Flexible pay ‘has helped prevent redundancies’

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Flexible pay ‘has helped prevent redundancies’

Summary:

A flexible approach to pay has reduced redundancies in many companies because of the ability to pay out less when times are not good. Vicky Wright, senior reward consultant at Watson Wyatt and current president of the CIPD, has challenged the perception that the bonus culture was behind the near-collapse of banks last year.

John Beadle, group head of human capital performance at Standard Chartered Bank and CIPD vice-president for reward, warned that the current sort of guidance from the Financial Services Authority is creating a tougher regulatory environment which could spill over into other sectors. While performance-related pay is still viable, it is definitely in evolution.

Article Quote:

“Despite criticism of bonuses in the wake of the banking crisis, Vicky Wright, senior reward consultant at Watson Wyatt and current president of the CIPD, said that, in reality, performance-related pay had helped to stem job losses.”

Article Link: http://www.peoplemanagement.co.uk/pm/articles/2009/11/flexible-pay-has-helped-prevent-redundancies.htm

Perhaps when dealing with performance related pay, executives should tie in such elements as company health. By that, I mean how is it possible for any executive to receive performance related bonuses (often in the millions), when the company is on the brink of collapse? Have we lost the ability to look at the big picture?

Instituting heavy regulations on bonuses is not the answer either. Hopefully, a middle ground can be found that rewards quality performance, yet recognizes that the ongoing health of the company is the ultimate qualifier.

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