Tag Archives: pay

London – love it or hate it

Mike the Psych's Blog

P1000602 - Version 2First the good news: London is apparently the world’s best city in which to work.

In a poll of almost 200,000 people in nearly 200 countries, one in six people said they would like to work there. And the UK as a whole came second to the USA although no other city in UK came in the top 40 world-wide .

Brits aren’t as keen to work abroad as other nationalities – only 40% of us compared to 2/3 from other countries according to the Boston Consulting Group and TotalJobs recruitment website. Those who do prefer the US, Canada, Germany, Australia and France. The UK attracts workers from Portugal, Israel, Barbados, Romania and Jamaica.

The international director at TotalJobs said “This report cements London’s position as a truly global city. Not only does it offer a wealth of job opportunities min a range of industries but it boasts…

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Chief Executives get richer by hiring remuneration consultants

stick_figure_crank_pound_500_wht_7405Organisations are using remuneration consultants to give a “cloak of respectabilityto justify over-generous pay increases, according to a study at Cambridge University.

Those that use external experts end up paying 7.5% more to their CEOs than those who set their pay in-house.

The Judge Business School analysed a thousand American companies and found a direct link between the hiring of executive pay consultants and higher CEO pay.

Professor of Finance Raghavendra Rau argues that the common practice of benchmarking pay against similar sized companies is counter-productive as it prompts each company to pay slightly above average.

“If everybody wants to be above average, the average will keep going up”  (and this applies to other aspects of organisational life e.g. see “No-one wants to be rated as average”).

It’s not necessarily the large multi-national consultancies – for example, Towers Watson, PwC, and Hay Group –  that are to blame as  when smaller “boutique” consultants are used CEOs are paid about 10% more.

Shareholders have been known to rebel against advice on boardroom pay e.g. at Aviva and Burberry.

Former chancellor Lord Lawson caused a storm last year when he described pay consultants as “a profession that makes prostitutes thoroughly respectable“. As you  might expect that didn’t go down well with the Remuneration Consultants Group which represents the industry and which said he was “ill-informed“.

I posted about the impact of using inter-company comparisons four years ago as I believed it had led to the inflation of public sector pay especially in those organisations which had been privatised.

Interesting as this latest study is, talking about 7.5 – 10% overpayment doesn’t mean much to the average employee when average pay for directors at British blue-chip companies rose by 21% to £2.4 million this year according to Incomes Data Services with CEOs taking home about £4.5 million a year.

Pay differentials between the top and the bottom of companies have never been more extreme, or obscene.  In America most people think that CEOs earn about 30 times what the average employee earns when the reality is it’s currently 350 times! No wonder some observers are warning that “the pitchforks will be coming out.

 

Want to be your own boss? Think hard about it before you take the plunge

figure_work_life_balance_500_wht_13760Working for yourself is not the bed of roses assumed by many fed-up employees.

Research shows that self-employed people work the longest hours for the worst pay.

So you’re not going to get rich quick and forget work-life balance!

The self-employed work longer hours with a third putting in more than 45 hours a week and 1/8 working 60 hours or more.

They are also among the countries poorest paid earning just half of what people earning regular employment. Median earnings for the average self-employed person are £207 a week.

Self-employment is at an all-time high with the Office of National Statistics (ONS) recording 4.6 million self-employed people which is 15% of the nation’s workforce (compared to only 9% in 1975).

The government’s take on this is that it shows we are a nation of entrepreneurs. The more cynical observer might point to people going into self-employment because they can’t get a regular job.

Over a million people who were self-employed in 2004 were working for someone else by 2009 suggesting that many people would prefer a steady job with a steady income – if they could get one. The self-employed tend to be older on average, about 47 years of age, than employees and it’s harder to get jobs the older you are.

The numbers are also distorted by the number of over-65s, half a million, who have  eschewed retirement to become self-employed (a sad reflection on the level of our pensions in this country compared to the rest of Europe).

