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The high level of earnings by senior people in private sector companies has hit the headlines once more with a series of outcries in response to news revealed in the Income Data Services report that FTSE 100 Directors experienced an increase of 49% in earnings over the last year.

While the increase in basic pay averaged only 3.2%, this figure was dwarfed by an average bonus payments increase of 23%, from £737,624 in 2010 to £906,044 in 2011 plus  the “crystallised? value of long term incentive plans (LTIP) and share options cashed-in during the year.

Overall IDS have revealed that -

• CEOs received an average increase of 43.5% (average earnings £3,855,172)
• Finance directors received an average increase of 34.1% (average earnings £2,001,515)
• All other directors received an average increase of 66.5% (average earnings £2,260,033)

In the press release from IDS themselves, the report’s editor, Steve Tatton reflected on the sensitivity of his findings, saying

Overall comment has been pretty negative however with very predictable condemnation from unions. Polly Toynbee has drawn attention to the diverging experience of those at the top and bottom of the earnings range, with the government considering reductions in employment rights and broader protections. Comment on these proposals has been quite dismissive. Attractor has asked the question if employees are Too Hard to Sack and would generally suggest that problems with terminating under-performing people are related to management culture and policy rather than employment law.

So what has happened in 2011? Read the rest of this entry →

Photo: srqpix, Flickr

The Coalition Government is apparently considering changes to employment law – pushing the qualification period for protection against unfair dismissal up from one year to two years. While this represents a reversal of employment law changes which took effect in 1999 – taking the UK back to the position before the last Labour government – they are also considering the introduction of a fee to discourage vexatious claims.

Business representatives, such as the British Chamber of Commerce, often suggest current arrangements are too one-sided – soft on employees – causing huge expense for employers in defending cases. Deregulation in this area will boost jobs, they say, though the TUC express the view that increasing burdens on dismissed employees would be objectionable – preventing people from bringing legitimate claims.

The TUC also reject the idea employment tribunal cases are running out of control, reporting a 14% rise in individual claims during 2009/10 – a figure which, in the context of the economic slowdown and resulting job losses doesn’t sound too alarming.

While the idea of making changes which are “pro-business” seems sensible, comments on Laurie Anstis’ Work/Life/Law blog suggest there are plenty of pragmatists out there who think the impact of such a change is likely to be marginal and many concerns it will simply encourage employers to act sloppily.

The BBC investigation last year provides interesting facts and some balanced perspectives – especially the points that employers need not deploy expensive legal representation to handle tribunals and that half of cases defended by employers in 2009 were won (though this seems like a case of a glass half full?).

So is a change in the law going to have an impact? Read the rest of this entry →

According to press reports, public sector employers are anticipating having to make workforce reductions of between 5% and 20% over the next few years.

In that context, back-office functions, including Human Resources, may see proportionately larger cuts as employers seek to protect front line services.

There is no doubt a financial squeeze of the scale being discussed requires major change and reorganisation of front-line service delivery.

It’s important to demonstrate corporate teams are reviewing their own activities and resources alongside front-line teams. As public services are reduced it would be inappropriate to leave corporate functions undisturbed.

There are certainly significant savings available for organisations which identify their back-office teams are working inefficiently. Change here could reduce costs without impacting service quality. It’s important to recognise these functions correspond to a small fraction of the entire workforce however. Read the rest of this entry →

The 2009 political conference season saw a stream of pronouncement indicating future changes in the public sector would significantly reduce “waste”.

The Centre for Economics and Business Research (CEBR) recently reported public sector productivity declined by 3.4% ovr 10 years to 2007, while compared to an improvement of 27.9% in the private sector.

Taking news stories at face value, it is easy to assume public sector organisations are prone to higher levels of waste and inefficiency than private companies. Read the rest of this entry →