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Excessive CEO pay is demotivating employees, CIPD says

UK employees believe high pay for top CEOs is having a 'far-reaching' negative impact, according to research from the Chartered Institute of Personnel and Development (CIPD).

The study The view from below: What employees really think about their CEO's pay packet found a perception among the workforce that CEO pay levels could be damaging employee motivation, organisation reputation and talent recruitment.

Demotivated by CEO pay

Some 71 per cent agreed that CEO pay levels in the UK are too high, while 60 per cent agreed that CEO pay levels were demotivating employees.

Almost two thirds of employees disagreed that CEO pay levels in the UK inspire employees to work hard, and more than half agreed that they were bad for an organisation's reputation.

Just under three-quarters wanted to see greater pay transparency within their organisations.

CEOs are paid approximately 183 times the average UK worker, a huge leap up from 47 times in 1998, according to the High Pay Centre pressure group. A typical FTSE 100 CEO takes home more money in three days than an average employee earns in year, it said.

Sense of unfairness

Charles Cotton, CIPD reward adviser, said, 'The growing disparity between pay at the high and lower ends of the pay scale for today's workforce is leading to a real sense of unfairness which is impacting on employees' motivation at work. The message from employees to CEOs is clear: "the more you take, the less we'll give".'

He said that pay and reward should be linked to both financial and non-financial performance measures, including 'employee wellbeing and engagement, accountability for culture and behaviour, and workforce development'.

'The CIPD recommends organisations increase their focus on ensuring CEOs bring a balanced leadership style, appropriate to the culture and context of the organisation,' he said.

Acas publications and services

Acas has detailed information about Employee engagement and has published the pdf icon Advisory booklet - The People Factor [937kb] on how to engage your employees for business success.

Acas experts can visit your organisation to help you understand what needs to be done to address a range of issues related to pay and reward and then work with you to develop practical solutions. For more information see Pay and reward: how Acas can help.

Practical training is also available on the related areas of Skills for supervisors, Contracts and terms and conditions, Recruitment and induction, and courses on employee engagement listed under Staff retention.

For free, impartial advice and guidance visit Acas Helpline Online.

Visit the Acas Training Courses, Workshops and Projects area for more information.

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