Executive Pay rises 41%, worker pay 1%
Discussion
One in four chief executives at Britain’s biggest companies took home a 41pc rise in total pay, while ordinary workers saw just a 1pc salary increase.
http://www.telegraph.co.uk/finance/jobs/9325216/Pa...
Now before someone tries to justify the pay of these masters of the universe.
The link between pay and firm performance is asymmetric. In good times, bosses’ pay rises a lot, but in bad times, it doesn’t fall so far. In fact, the biggest influence on bosses’ pay is not so much company performance as simply the size of the firm.
2. Big bonuses and performance-related pay are not technically necessary to elicit performance. There’s plenty of evidence that bonuses are sometimes ineffective at improving effort, sometimes actually counter-productive, and sometimes inferior to fines .
3. The claim that bosses must be paid a lot because their pay is set in a global market is silly. CEOs are paid more in the US than UK, and yet few Brits have become CEOs of US firms; one of the very few exceptions was Martin Sullivan who was CEO of, ahem, AIG. Holding down UK bosses’ pay is unlikely to lead to a mass emigration.
4. It’s not even clear that the average boss has much effect upon corporate performance. Take three facts:
- We know from football that changing coaches has no effect upon team performance. If bosses of organizations as small as 11 men can’t turn around performance, what hope do they have for larger organizations? As Warren Buffett said, when a boss with a good reputation takes over a business with a bad one, it is the business that keeps its reputation.
- Jonathan Haskel and colleagues have found that 80-90% of total factor productivity growth (pdf) comes from plants exiting and entering the industry, rather than from internal productivity growth. This suggests that bosses do less than widely thought to improve organizations’ efficiency.
- The death rate of companies is not only high, but statistically distributed (pdf) in a similar way to that of the extinction of species. This suggests that bosses can no more foresee (pdf) or prevent the demise of their firms than species can foresee or prevent their own extinction. Which suggests that bosses know less than we suppose.
source
http://www.telegraph.co.uk/finance/jobs/9325216/Pa...
Now before someone tries to justify the pay of these masters of the universe.
The link between pay and firm performance is asymmetric. In good times, bosses’ pay rises a lot, but in bad times, it doesn’t fall so far. In fact, the biggest influence on bosses’ pay is not so much company performance as simply the size of the firm.
2. Big bonuses and performance-related pay are not technically necessary to elicit performance. There’s plenty of evidence that bonuses are sometimes ineffective at improving effort, sometimes actually counter-productive, and sometimes inferior to fines .
3. The claim that bosses must be paid a lot because their pay is set in a global market is silly. CEOs are paid more in the US than UK, and yet few Brits have become CEOs of US firms; one of the very few exceptions was Martin Sullivan who was CEO of, ahem, AIG. Holding down UK bosses’ pay is unlikely to lead to a mass emigration.
4. It’s not even clear that the average boss has much effect upon corporate performance. Take three facts:
- We know from football that changing coaches has no effect upon team performance. If bosses of organizations as small as 11 men can’t turn around performance, what hope do they have for larger organizations? As Warren Buffett said, when a boss with a good reputation takes over a business with a bad one, it is the business that keeps its reputation.
- Jonathan Haskel and colleagues have found that 80-90% of total factor productivity growth (pdf) comes from plants exiting and entering the industry, rather than from internal productivity growth. This suggests that bosses do less than widely thought to improve organizations’ efficiency.
- The death rate of companies is not only high, but statistically distributed (pdf) in a similar way to that of the extinction of species. This suggests that bosses can no more foresee (pdf) or prevent the demise of their firms than species can foresee or prevent their own extinction. Which suggests that bosses know less than we suppose.
source
Fittster said:
One in four chief executives at Britain’s biggest companies took home a 41pc rise in total pay, while ordinary workers saw just a 1pc salary increase.
http://www.telegraph.co.uk/finance/jobs/9325216/Pa...
Now before someone tries to justify the pay of these masters of the universe.
The link between pay and firm performance is asymmetric. In good times, bosses’ pay rises a lot, but in bad times, it doesn’t fall so far. In fact, the biggest influence on bosses’ pay is not so much company performance as simply the size of the firm.
