Analysis of the first executive pay awards made following government reforms in 2013

Analysis of the first executive pay awards made following government reforms in 2013
Document type
Report
Corporate author(s)
High Pay Centre
Publisher
High Pay Centre
Date of publication
20 January 2014
Subject(s)
Trends: economic, social and technology trends affecting business, People management: all aspects of managing people
Collection
Business and management
Material type
Reports

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This report reveals that workplaces with big pay gaps between the highest and lowest wage earners suffer more industrial disputes, more sickness, and higher staff turnover than employers with more equitable pay differentials. It shows that on average:

  • Bosses earning 10 times more than the lowest-paid staff in their organisation experience industrial action at least once a year. Those with lower pay differentials do not.
  • Workplaces where top earners get 8 times the pay of junior staff report at least one case a year of work-related illness. Workplaces with pay differentials of 5 or less do not report any.
  • Organisations with average pay ratios of 7:1 experience higher staff turnover.

This report is based on a survey of almost 2,000 workplaces and reveals the true cost of pay differentials within the workplace. It warns that any positive effects of motivation from extreme pay inequality are likely to be outweighed by impacts on staff morale and shows how, when stretched too far, pay differentials actually have a negative impact on companies.

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