Senior Executives Totally Removed from Reality
Senior Executives “Totally Removed from Reality”
Responding to today’s announcement that executive pay in the FTSE 100 companies has increased 49%, leading employment engagement specialist, Alan Crozier says, “Senior executives are in danger of becoming (or have already become) totally removed from reality. The CEO and his executive directors make promises to shareholders and customers that rely on employees to deliver. The executive team therefore have to be totally invested in engaging their employees to achieve the promised results.
“This 49% increase announcement comes at a time when many people have pay increases pegged at 2%, or no increase at all, against a background of increasing inflation.
“Some commentators are being slightly disingenuous referring to “pay” when in fact the figures reflect total remuneration: including bonuses, share schemes and pension contributions. However, that distinction is not widely understood by the people they employ, or indeed the public. That is not to defend the increase, merely to offer additional clarity.
“People aren’t stupid: in this scenario they feel they are being used and abused. They become cynical, distrusting, and morale drops at a time when it needs to remain high.
“At the first opportunity, the most talented employees seek pastures new. According to the CIPD (Chartered Institute for Personnel & Development) recent survey, 22% are currently looking for a new employer. That represents a significant potential attrition cost in terms of recruitment costs, induction and training, not to mention lost knowledge and business relationships. Nearly half distrust their directors. When trust goes so does engagement - a significant driver of organisational performance.
“So at one end of the spectrum, those senior executives are in the personal wealth creation business. At the other, they are destroying shareholder value.”
Alan Crozier has recently joined the Government’s Task Force on Employee Engagement’s Guru Group, set up by the Department for Business Innovation & Skills (BIS). He is the author of the recently published book, The Engagement Manifesto and a founder of The Ghost Partnership.