2. Big bonuses and performance-related pay are not technically necessary to elicit performance. There’s plenty of evidence that bonuses are sometimes ineffective at improving effort, sometimes actually counter-productive, and sometimes inferior to fines .
3. The claim that bosses must be paid a lot because their pay is set in a global market is silly. CEOs are paid more in the US than UK, and yet few Brits have become CEOs of US firms; one of the very few exceptions was Martin Sullivan who was CEO of, ahem, AIG. Holding down UK bosses’ pay is unlikely to lead to a mass emigration.
4. It’s not even clear that the average boss has much effect upon corporate performance. Take three facts:
- We know from football that changing coaches has no effect upon team performance. If bosses of organizations as small as 11 men can’t turn around performance, what hope do they have for larger organizations? As Warren Buffett said, when a boss with a good reputation takes over a business with a bad one, it is the business that keeps its reputation.
- Jonathan Haskel and colleagues have found that 80-90% of total factor productivity growth (pdf) comes from plants exiting and entering the industry, rather than from internal productivity growth. This suggests that bosses do less than widely thought to improve organizations’ efficiency.
- The death rate of companies is not only high, but statistically distributed (pdf) in a similar way to that of the extinction of species. This suggests that bosses can no more foresee (pdf) or prevent the demise of their firms than species can foresee or prevent their own extinction. Which suggests that bosses know less than we suppose.
source
Without going into and detail at all about Executive pay... I do have plenty of views on that subject. The mention of changing coaches has no effect on a club's performance is quite laughable.http://www.telegraph.co.uk/finance/jobs/9325216/Pa...
Now before someone tries to justify the pay of these masters of the universe.
The link between pay and firm performance is asymmetric. In good times, bosses’ pay rises a lot, but in bad times, it doesn’t fall so far. In fact, the biggest influence on bosses’ pay is not so much company performance as simply the size of the firm.
2. Big bonuses and performance-related pay are not technically necessary to elicit performance. There’s plenty of evidence that bonuses are sometimes ineffective at improving effort, sometimes actually counter-productive, and sometimes inferior to fines .
3. The claim that bosses must be paid a lot because their pay is set in a global market is silly. CEOs are paid more in the US than UK, and yet few Brits have become CEOs of US firms; one of the very few exceptions was Martin Sullivan who was CEO of, ahem, AIG. Holding down UK bosses’ pay is unlikely to lead to a mass emigration.
4. It’s not even clear that the average boss has much effect upon corporate performance. Take three facts:
- We know from football that changing coaches has no effect upon team performance. If bosses of organizations as small as 11 men can’t turn around performance, what hope do they have for larger organizations? As Warren Buffett said, when a boss with a good reputation takes over a business with a bad one, it is the business that keeps its reputation.
- Jonathan Haskel and colleagues have found that 80-90% of total factor productivity growth (pdf) comes from plants exiting and entering the industry, rather than from internal productivity growth. This suggests that bosses do less than widely thought to improve organizations’ efficiency.
- The death rate of companies is not only high, but statistically distributed (pdf) in a similar way to that of the extinction of species. This suggests that bosses can no more foresee (pdf) or prevent the demise of their firms than species can foresee or prevent their own extinction. Which suggests that bosses know less than we suppose.
source
You only have to look at Chelsea last season. Going no-where to winning the Champions League. Tottenham appointing Harry went from second bottom to consistent top 5 finisher.
There are many more examples so I wouldn't have used football as the best reference for this particular argument.
on top of that everything else has gone up Fittster said:
One in four chief executives at Britain’s biggest companies took home a 41pc rise in total pay, while ordinary workers saw just a 1pc salary increase.
http://www.telegraph.co.uk/finance/jobs/9325216/Pa...
Now before someone tries to justify the pay of these masters of the universe.
The link between pay and firm performance is asymmetric. In good times, bosses’ pay rises a lot, but in bad times, it doesn’t fall so far. In fact, the biggest influence on bosses’ pay is not so much company performance as simply the size of the firm.
2. Big bonuses and performance-related pay are not technically necessary to elicit performance. There’s plenty of evidence that bonuses are sometimes ineffective at improving effort, sometimes actually counter-productive, and sometimes inferior to fines .
