There is a risk that the anger generated by reports of multi-million pound chief executive pay deals and a new round of bankers bonuses in a couple of months' time could spill over into the workplace.
A recent report by the Organisation for Economic Co-operation and Development (OECD), said that income inequality among working-age people had risen faster in Britain than in any other rich nation since the mid-1970s. Business secretary, Vince Cable, announced new rules in June to force publicly listed companies to give shareholders three-yearly votes on executive pay and bonuses in an effort to contain the tide.
But it's not just about six figure salaries for the C-suite, on Channel 4 this summer the 'Show Me Your Money' documentary discovered that there are also pay discrepancies between employees doing the same or similar jobs, which once revealed led to emotional responses from anger and shock to guilt and resentment.
HR directors may find themselves caught up in the backlash against high salaries, especially as the UK economy remains firmly in recession and many employees will not have had a pay increase for a number of years and some will have taken a cut. HR personnel may need to defend their company's position with regard to directors' salaries and also need to diffuse anger over pay inequality within their departments.
Good communication, as always, is vital to getting your message across, but good communication cannot defend the indefensible. If there are inexplicable disparities in salary between employees doing the same job, or if bonuses are awarded for underperformance, then no amount of talk will neutralise the upset and anger.
However, directors fail to explain decisions on pay and benefits effectively. The subject of salary is the last taboo in the workplace: it is considered impolite to enquire about another person's remuneration. Annual pay reviews and pay negotiations are shrouded in secrecy all of which makes explaining pay decisions uncomfortable as well as unusual.
Higher salaries might be required to secure good staff with specific expertise because that's the going rate in that particular specialism or industry. It may not be palatable, but it is an incontrovertible fact. If you explain why something is the case, people can understand and accept it even if they don't like it.
Disparities in the salaries paid to employees doing the same job might be due to the greater experience of one over the other, more relevant qualifications or the job market conditions at the time of the person's employment.
When communicating with employees who are cross about perceived unfairness, it is far less important to defend the company or organisation's position than to explain these underlying corporate interests (a negotiating technique).
Communicating can be a powerful way of diffusing anger and reassuring staff, but if they feel uncomfortable about the message, many business executives would rather hunker-down and hope the problem will go away. It is far better to address the issue head-on and in a positive and timely fashion. Keeping quiet will only further convince employees that their employer has something to keep quiet about.
The indefensible will remain indefensible. Trying to justify why a senior executive has received a large bonus package for delivering a drop in share price and negative growth will only damage your credibility. But if there are justifiable reasons, even displeasing ones, then HR directors should defend themselves by explaining quickly and with confidence.
When delivering a message, which will not please, it is best to keep it short. The more a person tries to explain, the bigger the hole they dig and the more likely they are to fall into it. CAP is key: show concern for the employee's position, say how you will act as a result, and put it into perspective by explaining the employer's interests. Employees may not like what they hear, but at least if they understand it will be a major step forward.
Jack Downton (pictured) is the managing director of executive coaching and training company, The Influence Business.
