Did you read about the battle that the CIPD Chief Executive became embroiled in with regard to her annual bonus this year? She found herself under considerable pressure, from both the media and the general public, to give it back. This reaction stemmed from a perception that it would be distasteful for a personnel expert to accept a large bonus in these economic times – despite hitting the goals and targets placed on her by the CIPD and, ultimately, its members.
As practitioners in the world of HR and Personnel, CIPD members understand and expect world class leadership from world class leaders – and it would be fair to say that their CEO is just that. However, to attract and retain this level of talent organisations like the CIPD have to pay market rates in terms of salaries and then set challenging goals to justify these levels of pay. World class leaders are not the norm, they don’t generally come fully formed and you can’t just churn them out of business schools: this level of experience is hard won over many years in different roles and across a range of difficult challenges.
The responsibility for setting salary levels, targets and associated bonus sits with the employer and is almost always initially negotiated at the time of employment. An agreement regarding bonus payments will certainly have been set out in her contract by the CIPD. Then, as an employee, she committed to these targets (and all the hard work it would take to achieve them) and understood that if they were not achieved no bonuses would be paid. However, a key motivational driver was that if the targets were hit then a bonus would be paid!!! I’m sure we would all feel pretty annoyed and disappointed if we were asked to give back a bonus we had agreed with our employer and worked hard for – even if the economic climate had changed since we signed the contract!
Of course, this CEO is free to choose whether or not to pay back any of her bonus. However, if the media, CIPD or its members are not happy with the outcome they should perhaps focus on the organisation’s talent management strategy, including the size of bonuses being written into contracts at the time of employment. Of course, the CIPD are not alone in needing to pay attention to this issue – hopefully many organisations will have learnt a valuable lesson of late and will start to agree reasonable bonuses that won’t break the bank!
Have you had similar experiences relating to bonuses in your organisation? I’d love to hear what you think.
