The bonuses of fat cat company directors continue to grow at the expense of
the rank-and-file. This is the message of the TUC’s new report Executive excess
– time to act.
It is not a new message – the media has been full of stories about CEO pay
rises in the face of tumbling share prices. In most of these companies, the pay
hikes are justified on the grounds of a shortage of leaders, rather than
performance – avoiding the argument about whether performance-related pay works
at all.
There are three news stories in this week’s Personnel Today covering the
implementation of PRP. While they show PRP can have more subtle and
sophisticated applications, all three are proving contentious.
BT has been working on a solution for spreading its work-life balance
principles to blue collar staff. The trial of a new PRP scheme among field
engineers enabled many to spend more time with their families instead of
working overtime.
Lifeboat charity RNLI has also introduced a form of PRP – a sensitive
subject in the voluntary sector – for all of its 1,000 staff. It is not aiming
to incentivise staff, but to improve the appraisal system and thus management
of the 178-year-old charity.
But there are inherent risks in PRP, even when applied in a sophisticated
manner. Just as discretional pay increases can motivate, they can also
demotivate disappointed staff. PRP schemes need staff and managerial support,
objectivity and consistency to deliver results, and it is unlikely they will
provide all the answers to motivation and productivity.
There are bigger, less tangible drivers at work, and getting staff to
understand, embrace and passionately work towards the organisation’s objectives
will take more than pay, benefits, a set of corporate values and the odd team
bonding exercise. HR needs to lead the thinking if the bigger answers on
leadership, development and staff empowerment are to be developed.
By Mike Broad
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