· 2 min read · Features

The double standards at the CIPD

Published:

The CIPD should know how demotivating it is when financial hardship is not shared equitably.

Should organisations have a conscience and, if so, who should be that conscience? Should it be HR professionals? Therese Procter, HR director for retailing services at Tesco, the supermarket chain, says it should.

The way Tesco has used HR in equipping its staff to move in to diversified business sectors is featured in the Chartered Institute of Personnel and Development's Next Generation HR research report, designed to highlight good HR practices for the future. Procter has described HR as the "key enabler" of Tesco's diversification, acting as the conscience of the company, ensuring employees maintain its stated values. Two of the most important of these values, she says, are: "No one tries harder for customers" and "Treat people as you like to be treated".

We must presume these sentiments have the wholehearted endorsement of the CIPD since Procter was invited to outline her approaches during the institute's annual conference in Manchester. But I wonder what the CIPD staff and membership made of these remarks in light of the institute's selective approach to bonus payments revealed in its annual report and accounts?

Bonus payments have become a sensitive subject and there seems to be universal agreement that senior executives should not expect bonuses when their companies have delivered poor financial performance.

But these sentiments do not appear to have penetrated the CIPD hierarchy. During the conference, Lee Sears, CIPD strategic adviser and one of the architects of the Next Generation HR project, spoke of the need for HR to create organisational equity.

The institute's membership and employees might be forgiven, therefore, if they question the equity of awarding their chief executive, Jackie Orme, a £57,000 bonus within her £327,000 salary in 2008-09. The bonus was awarded at a time of falling profits within the CIPD's commercial arm - a fall of 51% to £1.41 million on a turnover of just under £18 million in the year ending June 2009.

In defence of the chief executive's pay package, Vicky Wright, the CIPD's president, who also chairs its remuneration committee, said the arrangements reflected good practice in executive pay, containing what she called "stretching" short and long-term performance targets.

Wright is an experienced pay specialist. I know she would not condone performance pay without taxing criteria. All the same, I think she and her committee should have given more thought to a system that appears to uphold double standards in pay.

A two-tier system of reward has emerged in the past 20 or 30 years where people at board level and in senior executive teams are treated differently from rank-and-file staff. It means senior executives may attract performance bonuses for cutting costs out of the system - and that can involve pay freezes and redundancies for some.

The basic salary of the CEO was indeed frozen, along with the basic pay of everyone else in the CIPD. But most other employees cannot look forward to the variable performance pay available to their boss. Their rewards are not treated the same.

We have come to expect pay excess in banks and other financial institutions. But the CIPD's roots are in the UK's human relations movement. It knows how deeply demotivating it can be for staff when financial hardship is not shared equitably in a business.

If HR is to be the conscience of the organisation, who is to be the conscience of the CIPD? Its leadership seems comfortable with the way it has handled senior pay, but is that certainty reflected among the rest of the staff? Equity is a quality rather like justice. Justice must be seen to be done; equity must be experienced; it must run through an organisation from top to bottom. I'm not getting that feeling just now about the CIPD and that's a worry.

- See feature on Jackie Orme, page 34

- Richard Donkin is author of The Evolution of Work and The Future of Work; richard.donkin@haymarket.com