector to the private sector. I did a quick analysis of what the pay ratios are in my organization. In our school district, the ratio is 9:1. The ratio in our municipal operation is 9.5:1.
These are just my brief thoughts about your post. I could have continued on, but I am curious to see if any of my IPMA-HR colleagues would like to share their views.
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