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An HR expert has called for companies to consider a John Lewis-style share ownership structure where all workers get a share in profits.
Simon Richardson, Senior Lecturer in Human Resource Management at Westminster Business School, says government plans for compulsory pay ratio publication and workers are not enough and that profits should be distributed more widely across organisations.
He stated: “Maybe it’s time for companies to take a leaf out of the John Lewis success story to spread such phenomenal wealth opportunities round so every employee can see the fruit of their labours. After all, surely the success of FTSE 100 companies is as much due to the employees as much as the top executives.
“Proposals that publicly listed companies in the UK will have to publish their pay disparity between the employer and workers due to come into force in June this year will not be enough to significantly address the issue. Perhaps the New Year resolution of HR departments should be to identify additional ways to close this gap, such as wider share ownership. Why not even make the annual performance management review include merit payments based partially on shares? This way, employees might be incentivised all year in the expectation that they might receive a visit from Santa next Christmas.”
The call comes after the High Pay Centre and the Chartered Institute for Personnel Development published its ‘Fat Cat Thursday’ research.
‘Fat Cat Thursday’ is the day in 2018 on which the typical FTSE 100 chief executive has already earned the same as the average wage for a whole year.
Analysis by the High Pay Centre and CIPD finds that, while average pay for a FTSE 100 CEO has fallen, the ratio of CEO pay to the average full-time worker wage remains high, at 120:1.
The TUC says that this is still far too large a gap, and more action is needed reduce it. General Secretary Frances O’Grady said: “Worker are suffering the longest pay squeeze since Napoleonic times. But fat cat bosses are still getting salaries that look like telephone numbers. The government needs a plan to make the economy fair again.
“Workers should be given seats on pay committees to bring some common sense and fairness to boardroom pay. And the minimum wage should be put up to £10 an hour as quickly as possible.”