Regulators and policy-makers in the UK have recognised the need to better align business practices with the interests of wider society. Rising public concern about pay inequality, together with a series of high profile corporate governance failures at major UK companies, have prompted a series of government reforms, and the introduction of a revised Corporate Governance Code.

But regulation alone will not bring about the changes in business practices and corporate culture that are so badly needed. And since pay distribution and corporate culture both influence each other, we can’t solve one without looking at the other.

So what is driving the excessive increases in executive pay? And what roles can boards and HR play in tackling the issue?

To answer this question we’ve examined the role of the remuneration committees (RemCos) that are charged with setting and monitoring executive pay in large organisations. We identified a number of flaws in the existing model and have made recommendations for its reform.

Our research suggests that, by taking on a wider responsibility for governing people and culture within organisations, RemCos would be better placed to ensure that pay and reward incentivise the right kind of behaviours in business - the kind of behaviours that would help businesses, their employees and wider-society to flourish.

Why we produced this report

The recommendations outlined in this report form part of the CIPD's wider ambition to improve corporate decision-making by reporting more transparently on the risks and opportunities people pose to organisations.

The report is aimed at the boards and shareholders of large, publically listed organisations. Learn more about the implications for HR leaders and their teams here.

Watch the video below which outlines the reasons behind this new report, and reinforces the importance of transparency within businesses.

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Peter Cheese, CEO, CIPD

Download the full report here:

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