I quite enjoyed the mini-furore over the sums paid to BBC “talent”. At the basest level, who among us can honestly say they don’t get a tingle of schadenfreude at the sight of well-known people squirming whilst having to justify what they earn? It wouldn’t be so funny if it was us, would it, but it’s not so that’s ok.
It raised some interesting issues. For those in the organisation, at least those deemed talent, it’s about gender (and possibly class and race) imbalance. For everyone else it’s the absolute pound values that catch the eye. Is Gary Lineker “worth” over £1.75m per year? Is he worth 11 Darcey Bussells? I have an Alex Jones (no, me neither) but I want a John Humphrys – can I swap with you? Apparently not, unless I throw in a Dannii Minogue to make up the difference.
The BBC has decided what each of these employees is worth. But what does “worth” mean? In the case of entertainers and performers, it’s an entirely subjective judgment in the public mind – I can’t stand him therefore he’s not worth that. In the view of the people at the BBC who make the offers, Chris Evans’ worth to the corporation is a more objective judgment of what value he will add to that organisation.
At least it should be – the BBC is in an odd position as it’s publicly funded by what is effectively a regressive tax, so I don’t entirely buy the “adding value” argument. The licence fee would still be payable, Chris Evans or no Chris Evans. There’s no doubting his talent and popularity, and I suspect that it’s more a case of “if we don’t get him someone else will”, and he has a good agent. For the really big stars, that is probably the reality – for the rest, I’m not so sure.
In normal businesses, like yours and mine, the aim should always be to link employee remuneration to worth, by which I mean the value that employee has added to the business. Before the next pay review, ask each employee to specify exactly what he or she has brought to the party in the past year. It may not be something measurable in monetary terms as that may be difficult for non-sales staff to achieve; rather it could be systems added, processes improved, happy customer comments received – anything that is positive, useful and congruent with what the business is trying to achieve.
If you’re feeling really brave, how about finessing it – ask employees to tell you what pay rise they want, as well as the justification. That’s a powerful way to get employees thinking about what they do, how it affects the business and how they can do it better. A dose of hard commercial reality always helps. I once got “I’m worth £X more because I’ve moved further away and it costs me more in petrol to get here”. Mmm.
Get it right, and your employees should be comfortable in explaining why they get paid what they get paid without resorting to spurious arguments citing non-existent markets. Don’t get me started on CEO pay…..
Chris Martin is a chartered accountant and business advisor and has been helping franchisees create and grow wonderful businesses for over 20 years. He is a published author and has written extensively on franchisee tax issues. He passionately believes that whilst franchising is a deservedly successful business format, franchisees are often let down by their franchisors’ failure to offer support and guidance regarding the financial side of running the business. This leaves franchisees frustrated, overwhelmed and unable to grow their businesses to the extent they should. Chris has developed simple systems, support and guidance to ensure franchisees create businesses that provide them and their families the lives they so richly deserve.