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Quentin Colborn

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Colborn’s Corner: Who are the fat cats?

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With news about Barclays’ recent profit announcements and headlines about the fat cats being back in town, Quentin Colborn takes a look at fat cat salaries in the light of a recent article in The Times and questions if they are who we were expecting.

When you think about it, the expression ‘fat cat’, which is normally used in quite disparaging terms, is quite interesting in its derivation. We have a cat at home and while he is not fat (at least that’s what he tells me), if he were fat, where would it come from? I guess two sources, either he is catching lots of birds, mice, and rats – good on him for that – or we are feeding him too much. Of course he always says he is not fed enough! Either way if he were fat, would it be his fault? Probably not, but what about the so-called fat cats in the business world today?

The proposition in The Times was that the new fat cats are the union leaders of today who are currently enjoying pay rises well above inflation (however you measure it) and well in advance of the pay increases gained by their members. The Times quotes the case of Bob Crow of the RMT, who apparently enjoyed an increase in the value of his pay and benefits of 8% to £91,646 in 2008. Similarly, the paper reported on Tony Woodley, joint general secretary of Unite, Britain’s biggest trade union with 2m members. His pay and benefits package increased by 20% from £88,359 to £105,761 last year, The Times reported, according to official accounts.

Moral dilemma
 

So is it wrong to have large increases in pay and bonuses when many workers are facing redudancy, and those remaining in work are often experiencing reductions in earnings? That has to be a moral question as well as one of economics. If an organisation has the funds to reward people in this way it basically has three options. It can pay them at this level (if they deserve it), it can not award such large increases and keep the cash saved within its coffers, or it may take on more staff.

In economic terms there is much to be said for pay at the fat cat level in that it releases money into the economy that will enable the recipients to spend and hence encourge, albeit in a small way, economic growth. Alternatively, from a more moral perspective, is there an argument for restraining pay increases but using the funds saved to employ more staff? The social and economic benefits of increased employment ultimately benefit us all, but would this form of job creation actually benefit the employer – especially if they then struggle to retain their better staff?

Much is spoken about transparency these days, so how does this apply to ‘fat cat’ pay? There are proposals that, especially within the banking sector, all high (whatever that means) salaries shoud be disclosed, perhaps the top 200 employees. But such reporting is always after the event with no opportunity to change anything.

Equally, is it fair to expect an individual’s terms and conditins to be open to public scrutiny? It may happen at board level, but is it reasonable beneath that level? Within the Trade Union context, how many members have a say in their leaders’ terms of employment? How many want a say anyway? How much of the discussion about fat cat salaries comes from the politics of envy rather than any real perception of right and wrong? We hear much about high salaries, but how much do we hear said about those on the minimum wage? But of course that’s not so newsworthy, is it?

So what do you see as consituting a fat cat? Should there be curbs on executive pay? Should all those who earn more than, say, £1m a year have their package publicised? If so, why?

Quentin Colborn is an independent HR consultant based in Essex who advises management teams on operational and strategic HR issues. Quentin can be contacted on 01376 571360, www.qcpeoplemanagement.co.uk or via Quentin@qcpeople.co.uk
 

One Response

  1. Quentin Colborn in Pay & benefits
    I suppose Quentin is just trying to stir, otherwise why mix up comments about actual pay and increases in pay. Thinking of overall rewards, the pay of Tony Woodley (or even the expenses of MPs) are pretty trivial when compared with the the bonuses of city gamblers.

    I suggest that Quentin could read “The Spirit Level: Why more equal societies almost always do better”. This recent book:

    * compares different societies and shows that unequal societies have more fat people, more murders, more teenage births, poorer educational performance, more mental illness, more people in prison, etc, etc, etc.

    * shows that inequality affects people at all levels of society (the rich suffer these problems just as much as the poor)

    * identifies the most unequal societies in the developed world as the US and the UK.

    It seems we could all benefit if we moved from ‘Me, me, me’ and got back to more of an ‘Us’ society. Don’t believe me, read the book.