Growing gap between executives' and employees' pay 'affecting staff motivation'

The growing gap between the pay of executives and the rest of the workforce is having a "significant" impact on staff motivation, a new report has warned.

A group representing human resources managers said there was now a "crisis" over increases in pay for executives in the UK's largest organisations.

A study by the Chartered Institute of Personnel and Development (CIPD) found that three out of five workers felt demotivated by the high level of money paid to chief executives.

More than half of 1,000 workers surveyed said executive pay was bad for the reputation of UK companies.%VIRTUAL-ArticleSidebar-pay%

Charles Cotton of the CIPD said: "The growing disparity between pay at the high and lower ends of the pay scale for today's workforce is leading to a real sense of unfairness which is impacting on employees' motivation at work.

"The message from employees to chief executives is clear - 'the more you take, the less we'll give'.

"At a time when the average employee has seen their salary increase by just a few percentage points over the last several years, we need to take a serious look at the issue of top executive reward.

"It's crucial that chief executive reward packages are simpler and more clearly aligned to both financial and non-financial performance measures.

"These should include how their leadership impacts on critical outcomes such as employee wellbeing and engagement, accountability for culture and behaviour, and workforce development, all of which are vital underpinnings of the long-term health of both people and business."

The CIPD called for companies to be required to publish the pay ratio between a chief executive and average employees.

TUC general secretary Frances O'Grady said: "Soaraway executive pay is bad for business. Companies should be looking to reduce the pay gap between top execs and the rest of their workforces as a matter of urgency.

"This will boost staff productivity and ensure that workers get a fairer share of the rewards.

"This report highlights once again the need for better corporate governance. Moving forward it is essential that workers are given seats on company boards and remuneration committees.

"This would help inject a much-needed dose of reality into boardrooms and put the brakes on the multi-million pay and bonus packages that have done so much to damage the reputation of corporate Britain."