3. The claim that bosses must be paid a lot because their pay is set in a global market is silly. CEOs are paid more in the US than UK, and yet few Brits have become CEOs of US firms; one of the very few exceptions was Martin Sullivan who was CEO of, ahem, AIG. Holding down UK bosses’ pay is unlikely to lead to a mass emigration.
4. It’s not even clear that the average boss has much effect upon corporate performance. Take three facts:
- We know from football that changing coaches has no effect upon team performance. If bosses of organizations as small as 11 men can’t turn around performance, what hope do they have for larger organizations? As Warren Buffett said, when a boss with a good reputation takes over a business with a bad one, it is the business that keeps its reputation.
- Jonathan Haskel and colleagues have found that 80-90% of total factor productivity growth (pdf) comes from plants exiting and entering the industry, rather than from internal productivity growth. This suggests that bosses do less than widely thought to improve organizations’ efficiency.
- The death rate of companies is not only high, but statistically distributed (pdf) in a similar way to that of the extinction of species. This suggests that bosses can no more foresee (pdf) or prevent the demise of their firms than species can foresee or prevent their own extinction. Which suggests that bosses know less than we suppose.
source
Don't disagree with your general outlook, but your "facts" are questionable.http://www.telegraph.co.uk/finance/jobs/9325216/Pa...
Now before someone tries to justify the pay of these masters of the universe.
The link between pay and firm performance is asymmetric. In good times, bosses’ pay rises a lot, but in bad times, it doesn’t fall so far. In fact, the biggest influence on bosses’ pay is not so much company performance as simply the size of the firm.
2. Big bonuses and performance-related pay are not technically necessary to elicit performance. There’s plenty of evidence that bonuses are sometimes ineffective at improving effort, sometimes actually counter-productive, and sometimes inferior to fines .
3. The claim that bosses must be paid a lot because their pay is set in a global market is silly. CEOs are paid more in the US than UK, and yet few Brits have become CEOs of US firms; one of the very few exceptions was Martin Sullivan who was CEO of, ahem, AIG. Holding down UK bosses’ pay is unlikely to lead to a mass emigration.
4. It’s not even clear that the average boss has much effect upon corporate performance. Take three facts:
- We know from football that changing coaches has no effect upon team performance. If bosses of organizations as small as 11 men can’t turn around performance, what hope do they have for larger organizations? As Warren Buffett said, when a boss with a good reputation takes over a business with a bad one, it is the business that keeps its reputation.
- Jonathan Haskel and colleagues have found that 80-90% of total factor productivity growth (pdf) comes from plants exiting and entering the industry, rather than from internal productivity growth. This suggests that bosses do less than widely thought to improve organizations’ efficiency.
- The death rate of companies is not only high, but statistically distributed (pdf) in a similar way to that of the extinction of species. This suggests that bosses can no more foresee (pdf) or prevent the demise of their firms than species can foresee or prevent their own extinction. Which suggests that bosses know less than we suppose.
source
1. A football team is nothing like a company. In fact there are very very few similarities. Oh and just one name- Alex Ferguson- are you saying Man U would have done just as well without him? They really wouldn't
2.Haskel and colleauges- so between 10-20% growth could be down to one man? the fact they can't accurately define this figure speaks volumes! A multi-regression analysis shouldn't be impossible in order to quantify this figure. Why didn't they do this?
3. What? death rate of companies is like species? the death rate of companies is highest in the very first 12m of creation. Are you saying species do the same thing?
London424 said:
The mention of changing coaches has no effect on a club's performance is quite laughable.
On the football tangent:http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_07_43...
Our first analysis suggests that the shock effect of a turnover has a positive impact on team performance. However, accepting the positive impact of dismissing a coach without controlling for regression to the mean might result in misleading interpretations of the data. We calculated the regression effect and compared these data with the original. The analysis reveals no evidence to attribute the performance recovery following a change of coach to his/her successor and rejects the hypothesis of the effectiveness of coach turnover. The data suggest no impact of coach turnover in the short term. The results give support to the concepts of the organizational learning theory. Supporting the assumption that teams need learning time to improve performance, we would expect that the turnover effect is negative or non-existent. A period of approximately one month might be too short for new coaches to reconstruct the team according to the way they want to play the game.
