Opinion
THE WIDENING WAGE GAP T Driving
he divide between those who are paid significant salaries and generous bonuses and those on more modest incomes (and for some national minimum wage) seems to be getting wider. Recent press articles indicat that senior management salaries had increased up to 75% whilst employees’ salaries were expected to rise less than 3%. It seems hard to
understand the mechanics of this disparity.
rationale and Margery
McBain, MD of Gravitate HR examines the push and pull of managing salaries in an increasing competitive business and economic environment.
for success pushes up
salary expectations. All organisations, commercial and otherwise, need to push for operational success in order to drive turnover. There are few organisations for which success will come easily or without effort, ingenuity and energy.
They
need strong managers and effective leaders who have a clear vision and robust strategy to make it happen. The market has a pull for these rare breeds and therefore they can command a high price for their skills and commitment to a brand, company or cause.
The
company wants to hold onto the key skills, contacts and competence of these key senior managers and reward them accordingly rather than losing them to a competitor – hence the pay awards.
Managing the employment pull. Whilst that may be the case for rare or highly skilled expertise, many employers take the view that there are many middle tier, administrative or low skilled roles for which there is a significant pool of potential employees from which they can choose and therefore there is less need to pay inflated rates to retain their services – these roles are easily transferable and plenty of choice in the market. In a recent recruitment exercise we received 200 applications for a full time Communications Executive position – evidence that there is more supply than demand and thus less pressure on salary expectations for certain roles at a more junior level.
Geographical and Sector Pull. Statistics on the relative success or failure of the UK economy can mask the pull of certain skills and expertise in specific sectors and geographical areas.
high employment and top salaries – London and the South East continues to boom, with a draw to the city and financial services. We have clients most notably in the oil and gas sector as well as energy renewable, who are prospering, recruiting and growing
and their challenges are related to managing growth, finding the right skills and servicing clients. Internal salary discussions can be tricky as the level of business activity is transparent and employees want their slice of the cake which puts pressure on wage negotiations of salaries and bonuses. There is no easy answer to managing the economics of salaries. Organisations must retain key employees and reward is an integral part – however reward does not have to be monetary purely. Business success can bring pressure on salaries – but this can depend on what you are doing, where you are working, and your skill set. Surely all salary increases have to be justified and if performance is exceptional and makes a real and lasting difference to the success (however that is measured) that balances the push and pull. However,
it does feel like the
“haves” are getting more and the “have nots” are being penalised.
There are still hot spots of
Founder of Gravitate HR, Margery has built a strong career working largely in the retail sector with The John Lewis Partnership, Dixons Stores Group and most recently as Head of Human Resources for what was then the world’s oldest independent department store, Jenners.
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