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Hot topic: Is C-suite pay too high?

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Income inequality has risen steadily in recent years, so it is unsurprising that the top earners in an organisation, the C-suite, come under fire for a lack of awareness of the average worker’s day-to-day struggles.

This inequality could lead to dissatisfied workers, poor decision-making and reputational damage. But is it HR’s job to try and bridge the gap? And how could they do so?

 

Rachel Collar, founder, Haus of HR

Considering the widening income gap and recent data on CEO earnings, the evident disconnect between the C-suite and employees is a critical concern.

Drawing from my extensive HR career in the corporate realm, the comments made by NatWest chair Howard Davies highlight a lack of awareness and understanding of the challenges faced by the average worker, especially amidst the current cost of living crisis and escalating rent prices.


Read more: Low-income households skip meals due to cost of living


While it’s not solely HR’s responsibility to bridge this gap, HR plays a pivotal role in fostering and nurturing communication and understanding between leadership and employees.

HR can facilitate dialogue through initiatives like employee forums, which can serve as a valuable platform, ensuring that the concerns and experiences of the workforce are heard at the highest levels.

Additionally, implementing transparent communication channels and fostering a culture of empathy within the organisation can help effectively bridge the awareness gap.

Ultimately, it is in the best interest of both the C-suite and employees for HR to take an active role in addressing this issue, promoting a more harmonious and informed workplace.

 

Mary Macleod, chief executive, Business in the Community

Making workplace decisions based on evidence and communicating clearly and effectively with employees are fundamental building blocks to leaders building strong relationships with their employees.

While many think it is the responsibility of HR to ensure that the relationships between leaders and employees are strong, HR leaders can only do so much.

HR teams play an important role in supplying leaders with the relevant facts and figures to make effective decisions, however, the buck stops with senior leaders, and if they want to have a strong relationship with their employees, they must work at it.

 

Jonathan Krogdahl, HR consultant, Ewan Partners

Given the cost of living crisis and the job market showing signs of distress, the earning disconnect between the C-suite and employees becomes a reputational risk.

However, in the banking sector where Howard Davies sits, the pursuit of promotion for more money is seen as a very strong motivator and measure of performance.

To put this into context, Davies used to work at McKinsey, where top-ranked UK partners earn over £1 million a year. Meanwhile, at NatWest there are around 95 top employees (‘material risk takers’) with an average £863,000 per annum salary.


Read more: CEO pay up by half a million despite continuing cost of living crisis


So, when a senior executive in banking or consulting talks about earning potential, it is often viewed positively because they believe it’ll inspire the more junior ranks to push harder to get promoted to earn more, and in turn deliver better results for their firm.

They operate in industries where making more money than most will ever dream of is, for some, the ultimate target and not something to be ashamed of.

However, this doesn’t translate to other industries and to their clients. As such, the role of HR is to help their C-suite partners understand that and help reduce external reputational risk.

 

Phil Rimmer, HR professional

To a certain degree, HR has a responsibility in relation to compensation and benefits as this often falls under our remit. Over recent years, HR has really added significant value to organisations by being part of the board and influencing decisions.

The C-suites within organisations I have worked within have always had their ears and eyes close to the ground and been willing to hear the voices of their people. This is key in running a successful company.

Employees need to feel heard to bring higher levels of engagement and productivity, and communication is essential in ensuring openness and transparency across all levels is key.

Employees need to feel valued and receive pay to reflect their worth, therefore ensuring that salary benchmarking exercises take place on a regular basis is important. This ensures that your people receive remuneration in line with market rate.

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