The beginning of this year saw a new regulation come into force. Executive pay reporting is all about having greater transparency in the workplace, and holding organisations accountable to justify their pay for top bosses and how that compares to the average employee pay figures.
Executive pay reporting applies to all large UK listed companies with over 250 employees and came into force on 1 January 2019. For the very first time, the UK's largest organisations now have to acknowledge and explain each year the C-suite salaries and the gap between the top earners and the average worker in that business.
The pay ratio regulations closely follow the Gender Pay Gap reporting, the fall out of which sparked well overdue conversations about the equalities in pay for some females in what is a supposedly equal society. And while the introduction of pay ratio regulations might make some people start to feel uncomfortable, this is about exactly that. It's an opportunity to force senior teams to recognise and re-evaluate their company practices and the void between executive salaries and the living wage.
When the figures do come out, what will it do? Well, there'll be lots of debate for sure, and it's certain to hit the headlines - much like the recent BBC star salary list of top earners. People will question, are they worth it? Is my CEO getting paid too much and are they performing as well as they should be with that price tag?
Employees are well aware that they get paid less than their bosses; it's not about that. It's about understanding responsibilities, holding people accountable and creating the opportunity for fairness, open discussion, and strengthening the voice of the entire workforce. Having this open dialogue will also help build and shape the working culture to become better balanced and with greater flexibility. It's not necessarily about punishment or scrutiny but ensuring that businesses are behaving responsibly, take charge and tackle any unfair practices.
If you’d like to hear more about this, read more in my latest feature ‘Monopoly Money’ in the HR Director magazine issue #176.