UK CEO needs to work until 1pm on January 4th, 2019 to earn as much as what average employee earns in the entire year

Friday 4 January 2019 is “Fat Cat” Friday. In just three working days, the UK’s top bosses make more than a typical full-time worker will earn in the entire year, according to calculations from independent think tank the High Pay Centre and the CIPD, the professional body for HR and people development.

The average (median) full-time worker in the UK earns a gross annual salary of £29,574. “Fat Cat” Friday recognises that in 2019 the average FTSE 100 CEO, on an average (median) pay packet of £3.9 million, only needs to work until 1pm on Friday 4 January 2019 to earn the same amount. The £3.9 million figure was calculated by the CIPD and the High Pay Centre in their 2018 analysis of top pay and it marks an 11% increase on the £3.5 million figure reported in their 2017 analysis. The pay increase means that FTSE 100 CEOs, working an average 12-hour day, will only need to work for 29 hours in 2019 to earn the average worker’s annual salary, two hours fewer than in 2018.

The CIPD and High Pay Centre are highlighting the problem of rising executive pay in a new report launched today. The report, RemCo reform: Governing successful organisations that benefit everyone, identifies the shortcomings of the remuneration committees (RemCos) charged with setting executive pay and calls for them to be significantly reformed. In particular, it highlights:

  • the myth of ‘super talent’ as a factor that continues to drive excessive pay with one remuneration committee chair commenting: “It’s nuts… and nuts has become the benchmark”.
  • how there needs to be much greater diversity among those responsible for setting CEO pay, both in terms of their ethnicity and gender, for example, but also their professional backgrounds and expertise in order to combat ‘group think’.
  • how current pay mechanisms contribute to the problem of high pay. In response, the CIPD and High Pay Centre recommend replacing long-term incentive plans (LTIP’s) as the default model for executive remuneration with a less complex system based on a basic salary and a much smaller restricted share award. This would simplify the process of setting executive pay and ensure that pay is more closely aligned to executive performance.

The CIPD and High Pay Centre are calling for RemCos to ensure that CEO pay is aligned more appropriately to rewards across the wider workforce and that their contribution is measured on both financial and non-financial measures of performance.

Whole story here.

The eight archetypes of leadership

Manfred Kets de Vries in HBR:

  1. The strategist: leadership as a game of chess. These people are good at dealing with developments in the organization’s environment. They provide vision, strategic direction and outside-the-box thinking to create new organizational forms and generate future growth.
  2. The change-catalyst: leadership as a turnaround activity. These executives love messy situations. They are masters at re-engineering and creating new organizational ”blueprints.”
  3. The transactor: leadership as deal making. These executives are great dealmakers. Skilled at identifying and tackling new opportunities, they thrive on negotiations.
  4. The builder: leadership as an entrepreneurial activity. These executives dream of creating something and have the talent and determination to make their dream come true.
  5. The innovator: leadership as creative idea generation. These people are focused on the new. They possess a great capacity to solve extremely difficult problems.
  6. The processor: leadership as an exercise in efficiency. These executives like organizations to be smoothly running, well-oiled machines. They are very effective at setting up the structures and systems needed to support an organization’s objectives.
  7. The coach: leadership as a form of people development. These executives know how to get the best out of people, thus creating high performance cultures.
  8. The communicator: leadership as stage management. These executives are great influencers, and have a considerable impact on their surroundings.

More here

A modest proposal: eliminate email

The concept is simple. Employees no longer have personalized email addresses. Instead, each individual posts a schedule of two or three stretches of time during the day when he or she will be available for communication. During these office hours, the individual guarantees to be reachable in person, by phone, and by instant messenger technologies like Slack. Outside of someone’s stated office hours, however, you cannot command their attention. If you need them, you have to keep track of what you need until they’re next available.

On the flipside, when you’re between your own scheduled office hours, you have no inboxes to check or messages demanding response. You’re left, in other words, to simply work. And of course, when you’re home in the evening or on vacation, the fact that there’s no inbox slowly filling up with urgent obligations allows a degree of rest and recharge that’s all but lost from the lives of most knowledge workers today.

