The Business Doctor

'eradicating the Mad Management Virus'

Wednesday, 1 December 2010

The Greedy People....

Will Hutton today published a report in a vain attempt to cap Public Sector Chief Executives pay in Public Services. He states that top executives should be kept below what is around 20 times that of their lowest paid staff. Hutton said the pay of the top 1% of earners in the UK was escalating disproportionately and “outstripping the rest. Well tell us something we don’t know! I have written about this not only with Public Sector Leaders, but also Private Sectors, including our Banks. Now Owners of private companies can earn what they want…that’s a different argument we’ll save for another time (but I have written and talked about this many times)

Hutton claims the “ratchet effect”, where the rise in top senior public-sector salaries was simply “to compete in the labour market for CEOs”. What utter nonsense. Its greed, plain and simple, and an abuse of power by a certain small group or network of people. It was only revealed a few months ago that the university VC’s, a small and very elite group, earn some of the highest in the public sector between £250k-£350k yet the cutback in this sector over the past few months has meant the loss of frontline teaching and research jobs and the cutback of classes & courses. Yet, no VC, or ProVC’s have lost their jobs that I am aware of….

“There should be a proportionate relationship between effort and pay,” states Hutton, of the Work Foundation, who earns a reported £200k salary, must now have joined the ‘other side’ as the book which sprang him to popularity called the ‘State we’re In’ demonstrated the massive injustice in pay and work in the UK in the 1980’s. Yet we are now seeing our MP’s, Senior Leaders and Public Servants doing the same as Hutton complained about in the 80’s.

The problem here; this is a “missed the point” report. The question should be ‘Why pay them this amount in the first place?’

There is no evidence that suggests placing a ‘super-star’ manager at the top of an organization helps the organization succeed. Why? Well the Public Sector is not Private Sector without the profit element. The meddling by ‘Management Theorists’ and the MBA world has done untold damage already to non-profit, service driven, people led organizations. Take Targets and PI’s for example, they are now starting to be removed in the more progressive organizations, simply because they have proved worthless in service delivery and indeed, some (me) would say that they have been detrimental. Why? because they have diverted resources away from frontline services and into this measurement mindset. Great if you like numbers, graphs, and stats, but bloody-hopeless if you need a housing repair or replacement hip!

Anyhow, back to my point…..sorry, I have a tendency to rant and wander!

We do not need to pay Bankers, Chief Executives or anyone else for that matter more than what the frontline staff agree with! If the frontline staff think, ‘you’ as the ‘Boss’ deserve £500k per year then who am I to disagree, however it should be up to them to decide as they are fully aware of your contribution to the cause. If all you have done is slow things down, create more bureaucracy and policies, which hinder frontline speed and services, then, expect a low payout…..simples! 


  1. Totally agree with your analysis. I've got some shocking stories of management greed and incompetence, from the private sector. The head of Siemens even got done for fraud!! Then us workers had to be 'retrained' in how to not take a bribe. What a bleeding cheek!!!
    The problem is that Hutton is now being diluted with talk of 'you have to take the PMs pay as a package' (this would be £540k with allowances). But isn't that the point. The Expenses Scandal was supposed to have got rid of all that. It appears that outrage is fine as long as it's you doing it (the outrage).
    Pay has become so complicated with allowances, bonuses (both pro-rata and performance related) and share options that no-one, within or outside an organisation, knows what's going on. We should have a simple
    'Pay Test', if a MD or CEO doesn't want his salary package publicly published then it's far too high!!
    What are your thoughts on this? TC

  2. The attack on Senior levels of pay would have to come from the shareholders to work. However, the shareholders are only interested in the profits and are convinced that another couple of million for a new Chief Exec will net many times more than this in increased profits.

    The education of shareholders is the only way in which we could see any change in top exec salaries without a revolution.

  3. Richard, yes I agree. It is again another example of greed (shareholders) impacting on the sustainability of an organisation. This time in the Private Sector.

    I am all for big salaries, rewards for the best, etc., but this current system is simply flawed and in most cases build on misguided perceptions of what organisations need.

    Good points both... thank you

  4. If you're so democratic, why don't you include a box for "crap" instead of just "funny, interesting and cool"

  5. For all your hyperbole, you're just another business consultant who doesn't seem to have "managed" in the real world of business. What do they say, "those who can, do. Those who can't.........."