Silly Rewards by Clive Wright

August is supposed to be the silly season in the media, so I guess that’s why they asked me to write a blog now.

I’ve been looking at what has been in the general media and rereading past blogs to clarify some thoughts on what I should write about this time.

A couple of weeks ago Charles Cotton posed the question on whether anything had really changed in reward over the last 30 years and thought that the primary difference is the change in the use of technology for internal communication. 

On the 9^th July Bruce Thomson  discussed the knowledge required by reward professionals and on 2^nd August Jim McInally penned a very detailed and comprehensive outline of the issues that the public and media raise in relation to the fairness and justification of high rewards.

The truth is that there have been massive changes in reward but not all of them are well thought through for each organisation and although the technology has been there for better communication we are still not utilising it to the best effect.  The vast majority of the population do not understand the technicalities of reward; in fact even most HR people shy away from anything to do with reward.  Although reward people are getting more professional at what they do through developments such as the Advanced Certificate in Reward Management, regular Reward Forum Events, the Annual Reward conference and now the new HR Profession Map, everyone else in the general population seems to be quite content in getting their information from ill-informed media coverage.

When writing about the packages of Chief Executives the media always takes the highest possible level of reward that could be earned if all the maxima of the performance measures are met.  I’m not saying the levels of payment are right but often the payment of an additional million pounds can only be achieved if the shareholders have benefitted by several billion pounds.  But of course this doesn’t matter to the media, they want a headline that will shock and sell papers.  They are not interested in recognising outstanding performance or fairness.

When they write about the payment of bonuses to civil servants they criticize the payment without any thought of the fact that the base salary might have been held back to afford the bonus or that the bonus is only paid when stretching performance targets have been met.  No, that doesn’t matter, it’s not about the fact that someone has worked long and hard to achieve the targets, it’s all about the money. 

Even the recent headlines about the police receiving a bonus “just for doing their job” are inaccurate and incomplete.  As I understand it their pay increase was reduced in the past to afford the bonus, it’s not an arbitrary “add on”, it’s part of the package.  And the police themselves originally asked that a bonus be available so that they could recognise and reward staff for exceptional performance or duties beyond the normal police officer.  Perhaps the headline should have been “Police don’t know how to manage and reward performance”.   

This doesn’t help us as reward professionals.  How can we hope to be taken seriously and to do what is right in our organisations when the general assumption is that reward is not managed well and that anything we design must, by association, be unfair, be biased toward executives and not based upon reasonable judgements of performance. 

I hope I’ve made my point but the thing is what should we do about it?  I know of one consultancy that spent a lot of time and effort working with representatives of major corporations, the institutional investors and the media to try and develop an agreed, fair approach to measuring and reporting on executive pay.  There were several working groups and finally a general agreement on how it should work.  Example comparisons were drawn up of the packages for the Chief Executives in the FTSE100 that everyone thought were easy to understand and reflected a fair and reasonable comparison.  The trouble arose when the Chief Executives of the highest relatively paid organisations (taking into account size and performance) saw the results and didn’t feel comfortable that they were at the top of the list.  In fact one of them in particular felt so strongly that he threatened to take all of the work that the consultancy did with the company away from them unless they stopped the report.  Unfortunately, they took the easy route and canned the project! 

Should the CIPD undertake something similar, should we all start writing to the media when we see obvious errors or misinterpretations, should we try and find a way to talk to journalists to educate them?  Is there a way to get the message across to the public that the key aspect they should be looking at is performance?  Can we educate people that a reward package needs to be considered in it’s entirety and not just as individual elements?  Would a start in our own organisations be enough?