Home' HR Monthly : October 2018 Contents 6
ankaj Mishra’s new book, The Age of Anger: A History of the
Present, tells the story of Oklahoma bomber Timothy McVeigh,
and the man who planted the bomb at the World Trade Centre,
Ramzi Ahmed Yousef. They later occupied adjoining prison cells.
On the face of it, the two men were on different paths. McVeigh was
an Iraq War veteran and a drifter who had done poorly at school and
couldn’t hold down a job. Yousef was from Pakistan, had studied in
Britain and was a skilful computer engineer who had worked for the
An article in the L ondon Review of Books observed that if Yousef
had embraced life in the US instead of trying to blow it up, he could
have walked into jobs McVeigh was unqualified to get. McVeigh was
superfluous to his world in a way that Yousef was not, but they were
alike in that their anger gave them purpose.
One of the things HR practitioners know is that engagement in work
can provide people with meaning and purpose. On the other hand, the
wrong job, or no job, can lead to sustained anger, and even mould a
person into perfect fodder for ex tremist and terrorist causes.
In 2004, MIT professor of management Thomas A. Kochan wrote
a paper that appeared in Asia Pacific Journal of Human Resources. He
noted that US CEO pay relative to the average worker in the 1960s was
on a ratio of 40:1. In the 1970s it reached 400:1.
Kochan’s reference to this explosive relativity concluded: “H R
professionals lost any semblance of credibility as a steward of the social
contract because most of them lost their ability to seriously challenge or
offer an independent perspective... to the CEO or other top executives.”
In a book of the same name, Jean-Jacques Rousseau is credited with
coining the term ‘social contract’. It crystalises an idea that’s regarded
as having helped to fuel the French Revolution. At the time, the average
Parisian worker was having trouble putting enough bread on the family
table; and the response from on high was summed up by the infamous
quote attributed to Queen Marie Antoinette, “Let them eat cake”.
Last year, L ouise Davidson, the CEO of the Australian Council of
Superannuation Investors, noted that chief executives’ pay had risen
12.4 per cent in 12 months for those running ASX 100 companies, and
bonuses were up 18 per cent.
Australian CEOs were earning 78 times more than the average
worker, and the Reserve Bank governor expressed concern about
persistently low wage growth for the average worker – 2 per cent was the
norm – and its potential to curb Australia’s economic grow th.
Davidson did not mince her words: “At a time when public trust in
business is at a low ebb and wages growth is weak, board decisions to
pay large bonuses just for hitting budget targets, rather than exceptional
performance, are especially tone-deaf. This may be a sign that boards
have lost sight of the link between a company’s social licence and the
expectations of communities and investors.”
Social licence! Nearly three centuries have passed, but we haven’t
moved far from Rousseau’s phrase, nor the conditions that gave
rise to it. The use of ‘licence’ here is conceptual rather than literal.
Companies don’t apply for one, but it’s a term closely connected with an
organisation’s brand and reputation, and there’s an indication of how
quickly they can be lost in a sea of community anger.
The issue of executive remuneration is pertinent to the work of a
group of specialist HR practitioners. For that reason, the Australian
HR Institute took an active role in the Productivity Commission’s 2009
inquiry into executive remuneration, conducted in the wake of the global
financial crisis. I spoke to the two-strikes rule at the commission and
supported the practice, but at a higher threshold than 25 per cent. Since
it became an amendment to the Corporations Act, it has rightly struck
fear into boards at many an ASX-listed annual general meeting.
If you are someone who has lost your job and your home, as millions
had at that time, you might get a sense of where anger fits into this
picture. The dominant mood was that, if the wider society and a
company’s employees were suffering pain, the company’s executives also
needed to feel it, and in many instances that was not apparent.
It can’t be expected that the HR function is the solution to this
issue, but it has a legitimate part to play. The contribution the
institute’s board has made since then is to initiate a robust
professionalisation of HR through certification.
We are now prepared to say to business
leaders who employ the institute’s certified HR
practitioners: “These professionals have the
capability to work with you as skilled business
partners to boost the engagement and productivity
of your people.
“In addition, they will challenge you if you
propose to play fast and loose with the
assumptions you bring and demands you
make on you r employees, your
customers or you r suppliers.” •••
This is an edited version of a speech
Peter Wilson gave at the AHRI
National Convetion in August. It
appeared in The Canberra Times and
other Fairfax titles on 4 September.
Let them eat cake?
Executive pay rises that are vastly beyond what other staff receive break the social
contract and tarnish an organisation’s reputation.
BY PETER WILSON AM FCPHR AHRI CHAIRMAN
To read past Perspective columns by Peter
Wilson, visit hrmonline.com.au
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