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No more Upstairs Downstairs?

Well not literally, but it provides a useful metaphor.  The TV programme Upstairs Downstairs portrays life in the 1930’s and the separate lives of those who served and those who were served.  These same divisions may seem like something committed to history and TV dramas; but the furore about the gap between CEO remuneration and that of their employees, the political debate about taxing the rich or taxing the poor and the widening gap between rich and poor suggests that the division between those ‘Upstairs’ and those ‘Downstairs’ is alive and well.

When I started my first corporate job the offices were arranged as the proverbial ivory tower.  The CEOs office and senior leadership team were at the top of the building, then the next level of management and all the way down to the basement where the new starts (muggins included) worked in the dimly lit basement.  Then of course their were the parking spaces, the further down the food chain you were the further you walked to the office; and most amusing was the seating in the canteen and even the food that was served being determined by your pay grade.  No quite food glorious food from the movie Oliver Twist but the food served to the CEO was definitely a finer cut.

The days of the walnut panelled office may have been replaced with open plan office but the separation between employers and employees is being felt in organisations across the UK.

The problem with remuneration is that it isn’t about how much someone gets paid, but whether they perceive whether what they are being paid is fair pay for the work they have done.  Hertzberg identified pay as a demotivating factor.  The problem with the perceived over payment at the top of the ladder, and the increasing pressure on family budgets caused by the economic circumstances, austerity measures and rising prices; is that employees feel they are being treated unfairly.

To know that those at the top of the organisation have seen pay rises of around 49% in the last twelve months when the average employee has had their pay frozen or below inflationary pay rises whilst the work environment has become more difficult and pressurised.  A breeding ground for demotivation and disengagement among employees.  This in turn will have an impact on organisation performance, which will impact profitability.

If organisations are going to grow their way out of the economic downturn, they need to ensure that their employees are behind them; and to do that they need to be behind their employees.  It may be tempting to cut costs and hold wages, but if that is happening, then the senior leadership teams must demonstrate that they are ‘in it together’ with the employees.  Increasing perks, and remuneration packages at the top whilst being meagre at the bottom is not only morally questionable but bad for business.  One person at the top of the organisation can do nothing without the employees working for them.

Doing the right thing by your employees at this time, is doing the right thing by the organisation and will result to improved organisational performance.