Row over CIPD chief’s bonus

It is sad to see any organisation pulling itself apart, but doubly sad to see this happening to the Chartered Institute of Personnel and Development (CIPD). On the one hand, there is a need more than ever for strong, forthright leadership to be demonstrated by all in HR – not least from those at the head of the profession. On the other, the CIPD itself has needed to change and face up to fundamental challenges to its whole business model.

But as someone who was close to the institute for many years, I am not surprised by current events: I am not surprised at the disconnect that says there is nothing wrong with taking a ‘bonus’ when others are losing there jobs, and I am not surprised at the disconnect that is blind to the hypocrisy and loss of authority which the row has created.

By any measure, the CIPD is a small business, but its board and vice-presidents come predominantly from large employers – as does its chief executive, Jackie Orme. That means that big company thinking and practice has for years been applied to the management of a tiny organisation, and that has created the sort of disconnect that is at the heart of the bonus row.

When [former chief] Geoff Armstrong announced his departure, I was an almost lone voice in suggesting a change of structure. The profession needed a leader who the membership could revere and who would build a presence on the national stage, and the team in Wimbledon and the CIPD’s enterprises needed a great business manager.

Had that path been followed, the institute would not be where it is now – not least because the £300,000 (plus bonus) chief executive role would not have existed in the first place.

At the heart of the problem is the fact that the CIPD’s grandees have never embraced the idea that the institute is fundamentally a business. That’s not surprising when half of them come from the public sector, while the closest the other half have got to a P&L is running a departmental budget. That means they never accepted that they needed someone in the role with this type of previous responsibility or business leadership experience.

With the old cash cows of Harrogate, conferences and People Management magazine no longer paying the bills they once did, the need for good business leadership is greater than ever – as is leadership of the team in Wimbledon – and this can only be achieved through having someone suitably qualified for that role.

As to the specific argument about bonus, we are told that Orme did not receive a bonus at all, but that her contract contains “performance-related variable pay”, a distinction that Orme herself draws: “If the institute hadn’t put this high level of variable pay into my contract, then I would now be paid a fixed amount irrespective of how I perform”. That to her mind would be “morally indefensible”.

She also distanced herself from the culture of City bonuses: “There’s a world of difference between such questionable behaviour on the one hand, and sound business and HR practice that uses variable pay to focus leaders on key priorities and give them a meaningful stake in the sustainable success of the organisation.”

Ah ha. I think if I tried to split that particular hair in my job there would be uproar – and that’s the key. In a small company like ours, where there have been redundancies and pay cuts, it would indeed be “morally indefensible” to merely accept what’s contractually due – performance-related or not. But in large organisations such behaviour is par for the course.

Apart from asking itself how it got into this mess (see above), the CIPD board should face up to the damage the row has caused – morale within the CIPD could not be lower and the business challenges it faces will not go away. While on the public stage, it is difficult to see how the CIPD can comment on the whole issue of rewards and the many failures of the bonus culture, when its own leader is seen to be a recipient of it.

Simon Howard, chairman, Work Group

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