Although two out of three HR professionals in this survey feel that their HR departments does have a say on remuneration strategy, I wonder if this is truly the case. There are two aspects to this. First, they may indeed have a ‘say', but the issue is, does this get actioned? Does their ‘say' lead to policy changes and implementation of strategies? Second, does it really cover the whole of the organisation, from the top to the shop floor?
In terms of the latter, I suspect that many HR departments are engaged in the remuneration strategy for lower levels of the organisation, but not for senior or top management. I am sure many HR departments are consulted about senior management remuneration, bonuses and the like, but the strategy is decided and set elsewhere, by the CEO for senior managers and by a board remuneration committee for top management. Again, a lot will depend on the credibility, seniority and political skills of the HR director.
The more valued the HR director is by the CEO and the board, the more likely they will play a more active role in setting strategy throughout the organisation. I guess the question then is: should HR set the remuneration strategy throughout the organisation? Given the excesses we have seen among senior and top management in the finance sector, it might be a good idea for HR professionals to be involved in this strategy at all levels of an organisation, not only from a transparency but also from an equity point of view.
Also, HR has more of a track record of engaging staff on principles of equity and fairness than other functions and particularly top management, so they should not only have a ‘say' in the remuneration strategy, they should be responsible for it-and at all levels, including the board.
Cary L Cooper CBE, is professor of organisational psychology and health at Lancaster University Management School; and co editor of the recent book The Peak Performing Organization.
Look out for the October issue of HR magazine due to hit desks on Thursday where we investigate the role HR had to play in the bonus fiasco in the financial sector.
