Daily Management Review

Employees Getting ‘Demotivated’ by Widening Gap with CEOs in UK, says a Study


12/19/2015




Employees Getting ‘Demotivated’ by Widening Gap with CEOs in UK, says a Study
The pay gap between the bosses and the general workforce is demotivating staff in the UK, claims a recent survey by the Chartered Institute of Personnel and Development (CIPD). 

The survey research notes that the skyrocketing rise of excutive pay levels had now reached a “crisis point”.
 
“It (executive pay) does not clearly correlate to personal performance or business outcomes and this is having a significant impact on the motivation levels of the wider workforce,” the CIPD said.
 
The executive pay in the UK is ‘too’ or ‘far too’ high, said 71% of the respondents taking part in the research showed. Another 59% said that the issue demotivates them at work.
 
40% of the respondents in the survey said that they felt their boss's performance justified the level of pay awarded.
 
The survey results sent a clear message to those at the top, says the CIPD adviser Charles Cotton.
 
“The growing disparity between pay at the high and lower ends of the pay scale for today’s workforce is leading to a real sense of unfairness which is impacting on employees’ motivation at work,” he said
“The message from employees to CEOs is clear: ‘the more you take, the less we’ll give’. At a time when the average employee has seen their salary increase by just a few percentage points over the last several years, we need to take a serious look at the issue of top executive reward,” he added.
 
One of the major factors that contributed to the demotivation of the general working class is the pay increasing to 183 times that of the average employee in recent years compared to 47 times in 1998 for the FTSE 100 CEOs, claims a second CIPD report, The Power and Pitfall of Executive Reward: A Behavioral Perspective. 
 
The research recommended that the government should enact laws that would force all publicly-listed companies to publish the pay ratio between the CEO and the pay of average full-time employees.
This, according to the research would “encourage accountability and prompt a greater focus on this issue among key stakeholder groups such as investors who can help to drive change and hold businesses and senior individuals to account”.
 
The research also recommended providing of more clarity about why bonuses and long term incentives are paid out. The report claimed that both forms of reward are “disproportionately focused on financial goals rather than being linked to other outcomes and stakeholders interests, including those of the employees”.
 
The CIPD report also noted that “the existing long-term incentives may not motivate because they are predominantly linked to financial measures, which are often affected by factors outside the control of CEOs, such as the economic cycle.”
 
“There’s also very rarely any ramifications for poor performance. As a result, reward has just continued on an upward trajectory and as many businesses seek to restore trust from their employees, customers, and communities, it’s time to address the issues and challenge the direction of travel,” said Cotton of CIPD.
 
While chief executives were also employees excessive pay packages "mark them out almost as a different species", said Stefan Stern, Director of the High Pay Center.

(Source:www.digitallook.com) 






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