Bankers’ bonuses and executive pay topped the agenda at the recent G20 meeting of finance ministers in London, potentially challenging many HR and remuneration departments globally to devise new bonus schemes.
While the issue of capping bonuses divided governments, there was agreement on the need to rein in bonuses, tying compensation more closely with long-term performance and greater transparency of executive pay packets in order to discourage short-term and irresponsible risk-taking.
Although there were calls for similar pay rules to be enacted by all leading economies, it may be largely down to individual countries and companies to devise bonus schemes that adhere to a code of conduct.
Speaking to HR Leader, David Smith, CEO of HBOS Australia, said that HR will be critical in leading business through the aftermath of the GFC.
“If one accepts the theory that the world has changed on the back of the GFC – that the way we design our compensation schemes, our incentive schemes and the way we motivate and lead people will be different - I think that thought leadership in part should be led by our HR colleagues,” said Smith.
The UKs CIPD has also issued guidelines for HR professionals to ensure executive pay packages do not lead to inappropriate risk-taking and that they reflect an organisation’s long-term performance.