Quantum accountability: when does enough become too much in top pay decision-making?
ISSN: 0142-5455
Article publication date: 25 September 2023
Issue publication date: 31 October 2023
Abstract
Purpose
The purpose of this paper is to examine how and why individuals involved in executive remuneration (top pay) decision-making consider quantum as being appropriate rather than excessive, theorised under the rubric of accountability.
Design/methodology/approach
In-depth interviews were conducted with non-executive directors (NEDs) serving on remuneration committees (Remcos), institutional investors, their external advisers and internal HR reward experts. Transcripts were analysed using NVivo and the Gioia qualitative methodology.
Findings
Defining, measuring and applying performance conditionality in the determination of top pay quantum such that it aligns with company strategy/culture and values, as well as individual recipient motivations, is difficult. While creative approaches to setting top pay so as to attract, retain and motivate key personnel are welcomed, these risk Remco members' personal/organisational reputations. Members recognise disconnection between top pay quantum and general pay levels and how the media highlights social inequality leading to public distrust. They believe they can contribute to more socially acceptable quantum by applying their own values in top pay decision-making.
Originality/value
Sanctions-based, trust-based and selection/peer networks/felt-based accountability theory is used to explain decision-makers’ actions when determining top pay quantum. This paper extends felt accountability theory to encompass public/societal accountability in the context of the appropriateness of top pay quantum decisions.
Keywords
Acknowledgements
The authors wish to thank Laura Baker for her assistance in the design of Figure 1.
Citation
Shortland, S. and Perkins, S.J. (2023), "Quantum accountability: when does enough become too much in top pay decision-making?", Employee Relations, Vol. 45 No. 6, pp. 1455-1475. https://doi.org/10.1108/ER-02-2023-0066
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited