Editorial

Citation

Heap, J. (2002), "Editorial", Work Study, Vol. 51 No. 5. https://doi.org/10.1108/ws.2002.07951eaa.001

Editorial

There has never been more money poured into management training and development. There has never been a greater number of qualified and certified managers, executives and directors. There has never been more money spent on management consultancy. So, we have good management and leadership, do we?

Well, when one looks at recent behaviours and results from across the board, one begins to doubt. Putting aside issues like the ENRON scandal as oddball exceptions (which I'm sure it is), there does seem to have developed a culture amongst senior executives that, if not explicitly harmful, is insidiously damaging.

Within the UK, there is emerging a real debate on the value of non-executive directors. Such value – on the face of it – seems to be questionable. Although, in theory, the concept is sound, in practice they seem to act as human rubber stamps and rarely exercise the authority they do have.

However, worse than that (although linked with it), there seems to have developed a "gravy train" of senior executives. Rewards – of all kinds – seem to have leapt upwards with astonishing speed. Salaries, share options, pension benefits have all risen very fast. The argument is that if you want a top executive, you have to pay top rewards. Yet, this spiral of inflating rewards bears no relation to performance; no relation to share price; no relation to underlying company strength. It seems as though there is a mutual set of remuneration committees all massaging the general rise in executive pay.

I am old enough to remember honest, shop floor bonus schemes where extra pay was given in return for short-term extra effort. I know that this cannot work for executives – their performance quite rightly should be measured over the longer term. However, when have you ever seen a director's remuneration explained in relation to such long-term performance. (Answers on a postcard, please!)

The pay of executives has reached a point where all credibility is lost. It rises as share price declines; it rises as workforce redundancies are announced; it rises as market share is eroded … need I go on?

The real issue is not one of what might – in overall company turnover terms – be a relatively small amount. The real issue is the one of the culture created – a culture of mistrust, of cynicism, of division, of them and us. This is so damaging as to often be terminal – if the "fat cats" eat enough cream, they become lazy and self-satisfied. There are (vague, I admit) echoes of older civilisations where a ruling class gathers to itself the wealth and rewards, leaving an underclass of dissatisfied, and even rebellious, "serfs". We may not yet have reached such levels of excess, but the warning signs are there.

We need to re-look at ways in which performance is rewarded and wealth is redistributed – before it is too late.

John Heap