The TUC has picked up on this noting that almost half of the UK’s self-employed are over 50 and not quite the bright young entrepreneurs the government would like us to believe.

What do the self-employed actually do? Top jobs are builders, taxi drivers, and carpenters with a fast-growing group of managers. The latter group presumably reflecting company downsizing or stressed managers wanting to became consultants?

As I’ve posted before working for yourself is not easy and working from home especially has its own problems.

Local Government fat cats – update

boss_holding_pound_clip_1600_wht_8420Once upon a time having a job in the public sector meant that you weren’t paid brilliantly but you had job security and a good pension.

That is no longer the case for senior managers (although they still aren’t paid as much as the mouth-watering sums given to CEOs in the private sector).

Nevertheless a Sunday Times investigation this weekend shows many councils have significantly increased the pay and packages for their Chief Executives at a time when they are cutting services.

Only five of the twenty top payers have reduced pay after demands for austerity by the government in 2010.

The 10 biggest pay packets in 2013/14 (2010/11 in brackets)

  1. Somerset    £318,500   (£128,894)
  2. Wandsworth   £215,696   (£174,271)
  3. Birmingham   £211,804   (£198,925)
  4. Surrey   £211, 600   (£210,000)
  5. Buckinghamshire   £209,070   (£207,750)
  6. Manchester   £209,934   (£203,934)
  7. Durham   £200,000   (£200,000)
  8. Sunderland   £196,627   (£193,148)
  9. Liverpool   £199,500   (£153,176)
  10. Stoke-on-Trent   £195,516   (£191,032)

Somerset is particularly troubling as the previous Chief Executive, Sheila Wheeler was paid a £198,000 package (£160,000 basic) and left for undisclosed reasons after being criticised for her inactivity during last year’s West Country Floods.

The salary of over £300,000 shown in the table above was for the Director of Children’s Services  (Peter Lewis) who was recruited temporarily through an agency and was one of three  temporary appointments which in total cost the Council almost £750,000. The Council is trying to save £18 million.

NB Lewis has since lost his job with the Council having failed to deliver the improvements it needed.

The highest paid apart from that was £160,000 (£129,000)

Wandsworth, second on the list, has 11 officers paid more than the Prime Minister (David Cameron is paid £142,000 by the way) and the Chief Executive got a £15,000 bonus and a pay rise last year taking him to £282,210.

Stoke-on-Trent justified the pay increase for their top officer by saying the city needed someone “with the ability to effectively manage the delivery of complex services, and to drive jobs and growth for residents”.

This is a mantra we have heard before and you’ve heard me comment before on the topic of public sector fat cats.

Update December 2014

The Chief Executive of struggling Pembrokeshire council left recently with a pocketful of cash (well more than a pocketful – £280k) rather than a pension contribution.

He was paid £195k a year plus benefits and had a £90k Porsche Panamera leased for him.

During his time there he oversaw 1,000 members of staff having pay cuts of up to £5,000. Obviously not leading by example!

How much would you need to change jobs?

newspaper_check_jobs_1600_wht_12083Not much it would appear if you are British.

The average Brit’s loyalty can be bought for around £2,000 (based on average wage of £26,500 – not a CEO’s over-inflated package).

A rise of 5.3% is all that’s needed to switch loyalty to another employer here in the UK.

In faster-growing economies it’s a different matter. Workers in Indonesia and Brazil want 20%, 17% in South Africa and 12% in China.

In Europe Spanish workers, despite the recession, expect around 6% and the French almost 9%.

We’re not the ones making the lowest demands however.  Italians, Germans and the Dutch have lower expectations than us.

Of course it’s not ALL about money. In the UK work-life balance came out as the most important consideration followed by location, stability and respect (compensation came 5th). I don’t know the results from every country but I’d guess that Sweden was high on the list for work-life balance too.

Compensation was rated as the most important factor by people in Canada, China, France, Germany, and the USA.

All this according to survey of 18,000 employees by a global advisory company CBE.