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Posted over 3 years ago by Richard Haaker


With executive pay ratio regulations coming in next year, we’ve been looking at how businesses can benefit from a culture of transparency. 


Many business leaders, are confident their pay packet is an accurate reflection of their responsibilities as well as the role in the company’s success.  For many employees – the incoming pay regulations will only confirm what they know – that their boss earns more than they do…


But we’ve been wondering whether these regulations will force pay differences to stand up to scrutiny and what impact this could have on company morale. 


When the regulations come into place, it will be mandatory for large firms (with more than 250 employees) to publish details of top-level pay. We don’t think that means everyone should start worrying – quite the contrary, we believe this legislation paves the way for honest, business-wide conversation about the value each individual brings to a business. 



In the last few year’s we’ve already seen the stigma around ‘The salary conversation’ start to lift. Many are prepared to discuss their salary, and it’s often easy to work out exactly what you could be earning through sources like Companies House, salary calculators, historic job ads and gender pay gap reports. 


Problems arise when skills are in short supply, in a specialist role – the candidates have power to write their own pay cheque, especially if the board believes they will deliver the results needed to gain a competitive advantage. 


What matters to employees is exactly how a business communicates it’s decisions to the wider team. Have you engaged with employees on the reasons why? Do they understand the rationale behind the company strategy, what the targets are and, crucially, how their role delivers genuine value to the company?

We suggest that rather than being restricted to the boardroom, if appropriate, these conversations could be opened up during office-wide annual or quarterly meetings.



The above is part of an employee value proposition (EVP), which details about the company and its values. An effective EVP continually evolves, in line with the expectations of each generation entering the workforce. Find out more about the value of developing you EVP and Employer Brand here.


At Macildowie we talk about the psychological contract – an unwritten code of conduct that sets out what is expected of an employee. We believe this plays a key role in getting members of the team onboard. Within our business we encourage people to become CEO of their own desk – each member of the team is accountable for their own work and development. It is a way of inspiring them to take charge of their career, no matter what their rank in the company. 


It is worth noting that commercial performance could suffer if pay discrepancies mean you fail to attract and retain staff, and morale (and therefore productivity) is poor. Just a handful of disgruntled employees, posting negative reviews on Glassdoor (part of a companies' online Employer Brand), is sometimes enough to put people off making an application. 


The question remains, on what grounds can ELT members command a high salary, without people feeling it is unjustified? In my view, it comes down to the quality of their leadership and if they possess three key attributes:

  • Curiosity, 
  • an ability to communicate,
  • Coaching skills


Beginning with curiosity, strong leaders are continually strive for ways to build relationships and gain employees’ trust across the ranks with an ‘open-door’ policy. Curiosity enables empathy, which in turn helps create trust, and trust is vital for effective leadership. If a leader is effective, then employees are more likely to be open to a pay gap.


Linked to this, it is important to foster 360-degree communication between every team member. As well as finding out what motivates people, you also get an honest opinion on what is working well and what is going wrong. 


Finally, and perhaps most importantly, good leaders are also coaches, who invest in their team. This is not necessarily monetary rewards but could be time spent on mentoring and training schemes that enable people to be the best versions of themselves. When ELT members share their expertise, working with juniors to untap their potential and demonstrating a path to the top, it breeds positivity and leaves little room for resentment. 


If you'd like to further explore our Executive Search offering take a look here or get in touch with Richard Haaker below.