2008 - A better deal on pay
The Italian government created uproar last week when it
published online the individual declared earnings of everyone
in the working population.
The web site was over-loaded as people curious to know
more about the earnings of their friends, relatives and
colleagues logged-in in their thousands.
Twenty four hours later the site was suspended after a
legal challenge from a privacy watchdog organisation. But
by that time the nosiest of Italians had made the most of
their brief window on the earnings list.
The decision to publish the information without notice,
was one of the final acts of the outgoing centre-left government,
creating deep discomfort for those Italians who are casual
in their approach to paying tax.
Tax issues aside, why are we cagey about people knowing
what we earn, and why are we so fascinated to learn the
earnings of others?
A new piece of research by Hudson, the recruitment and
talent management consultancy, reveals that many people
would be quite willing to disclose their earnings if they
thought it might get them a better deal.
Hudson carried out research among 1,000 UK professional
workers that found that 60 per cent of those questioned
would be happy to reveal their pay level if, by doing so,
it might help them achieve pay parity with better paid colleagues.
A similar proportion – 62 per cent – thought
that senior managers should be forced to disclose their
earnings to the rest of the workforce. This already happens
at board level in public companies, so I assume that people
are seeking more disclosure among senior management jobs
below board level.
Some 63 per cent of the sample – again about the
same proportion – believed there was a need for more
transparency in pay to help reduce the gap between women
and men’s pay that in the UK, according to the Annual
Survey of Hours and Earnings, was 17.2 per cent in 2007.
The gap between women's median hourly pay and men's last
year was 12.6 per cent, compared with 12.8 per cent recorded
in April 2006, so the gap is closing gradually.
The gender pay gap is an emotive subject, clouded by the
differences of sex. If a woman, for example, has taken a
two-year career-break, rejoining a business to work alongside
a male colleague who joined the company at the same time
as she did six years ago, could she expect to be on the
The male colleague would have had six years’ experience
in the job while she had four. On the other hand, even with
less experience, she might simply be better at the job.
Should she be penalised for spending less time in the role?
Ultimately I think it is difficult to make pay levels entirely
fair but I do agree with Andy Rogerson, chief executive
of Hudson UK, who argues that employers could do more to
create transparent pay policies that explain what people
might expect to earn at different levels of a job.
On the other hand, pay spines have been historically clearer
in the public sector and it doesn’t seem to have done
much to create a more motivated workforce where the levels
of absenteeism are generally higher than those in the private
“I think people are interested in general terms in
what senior people in organisations are paid because they
will make a value judgement on whether the senior people
are worth it or not,” says Rogerson. “I think
this is particularly true of people’s immediate bosses
where they can relate their own efforts to those of the
people in charge.
One of the trickiest areas for assessing pay is in making
judgements around talent and experience. It is not uncommon,
for example, for an extremely talented younger employee
to be paid much less than a more experienced colleague.
Sectors that thrive on visible talent, such as sport,
tend to pay premiums for outstanding performance, whatever
the experience of the player. Even in professional football,
however, experience counts.
Young talented players such as Theo Walcott at Arsenal,
for example cannot initially expect to earn the levels paid
to more senior members of the squad. But it doesn’t
take too many displays demonstrating a consistency of excellence,
such as those of Cristiano Ronaldo of Manchester United,
to take a player to the top of the earnings tree.
In football, however, pay inflation among the top players
has been so steep, supported by earnings from televisions
rights, that it has skewed the economics of the game, putting
it in danger of moving too far away from its grass roots
among the often working class supporters who watch every
week from the terraces.
In that sense pay will continue to be divisive, creating
unnatural barriers in human relations. Take talented working
class youngsters from a warm family environment, expose
them to the fickle interests of international and national
media, and it does not take long before the less robust
characters fall victim to the corrupting influences of fame.
Among the corrupting emotions is that of pay envy, one
reason why I think employers would be wise to think carefully
before posting lists of earnings on the office wall. It’s
not just envy, either. Some employees will be embarrassed
by disclosure of their inflated earnings and others, humiliated
when they find how little they may be earning in comparison
with their colleagues.
It is one thing to have a sense of where we are in the
pecking order – and I think we all have a good idea
where we stand – and quite another to see it plastered
all over the office, or, in the Italian case, all over the
Andy Rogerson says he is against disclosing individual
pay rates in an organisation and doesn’t plan to do
so at Hudson. “It would probably give us headaches
with some of our consultants,” he says.
As far as his own pay goes, he says about two-fifths of
it is variable, based on the performance of the business.
“There are probably a number of people who report
to me who earn more than me. Our best sales people will
comfortably earn more than I earn but they’re doing
a different job.
“As people get older, priorities change and I feel
more in control of my job now than I was as a consultant.”
It should be clear from this that emotions around pay are
relative to people’s individual circumstances. Rocking
the boat too much around pay can lead to the kind of neurosis
where a manager is reluctant to congratulate a good individual
performance for fear that it could lead to a request for
a pay rise or a promotion. That kind of fear is simply cowardice.
While Rogerson believes that full salary disclosure is
inappropriate in most organisations, he argues that the
underlying principle of ensuring fairness and transparency
in the process of setting and reviewing salaries, is a good
one. It’s not enough for companies to be fair on pay.
They must be seen to be fair.
See also: A
case for paying chief executives less and Pay