This is from an HBR article by Cal Newport. You can and should follow his blog.

I want to hear what you think… particularly the ways in which you can make this (or some version of it) work. Drop me a note using the “Contact me” button on the ruler.

Because you don’t hire half a person

“That one can hire only a whole man [or woman] rather than any part thereof explains why the improvement of human effectiveness in work is the greatest opportunity for the improvement of performance and results”.

– Peter Drucker

We’re all rational decision makers? Think again.

We say we make decisions based on an assumption of a rationality that maximizes. In reality, we are imperfectly rational creatures who make sub-optimal decisions. Time to re-visit our assumptions.

The model of rational choice makes several assumptions. It assumes that our goal is to maximize self interest. It assumes that different dimensions of our decisions are “commensurable” (that is, comparable on a common scale—say a “utility” scale). And it assumes that we act with complete information and can meaningfully assign probabilities to every outcome. (…)

What modern research tells us is that we are imperfectly rational in two different respects.

  • One is that we do the “math” wrong; we are bad at thinking about uncertainty and at creating relevant and accurate spreadsheets in our heads.
  • The second is more important: we often want the wrong things.

We mispredict how much satisfaction, or utility, a given outcome will give us. We discount future consequences of decisions too steeply (and thus eat and spend too much, and exercise and save too little). And we mispredict how long a given decision will satisfy us. That is, we tend to ignore the fact that we get used to good things so that they provide us with satisfaction for a much shorter time than we imagine.

The model [of rational choice] is not fine. Virtually all of the assumptions built into it about human beings and the world are false:

It assumes that people are self-interested. Well, yes and no. Self-interest is certainly part of what moves us, but we are also interested in the welfare of others (…), and even the world. And we are also interested in doing what’s right (…).

It assumes that there is a common scale of value on which everything can be compared. There isn’t. Sure, we can assign value numbers to things like salary, colleagues, being close to our families, and the like, but in doing so, we are only kidding ourselves that these numbers actually represent a common underlying metric. Tradeoffs are hard to make, and often can’t be made formulaically. (…).

It assumes that we can attach meaningful probabilities to outcomes. Sometimes we can, but life is not a roulette wheel or a series of coin flips, in which probabilities are well defined. The world is a radically uncertain place, and we deceive ourselves if we think we can always attach numbers to our uncertainty.

via Barry Schwartz.

Want to Be a Leader? Keep a Journal.

 

Research has documented that outstanding leaders take time to reflect. Their success depends on the ability to access their unique perspective and bring it to their decisions and sense-making every day.

Extraordinary leadership is rooted in several capabilities: seeing before others see, understanding before others understand, and acting before others act. A leader’s unique perspective is an important source of creativity and competitive advantage. But the reality is that most of us live such fast-paced, frenzied lives that we fail to leave time to actually listen to ourselves.

Gaining access to your own insight isn’t difficult; you simply need to commit to reflecting on a daily basis. Based on research (my own and others’) and many years of work with global business leaders as a consultant and international management professor, I recommend the simple act of regularly writing in a journal.

 

 

Holding a meeting of people from different cultures

In one of the People and Business Management workshops that I facilitate we ask participants to outline how they would approach their first meeting as the manager of a multicultural team. I’m always pleasantly surprised by the imagination and inclusiveness of the responses.

This article in the Harvard Business Review provides useful guidance. Here’s an excerpt:

Do

  • Study up on the variations that exist among cultures and how those differences play out in the workplace
  • Create protocols and establish norms so that your colleagues understand how meetings will run
  • Incentivize colleagues to step outside their cultural comfort zones by institutionalizing rewards around what you’re trying to motivate people to do

Don’t

  • Be hung up on how people from certain cultures are supposed to act—remember, people are capable of adapting and adjusting their cultural default
  • Force a perfect dynamic in meetings—solicit colleagues’ opinions in other venues and encourage people to provide feedback in different ways
  • Overlook the importance of team bonding—encourage colleagues to get to know each other outside of meetings so that cultural differences won’t seem as glaring