David Bolchover’s new book Pay Check examines the justification for the increasing pay divide between senior managers and staff. He tells workingmums.co.uk that the idea that senior managers are exceptionally talented does not bear scrutiny. In fact, many employees are talented, but are just not helped up the career ladder, he says.
A ‘myth’ that those at the top echelons of large corporate companies possess rare talents is stopping women and others from rising up the ladder and leading to unjustifiable inequalities in pay, according to a new book.
Journalist David Bolchover is author of Pay check: are top earners really worth it? He argues that performance and personal impact in large companies is very difficult to measure because of the number of people involved in teams. That makes it difficult to differentiate between individuals. “When it comes to promotion these companies are faced by what seems like large numbers of equally able people,” he says.
“So what makes the difference? Corporate politics, self promotion, telling everyone how good you are and forming alliances with people above you in the hierarchy. If you look at the stories of most senior managers they often talk about how they found patrons. Naturally it is easier to make relationships with people who are more like you or remind you of you 20 or 30 years ago so men gravitate towards men.”
He says the lack of women in the boardroom – or ethnic minorities or indeed anyone who doesn’t fit the traditional mould – is because they “do not look like what talented executives look like”. He adds that the number of tall men who are CEOs in the US [one in three are six foot two or more] is substantially higher than average [one in 30]. “They are reproducing what was there before,” he says. “The argument about the glass ceiling is a bit of an excuse, just like the idea that women lack the drive and commitment. The rise of female entrepreneurs gives the lie to that.”
He cites research showing female entrepreneurship has risen by around 15% in the UK in the last 10 years. “Saying women do not have the drive in business because they are distracted does not hold water. They are making a choice to give up a relatively cushy life in a company where they get a good salary every month to run their own business, to think up a good business idea, try to raise the capital to run that business and to deal with the stress of earning money and the knowledge that statistically most business start-ups fail.”
And they’re not mainly setting up businesses to get more work life balance, though this is a factor. Bolchover says research in the US – where the number of female entrepreneurs is much higher than in the UK – shows personal or family reasons are not the main reason for women setting up their own businesses. A study by Korn/Ferry and Columbia Business School, entitled Why Women Executives Leave Corporate America for Entrepreneurial Ventures, shows only 41 per cent of those who had set up their own business mentioned did so for family or personal reasons compared to 78 per cent who said they wanted to take risks and challenge themselves and 65 per cent who wanted to have an impact on company strategy.
That suggests that many of these women are frustrated, says Bolchover. “They may have gone back to work part time after having children and not be in a senior job. They may question if it is worth their while if they are paying a lot in childcare. If they can operate a business and earn a good income and it is more flexible why not do it?”
Bolchover is dubious about many of the diversity schemes run by the large corporates and feels most are just paying lip service to the idea. “These initiatives have been running for 10 to 15 years and there has not been any major shift at the top of companies,” he says. “In some industries there are more women at the top because there are more at the bottom, but there has been a snail-like increase at the top of most companies. It’s not in the interests of those at the top.”
He is similarly skeptical about companies’ commitment to employee engagement. “If you ask a senior executive if they see employee engagement as key to their company’s success they will say yes. If you then ask them how often the motivation of employees is discussed at board level most say never. The lack of diversity is so deep-seated that it is not going to be solved by a few initiatives,” he says.
Although new companies are springing up and are less hierarchical, he thinks this will not have a big impact because as they grow they will have to adopt policies and processes which make them more rigid and more top down. “It’s the nature of capitalism that newer, more flexible companies come up and that some grow into big corporates and it’s a good thing,” he says. “My issue is with the people at the top of these big companies who have captured the fruits of the system for themselves and have used the talent ideology to make people feel that they deserve the huge salaries and benefits they receive.”
Bolchover says the arguments against the growing pay gap between top executives and other employees tend to get confused. He says the left, for instance, treats it as a moral issue and rails against inequality. “But the problem is not inequality,” he says, adding that entrepreneurs who have come up with their business idea and taken risks to make their money deserve to reap the rewards. “The issue is that the market is not working efficiently and needs to be corrected. The top executives have captured the wealth and taken it from us,” he says.
He is optimistic that the system will be corrected, though, because he says the media have begun to argue against the pay gap from the right, rational basis, rather than just attacking greedy executives. Research also shows that the executives themselves are changing in the ways they rationalise their pay. Whereas before they might justify it on the basis that they deserved high salaries because of their ‘talent’ and irreplacability, a recent Ipsos Mori poll shows they are now tending to say that just take the money because they are offered it.
“They are losing confidence in their own justification,” says Bolchover. “Before they would say they were so talented and worked so hard. Now they say it is just that they are being opportunistic because that’s the way the system works. All systems require some form of justification to sustain them. Once the top people cease to believe in the system deep down it is the beginning of the end.”
*Pay Check by David Bolchover is published by Optic, price 6.99 pounds.