Banking HR professionals do not have the clout inside financial institutions to influence pay or reward for high earners, despite the huge reputational damage it could cause during the recession, according to an industry expert.
David Coats, associate director of think-tank The Work Foundation, told Personnel Today that banks which insisted on paying huge bonuses and rewards in the aftermath of the financial crisis were risking ruining their reputation and employer brand. But HR had little boardroom influence in reward decisions, he warned.
“If you take the financial crisis – the approach being taken to remuneration at the top is doing nothing to remedy the reputational damage at all,” Coats said.
“HR is peddling furiously but frankly doesn’t have the clout inside organisations to make the difference that will overcome risk to reputation.”
His comments follow reports last week that HSBC was considering increasing the salaries of top executives by up to 40%, while Barclays investment bankers were allegedly in line to receive pay of £191,000 for last year, including an average bonus of £95,000.
Coats added that unless the pay gap between top earners and the rest of the workforce narrowed, and based on a more defined set of rules around determining pay, HR would continue to “slide down a slippery slope”.
However, Shaun Tyson, professor of HR management at the Cranfield School of Management, said HR could play a key role in bolstering communication with PR departments to prepare them for any potential negative stories that may emerge following the publication of bonus and reward detail.
He said: “HR should alert the PR people once the bonuses are likely to be published or agreed, and make sure PR people have a strategy for dealing with comments.”
Mark Childs, director of reward consultancy Total Reward Solutions, cautioned against reigning in bonuses for fear that talented individuals would flee to rivals.