CIPD says Commons Committee has missed a trick by focusing too much on reward

Commenting on the various proposals raised in the House of Commons Treasury Select Committee report on the banking crisis, Charles Cotton, Reward Adviser, says:

General conclusions of report

ìThis report has thrown down the gauntlet to all financial sector organisations. Times have changed and it would be wrong to assume they can sit on their hands and wait for the ëgood timesí to return. They must look at the performance, values, attitudes and behaviour the organisation needs from its top talent, and how it will reward and recognise this.

ìItís all about rewarding sustained value creation. Is the size of the reward in line with the success of the company? Should the reward be deferred over an appropriate number of years, or awarded in shares, or both?

ìBut we believe the Committee has missed a trick by focusing too much on the reward aspect of people management. It is dangerous to overplay the role of bonuses in contributing to the banking crisis and the impact that their reform will have.

ìThere must be a more holistic approach to how people are managed and rewarded, including good management and appraisal systems and organisational culture with an appropriate attitude to risk.

Conclusion that FSA should not regulate the size of pay in the banking sector

ìThe CIPD supports this conclusion and has previously stated the FSA should not regulate pay or how much people are rewarded.

Proposal that financial companies disclose salaries and remuneration procedures for staff below the board where they are paid more than board members

ìThe CIPD welcomes this suggestion. Top talent is crucial to the success of organisations, and giving shareholders sufficient information on how these key individuals are rewarded and what performance levels are required is important for their investment decisions.

Proposal that remuneration committee members have greater expertise

ìWe support calls for remuneration committee members to have greater expertise as well as increased transparency and independence of mind. However it is important that demands on them do not become so onerous that the available pool of talent diminishes even further.î