However if you have Steve Kean as your manager you are f
ked.I think that many of us, were we in the position to legally increase our pay by 41pc either by proposing it ourselves and getting it passed or whether it was offered to us would take it. So in modern parlance - "don't hate the player hate the game"
Oh and as a footnote the studies providing that football "soundbite" seemed to be saying that it has no statistically significant impact in the short term (I believe one study said 4 matches) or other specific circumstances. For the article to use it as a unilateral "fact" was a bit naughty IMO.
Oh and as a footnote the studies providing that football "soundbite" seemed to be saying that it has no statistically significant impact in the short term (I believe one study said 4 matches) or other specific circumstances. For the article to use it as a unilateral "fact" was a bit naughty IMO.
Fittster said:
On the football tangent:
http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_07_43...
Our first analysis suggests that the shock effect of a turnover has a positive impact on team performance. However, accepting the positive impact of dismissing a coach without controlling for regression to the mean might result in misleading interpretations of the data. We calculated the regression effect and compared these data with the original. The analysis reveals no evidence to attribute the performance recovery following a change of coach to his/her successor and rejects the hypothesis of the effectiveness of coach turnover. The data suggest no impact of coach turnover in the short term. The results give support to the concepts of the organizational learning theory. Supporting the assumption that teams need learning time to improve performance, we would expect that the turnover effect is negative or non-existent. A period of approximately one month might be too short for new coaches to reconstruct the team according to the way they want to play the game.
However if you have Steve Kean as your manager you are fked.
That whole papaer only covers teams who are turning over managers very quickly to get short term results. http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_07_43...
Our first analysis suggests that the shock effect of a turnover has a positive impact on team performance. However, accepting the positive impact of dismissing a coach without controlling for regression to the mean might result in misleading interpretations of the data. We calculated the regression effect and compared these data with the original. The analysis reveals no evidence to attribute the performance recovery following a change of coach to his/her successor and rejects the hypothesis of the effectiveness of coach turnover. The data suggest no impact of coach turnover in the short term. The results give support to the concepts of the organizational learning theory. Supporting the assumption that teams need learning time to improve performance, we would expect that the turnover effect is negative or non-existent. A period of approximately one month might be too short for new coaches to reconstruct the team according to the way they want to play the game.
However if you have Steve Kean as your manager you are f
ked.Not really relevant to the meiudm or long term performance of footie team.
PugwasHDJ80 said:
3. What? death rate of companies is like species? the death rate of companies is highest in the very first 12m of creation. Are you saying species do the same thing?
you need to click on the links in the source article. Death Rates: http://www.investorschronicle.co.uk/2011/09/15/com...
PugwasHDJ80 said:
That whole papaer only covers teams who are turning over managers very quickly to get short term results.
Not really relevant to the meiudm or long term performance of footie team.
In this paper sport data are used to study the effects of manager replacement on firm performance. Using match results of the major Italian soccer league (“Serie A”) we analyze the effects of coach (manager) changes in terms of team performance. From our preliminary estimates, including year and team fixed effects, it emerges that changing the coach produces a positive effect on a number of measures of team performance. However, this effect turns out to be statistically insignificant once we take into account the fact that the firing of a coach is not an exogenous event, but it is riggered by a “dip” in team performance. Using as an instrument for coach change the number of emaining matches in the season (which is a proxy for the residual length of the coach contract) Two-Stages Least Squares estimations do not show any significant effect of coach change on team performance.Not really relevant to the meiudm or long term performance of footie team.
http://mpra.ub.uni-muenchen.de/11030/
&
"This research examines the impact of manager turnover on firm performance using information from the Dutch soccer league in the period 1986-2004. The main advantage of using sports data is that both manager characteristics and decisions and firm outcomes are directly observable."
http://ideas.repec.org/p/cpb/discus/166.html
Don't think I'm going to get this back on topic.
I realise this is about private sector but, in my view, much more outrageous is senior public sector figures pay.
Our local authority CEO got a £17K payrise last year to a package worth £235K.
Contrast that with the authorities care workers having their weekend and night pay rates reduced to plain time, costing already low paid workers £3500/yr.
Even our local fire chief got a £10K pay rise. Fireman's pay has been frozen for 3 yrs.
So much for us all being in this together.
