Saturday, 6 November 2010


"One problem we have is people don't want to join us because they believe we are not in control of remuneration," said Gulliver. "It would be unacceptable from the point of view of our shareholders if we were unable to attract and retain the type of people required to deliver profit."
Surely a delusion capable of swift correction. Consider the average employee. He/she goes to the HR and tells them that if they want to retain him/her they will have to pay him/her a sum considerable above his/her salary banding. He would speedily be directed towards the door and advised to test his worth elsewhere.
The excuse for the seemingly exorbitant rewards to those in the banking and financial sphere is that it has all been reviewed by their Remuneration Committee. Big deal - they are but employees of the enterprise and are likely to adhere to religion. The Scripture says, "Do not muzzle the ox while it is treading out the grain," and "The worker deserves his wages."
My objections are directed to the supposition that just one person can so direct and lead the organisation so as to achieve the sort of profit they do achieve. That needs teamwork - we have seen just what damage a rogue trader can inflict despite the assumed talent of the Boss Man. If they fail, they walk away with the inflated sums he has been paid before his bubble burst. All he loses is his bonus calculated on results; that may well be cushioned by Golden Parachutes. If the selection process were better handled, we would not be in the straits we are now and Government support would not have been needed.
Recruitment of new senior staff is mostly put out to specialist agencies. They hunt data bases for likely candidates, do a shuffle and nominate a short-list. Their fee is a proportion of the salary finally achieved so they will obviously favour the £750,000 pa applicant over Mr £500 grand. Any subsequent failure will be explained "he was OK when we put him forward. Don't blame us"
We need Government action to control all salaries. The implied blackmail used by those seeking the top jobs - "if you do not pay me (this) I'll go elsewhere" can be countered by creation of the situation that there is no higher paying position. Pay him a end of year bonus if the results justify it. The cost of this comes off the bottom line. There needs to be a bonus pool - if Mr X gets 30% of the pool there is less for everyone else. All employees should benefit in proportion to any bonus; this to correct the situation where the highest paid receives a reward that is proportionally many many times the raise given to the lowest on the greasy pole.
At one time I worked for a company where the Head Honcho laid down a rule for anyone asking to employ a new worker could do so but their payroll budget would not be increased. It worked very well. So what makes the banking and finance world such a different beast?

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