Canadian HR Reporter

CANADIAN HR REPORTER February 8, 2016 NEWS 9 Labour law research just got faster, easier and more comprehensive. LabourSource™ on WestlawNext® Canada combines the most robust collection of grievance arbitrations with court and board decisions, expert commentary, legislation and collective bargaining-related content – with Canada's most advanced search engine. A single search delivers the content you're looking for, whether it's case law, legislation, commentary, or legal memos. You can then filter your results to get exactly what you need. With LabourSource, you'll always be confident that your research is complete and that you haven't missed anything. Experience the benefits • Prepare winning grievance arbitrations and labour board applications • Successfully negotiate favourable collective agreements • Stay up to date on the latest labour-related decisions, industrial relations and economic news Legal content that is labour focused, not labour intensive Introducing LabourSource™ on WestlawNext® Canada See the LabourSource advantage View a demo at westlawnextcanada.com/laboursource 00224EP-A47770 Skyrocketing CEO pay can be demotivating to employees: Survey Large pay gap can lead to low morale, compromised employee commitment BY LIZ BERNIER EVER-INCREASING executive pay has seen its share of the spot- light in recent years, but new re- search suggests there can be con- sequences far below the C-suite. Six in 10 employees (59 per cent) are demotivated by high executive pay in their workplace, according to a survey by the U.K.- based Chartered Institute of Per- sonnel and Development (CIPD). And about 70 per cent feel chief executive pay is too high. "A high proportion thought it demotivated them, and they thought it was bad for the firm's reputation," said Charles Cotton, performance and rewards advisor at CIPD in London. CEOs in the U.K. earn an aver- age of 183 times as much as the average employee, up from 47 times as much in 1998, according to 2015 research from the High Pay Centre. "(We) found that the gap be- tween a typical employee and the CEO had grown over a number of years. And when we questioned a sample of employees about their views on executive remuneration, we found quite a few negative re- sponses," said Cotton. In 2015, the average CEO earned 204 times the median worker pay, according to a Glass- door survey of more than 400 companies from the S&P Index. "Workers differ in how much they are concerned with work- place inequality — some care a lot and some aren't affected at all. But among those workers who are most concerned about inequality, large gaps between CEO and worker pay clearly affect employee morale," said Andrew Chamberlain, chief economist at Glassdoor in San Francisco. Negative consequences Very high executive compensa- tion can directly impact employ- ees' attitudes and whether they are giving their best at work, said Cotton. "It kind of flags that a wide gap can be problematic unless there's some sort of rationale behind it," he said. "(And) there is a growing discrepancy now. If chief execu- tive pay and employee pay were going up at the same pace, there wouldn't necessarily be an issue. But it's not going up at the same pace." Negative feelings and impacts on morale can manifest in differ- ent ways, said Cotton. "Obviously, there can be nega- tive consequences for an organi- zation if employees feel that 'My contribution isn't going to be recognized as well as the chief ex- ecutive's and I'm not going to go above and beyond the call of duty or go the extra mile,'" he said. "Of course, as more and more employees take this approach, the organizational performance will start to suffer… and you can see that in employee turnover, em- ployee absenteeism, people not wanting to join certain organiza- tions because of the perception they get." It's less about what the actual CEO pay ratio is and more about the message it sends to employees, said Claudine Kapel, principal at Kapel and Associates in Toronto. "It's fueling concerns in the eyes of employees about pay fairness. So I don't think it's so much about the specific number itself — how many times the employee aver- age wage is the CEO making — but rather what it represents in the eyes of employees that can cause people to feel like they're being taken or disenfranchised," she said. "Part of this too is a function of timing. So many organizations have been seeing higher levels of profitability since the recession, along with higher levels of CEO pay. Salaries and wages of em- ployees in general have remained fairly stagnant, so they've been running at two or three per cent on average." OPTICS > pg. 12 Darryl White, CEO of BMO Capital Markets, in 2015. High CEO pay can impact employee motivation, according to a U.K. survey, and many employees feel their leaders are overpaid. Credit: Mark Blinch (Reuters)

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