Our local authority CEO got a £17K payrise last year to a package worth £235K.
Contrast that with the authorities care workers having their weekend and night pay rates reduced to plain time, costing already low paid workers £3500/yr.
Even our local fire chief got a £10K pay rise. Fireman's pay has been frozen for 3 yrs.
So much for us all being in this together.
Fittster said:
PugwasHDJ80 said:
That whole papaer only covers teams who are turning over managers very quickly to get short term results.
Not really relevant to the meiudm or long term performance of footie team.
In this paper sport data are used to study the effects of manager replacement on firm performance. Using match results of the major Italian soccer league (“Serie A”) we analyze the effects of coach (manager) changes in terms of team performance. From our preliminary estimates, including year and team fixed effects, it emerges that changing the coach produces a positive effect on a number of measures of team performance. However, this effect turns out to be statistically insignificant once we take into account the fact that the firing of a coach is not an exogenous event, but it is riggered by a “dip” in team performance. Using as an instrument for coach change the number of emaining matches in the season (which is a proxy for the residual length of the coach contract) Two-Stages Least Squares estimations do not show any significant effect of coach change on team performance.Not really relevant to the meiudm or long term performance of footie team.
http://mpra.ub.uni-muenchen.de/11030/
&
"This research examines the impact of manager turnover on firm performance using information from the Dutch soccer league in the period 1986-2004. The main advantage of using sports data is that both manager characteristics and decisions and firm outcomes are directly observable."
http://ideas.repec.org/p/cpb/discus/166.html
Don't think I'm going to get this back on topic.
voyds9 said:
Does it not just spur you on.
I want to be an executive rather than a worker. So I get extra qualifications, work harder make suggestions, generally get noticed.
Seems a far better idea than being at the bottom of the pile and bleating on how well everyone else is doing.
You and your work ethic. Just who do you think you are!?I want to be an executive rather than a worker. So I get extra qualifications, work harder make suggestions, generally get noticed.
Seems a far better idea than being at the bottom of the pile and bleating on how well everyone else is doing.
For what it's worth, I agree. My parents did the same. My kids will do so too.
iphonedyou said:
voyds9 said:
Does it not just spur you on.
I want to be an executive rather than a worker. So I get extra qualifications, work harder make suggestions, generally get noticed.
Seems a far better idea than being at the bottom of the pile and bleating on how well everyone else is doing.
You and your work ethic. Just who do you think you are!?I want to be an executive rather than a worker. So I get extra qualifications, work harder make suggestions, generally get noticed.
Seems a far better idea than being at the bottom of the pile and bleating on how well everyone else is doing.
For what it's worth, I agree. My parents did the same. My kids will do so too.
Fittster said:
iphonedyou said:
voyds9 said:
Does it not just spur you on.
I want to be an executive rather than a worker. So I get extra qualifications, work harder make suggestions, generally get noticed.
Seems a far better idea than being at the bottom of the pile and bleating on how well everyone else is doing.
You and your work ethic. Just who do you think you are!?I want to be an executive rather than a worker. So I get extra qualifications, work harder make suggestions, generally get noticed.
Seems a far better idea than being at the bottom of the pile and bleating on how well everyone else is doing.
For what it's worth, I agree. My parents did the same. My kids will do so too.
There are numerous examples of FTSE 100 companies where Senior Management are filled with people who have come through the rank and file.
Fittster said:
The UK has the some of the worst social mobility in the world. You'll finish just where you started.
Oh no it doesn’t.Well, it depends very much on what scale you look at actually.
You might not be able to go from the son of a miner to become landed gentry, but it’s relatively easy for the miners son to end up being a white collar bank manager.
It’s very possible for the son of factory worker to become a company director earning 80k+ per year.
The UKs social scale is very broad and in general people might not be able to move far along it – but you don’t need to move far to have huge change in lifestyle.
The opportunities for personal advancement and self progression are huge, and there are almost no barriers.
Education is free to A-level standard, and open to all at degree standard (even if it does mean a loan)
It might be hard to jump from working class to middle class to upper class.
But you can certainly go from £15k per annum working class to £50k+ per annum working class without needing to have a rags-to-riches film made about your amazing success.
That sort of thing happens every day.
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