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It’s shocking that executives can ask for such huge pay rises

A few years ago at Pimlico we were forced to look hard at our pay structure. We found a few anomalies in the system. Other bosses should similarly take a look at what they offer staff – and what they make in turn.
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People doing the same job, even with the same levels of experience, were being paid different wages. It was a shock to the system. We had to strip things bare so everyone could see what their colleagues earned.

It was made more severe as it took place under the spotlight of television cameras for a Channel 4 documentary called Show Me Your Money.

But in the long-run, the knowledge that all was fair and above board made for a better working environment. I believe it is also the case with CEO pay and the news of a huge disparity in wage rises between bosses and their staff.

It leaves an even more sour taste in the mouth when the bosses talked about in the research, carried out by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre, are only glorified employees of the companies they run, rather than the actual owners.

Please tell me how it can be helpful and motivational for someone building houses for Persimmon, to learn that their boss trousered £47.1 million in a single 12-month period?

In the 1980s we were battered by the message “greed is good”, and it wasn’t just Michael Douglas’ anti-hero Gordon Gekko from the movie Wall Street. He was just symptomatic of the times – and he was also very wrong.

I’m not going all Marxist! But I think when the skilled tradesperson on the tools is paid 1/1000th of the amount his or her CEO is getting, the said boss shouldn’t be surprised when a hammer comes through the corporate HQ window.

It just isn’t helpful. It’s unfair. In the UK we are teetering close to recession, and yet bosses are taking on average 11% pay hikes. Meanwhile, staff who are on much less to start with are managing just 2%.

Don’t get me wrong, I have nothing against bosses making more, but when you’re already getting many times the amount your lower paid workers are on, how can you take a double-digit percentage increase, while employees get a low single?

Take a boss earning millions, as an example. If he or she gets a 10% rise every year for 10 years their money goes up an eye-watering £1.6 million. An employee on £25k getting a 2% annual pay rise will increase their gross wage by £13,600 over the same period. And yet this is what is going on.

I’ll say it again. I have nothing against bosses. Even ones that don’t own their businesses, getting good pay rises. But if they can take 10%, then so should their workers.

And if there’s no money when the profits are counted to give workers a big raise, then there shouldn’t be a big stack of cash for the bosses either.

You might even argue that when things don’t go well it’s the bosses who should take the hit since they already get big bucks.

I make no secret of the fact that I pay myself very well, but if the profits aren’t there I get a pay cut. Occasionally they have been big hits, usually around the time of recession.

I really cannot understand how executives at publicly-listed companies can go in front of their boards and ask for huge pay deals when they haven’t done a good job.

Perhaps this is why there have been so many shareholder revolts in recent years?

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About Author

Charlie Mullins

Charlie Mullins OBE is the archetypal entrepreneur – having started his business from scratch and then building it into a multi-million pound enterprise. From humble beginnings growing up on an estate in South London, he left school with no qualifications, but after a four-year plumbing apprenticeship he started his own firm, Pimlico Plumbers, which now generates a turnover in excess of £30m and boasts many well-known names among its many clients including Simon Cowell, Helen Mirren and Richard Branson. He has been a regular contributor on Real Business since 2011 and is particularly interested in promoting and encouraging apprenticeships.

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