HR Indaba panellists reiterate the importance of exposure to the realities of South Africa

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To address pay gaps, executives need to be exposed to the problems of low-income earners.

Speaking at the HR Indaba on 18 October, Professor Jon Foster-Pedley, dean of Henley Business School, said the increased pay gaps in society were caused by the lack of transparency in companies about how much of a pay gap exists.

He added that Henley had initiated a process where the exco team and its professors were being exposed to the problems facing the socially disadvantaged in society to shape how they taught their lessons regarding the effects of pay gaps.

According to Jon, exposing exco teams to the conditions of low-earning employees creates empathy in leaders, who in turn make a change towards those affected.

Weighing in on Jon’s comments, Jack Frost CEO Paul Steenkamp said overpaying executives had negative implications for the economy because the gap continues to build inequality.

“What is evident is that companies keep looking for executives in the same pool and overpaying them, but at the same time not realising that they are building selfish individuals who have no interest in changing the social inequality,” he said.

Incentives

Paul mentioned that high incentives did not create positive change for executives because they did not need it.

“Giving increased incentives to already high earners does not have any meaning for them because they do not need it. HR managers need to develop their hiring strategy to hire leaders who understand the meaning of equality. Train staff from the lower levels up to become better leaders with empathy,” he said.

Jon added that although rewards were important, companies should invest long-term into their companies and address issues of inequality from the bottom. South Africa, which has the highest inequality in the world in pay gaps, has seen many employees complain about the unequal system.

Solutions needed

Julia Fourie, Sanlam’s head of rewards, said South Africa needs to create a design that works for the country’s specific needs. She added that an intentional design that affects the livelihood of employees – like rewards – would help balance the gap in-between low and high earners.

She mentioned that Sanlam has been supporting its employees with the recent inflation and petrol hikes that have recently hit the country.

Fourie added that during Covid-19, the company did not cut employee salaries, regardless of bonuses shrinking to fifty percent.

“Since Covid-19, Sanlam has recognised the need to assist employees through difficult times, we gave them a 13th cheque, when the country faced fuel hikes we partnered with fuel companies to give our employees fuel rewards,” she said.

Fourie noted that companies need to understand the impact of inflation on all their employees because it discriminated against most low-income earners.

Paul told delegates that South Africa’s large and growing wage gap had started to attract shareholders' interest who aimed on closing the gap.

During the covid-19 pandemic, many executives received bonuses amidst widespread job cuts across sectors impacted by the virus, which increased the pay gaps between employees and executives.

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