Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

BonusesCompensationExecutive payPerformance-related pay

Pay: Why companies need to figure out what’s “fair”

by Tom Gosling 14 Nov 2017
by Tom Gosling 14 Nov 2017

The introduction of pay ratio disclosures, further likely regulation on the remit of remuneration committees, and stakeholder voice within the boardroom are all part of a wider Government push for a fairer capitalism. Tom Gosling asks whether companies can ignore inequality and just get on with the business of generating wealth, or should they consider themselves as social entities in their own right?

Senior executives play a critical role determining the culture of a business, so in collaboration with the London School of Economics and Political Science, PwC decided to find out what they think. We engaged with more than 1,000 senior executives from multinational organisations to explore their attitudes to six principles of distributive justice in relation to their company and society.

ethics-of-pay
The ethics of pay in a fair society: What do executives think? is published by PwC in collaboration with the London School of Economics.

At one end of the spectrum were principles that are concerned with wealth outcomes, for example delivering minimum levels of income or distributing wealth in a way to help the least well off. At the other end of the spectrum were principles concerned with the process for wealth distribution, such as equal opportunity or economic efficiency. We evaluated respondents’ attitudes to these principles.

Fairness is multi-dimensional

Attitudes to fairness are complex and multi-dimensional. Despite inherent conflict between them, most respondents support three or more principles. A single principle cannot describe the wide spectrum of attitudes in this area. “More fair” does not mean more equal.

Surprisingly, executives’ attitudes on what fairness resembles in companies and society were strikingly similar. The concept that companies create wealth which society then redistributes was not supported. The executives viewed companies as social entities in their own right, with responsibility to provide a fair pay structure. They saw companies as being part of, rather than existing outside of, society.

The four fairness tribes

Four ‘tribes’ emerged with distinct views of what people expect from their company and society. The first, ‘idealists’, believe distribution of wealth should lead to moral outcomes. They reward individuals based on contribution, but believe everyone should have enough money to live a comfortable life.

Equally the ‘communitarians’ prioritise the need for sufficient income but believe equal opportunities are important – nobody should be disadvantaged because of their birth.

The ‘free marketeers’ believe that, as long as there are equal opportunities for all, talented people deserve to receive more, and no one is automatically entitled to wealth. To a free marketeer economic efficiency is an important distributional principle.

Our fourth tribe, the ‘meritocrats’, think that individuals are entitled to economic benefits because of their efforts and contribution. Like the communitarians, they believe that equal opportunities are important. However, unlike the free marketeers they don’t believe that efficiency is an important criteria on which to judge fairness.

How generations view fairness differently

The survey threw up distinct differences in attitude by age. Younger respondents were less likely to trust the ability of the market to produce a morally desirable result, and wanted stronger protection for the least well-off.

In contrast almost 50% of over 65s identified themselves strongly with pro-market principles versus under a third of under 35s. Perhaps unsurprisingly, we found the younger generations more likely to be idealists, and the prevalence of free-marketeers increasing with age. This causes a challenge to companies seeking to develop an approach that works for three generations in one workforce.

So how should companies respond?

The debate on fairness is being hijacked by a one-dimensional view based on pay ratios. It is in companies’ interests to develop a fuller narrative on fairness and their methods to deliver that to employees.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

We believe there are four steps to achieve this:

  • Develop fairness principles: Boards need to translate key principles of fairness into their business deciding which are relevant given their individual business, workforce and culture.
  • Engage employees: Engage with employees to find out what fairness means to them, using insights as the tool to refine and make relevant company fairness principles.
  • Translate into tangible people policies: Fairness principles come alive when expressed in tangible people policies such as the living wage adoption, pay-for-performance and equal pay.
  • Measure and monitor: Develop metrics that enable progress towards fairness to be measured and monitored. A ‘fairness dashboard’ can help with accountability and reporting.

For companies there is an opportunity to create a more engaged workforce with benefits for long-term value and productivity. At the same time companies need to claim their stake in this debate, or risk it being defined in narrow terms, which could be damaging to the long-term health of British business. It’s time for companies to figure out what they mean by “fair”.

Tom Gosling

Tom Gosling is a partner and lead of the UK reward practice at PwC.

previous post
More than four in 10 fiddle expenses, finds survey
next post
Why your digital workforce needs on-the-job learning

You may also like

Legislation could block bonuses at Thames Water

16 May 2025

John Lewis fails to pay bonus for fourth...

13 Mar 2025

Lloyds scales back diversity targets for employee bonuses

11 Mar 2025

Greggs employees to share £20.5m profits pot

4 Mar 2025

Asda execs to go without annual bonus, reports...

3 Mar 2025

Barclays and NatWest remove climate targets from bonus...

18 Feb 2025

Barclays doubles CEO pay and awards shares to...

13 Feb 2025

BT to remove DEI element from middle managers’...

6 Feb 2025

British employees work nearly 216 extra hours annually

30 Jan 2025

KPMG partners receive record pay

30 Jan 2025

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+