Boss and worker pay gap ‘reaching crisis point’

Watching executive salaries rise has become demotivational says the CIPD
Watching executive salaries rise has become demotivational says the CIPD

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 found that three out of five workers felt demotivated by the high level of money paid to CEOs.

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

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’.”

When employees had seen salary rises of a few per cent over several years, he said it was time 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,” he added.

“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 organisation has called for companies to be required to publish the pay ratio between its chief executive and average employees.