http://www.bankofengland.co.uk/publications/Documents/agentssummary/agsum13mar.pdf

With the focus on the pay of certain CEOs, executive remuneration received an uncomfortable level of media and political interest.

Shortly afterwards the Government published its proposals for enhanced shareholder powers. These include a binding vote on executive remuneration policy at least every three years and an annual advisory vote on its implementation.

The ‘problem’ of executive reward has several dimensions and these have emerged as a result of changes that have taken place over the last twenty years or so.

Three key aspects are:

Quantum: over time executive pay has increased by multiples of the rate of growth experienced by other employees. It has also increased at a rate perceived as inconsistent with returns to shareholders.

Performance: pay needs to be linked to performance but, for various reasons, many consider that current linkages are inadequate. An important related issue is what constitutes ‘good’ performance, particularly in periods of weak economic growth. Additionally, have constant demands for significant and relentless growth led to the performance and ethical breakdowns that have occurred in some companies? Perhaps steady, sustainable performance should be reconsidered as a worthwhile goal?

Governance: following the various changes of the last two decades, two effects seem prominent: greater disclosure often leads to a levelling-up of pay, and being in the public eye can result in remuneration committees favouring a standardised approach rather than one better aligned to the company’s strategy and business.

This year’s Remuneration Reports and AGMs are only a few weeks away. While the new shareholder voting provisions do not come into effect until later, will changes to executive pay emerge this spring? And if so, what direction might they take?

The key players in shaping the immediate response to the last year’s events and the new regulations remain the non-executive directors who sit on each company’s remuneration committee and the institutional investors which have major holdings in the particular firm. Based on contributions to PARC’s programme last year, it seems as though some consensus may be emerging between these two parties. It appears there may be increasing agreement on the following points:

Simplicity: there is a need to simplify incentive arrangements.

Tailoring: plans are more effective when they reflect the strategies and goals of the particular company rather than following a standardised approach.

Shareholdings: many shareholding requirements need to be larger, and share-based rewards should be held for longer, enabling pay to align more strongly with long-term company performance.

Trust: there needs to be greater trust between institutional investors and remuneration committees. This depends on more open and transparent communication of reward plan design, how it is meant to link to performance, and – after the event – what that performance has been and how it has flowed through to reward payments. Currently, such reporting clarity is rare. Remuneration Committees will need to show their robustness in evaluating performance. Rebuilding this trust may reduce the requirement for multiple consultations and enable non-executive directors to exercise greater judgement in reward decisions.

Recently a new set of ‘Remuneration principles for building and reinforcing long-term business success‘ were jointly issued by Hermes Equity Ownership Services, the National Association of Pension Funds, the BT Pension Scheme, Railpen Investments and USS Investment Management. Perhaps unsurprisingly given that the NAPF was a major contributor to PARC’s autumn programme, these principles cover the four points above but place them in the broader context of encouraging long-term rather than short or medium-term business success.

Over recent years many companies have made progress in communicating their remuneration policies. Further changes will be needed in preparation for the new voting requirements and to comply with new disclosure regulations. We may see some companies anticipating these in this spring’s remuneration reports.

A possibly more interesting aspect will be whether we start to see substantial changes in remuneration practices, including how performance is linked to reward and how this is explained. Our meetings indicated that the time seems increasingly right for companies to consider change. Yet some may be reluctant to be first movers and may need to overcome the perceived barriers and risks. However, perhaps this has been facilitated by a significant group of investors signalling the directions that they now favour.

Mairi Bannon, director, Performance and Reward Centre (PARC) and co-founder, Corporate Research Forum

Office ‘banter’ can just be friendly chat, but from time to time it can become a form of bullying and you may not even realise it.

HR expert, Richard Harrison looks at what is considered discrimination and how it can often be disguised within the office. Those who are being bullied may not speak up about the issue in the early stages, and this is when you need to be aware of your duties and the benefit of addressing such issues.

The free webinar will provide you with guidance on how to prevent office banter from turning into a litigation case.

Date: Thursday 21st March, 2013 at 10:30 AM

Place: Your desk

Duration: Approximately 45 minutes

Cost: FREE

Upon registration please use the ‘comments and questions’ field to ask questions about any issues relating to the webinar, which will be answered at the end.

Click here to register for the webinar.

Why is tax compliance such a hot topic currently?

The recession and resulting austerity measures have created enormous pressure on the government to raise revenue – and a feeling that everyone should pay their fair share. In addition, the questions of morality and legality are being discussed in connection with the level of tax individuals should pay.

In fact, tax avoidance schemes and general tax compliance are now more prolific in the media spotlight than at any time during my 30+ year career as a Chartered Accountant.

Are recruitment agencies recommending non-compliant tax solutions?

Yes, unfortunately this occurs regularly, although often unknowingly. Recruitment agencies aren’t tax specialists so it’s difficult for them to know whether the solution being offered to them or their contractors is truly compliant. In addition, commercial pressures are pushing them towards solutions that have financial incentives attached – and they are sometimes turning a blind eye to the potential implications.

Are there consequences for recruitment firms recommending non-compliant schemes?

Yes. The 2007 Managed Service Company (MSC) legislation introduced the concept of debt transfer, whereby contractors’ unpaid tax liabilities can, in certain circumstances, be transferred to ‘associated’ parties – including recruitment agencies. Also, where contractors are paid (directly or indirectly) via offshore arrangements, liability can be transferred to the recruitment agency.

If a contractor is deemed to be caught by MSC rules and to have underpaid tax by £5,000 and an agency has 500 contractors under such a scheme , with penalties and interest, an HMRC claim in excess of £500,000 could arise – possibly bankrupting an agency and its directors. There are a number of such claims currently being processed through the courts.

What are the warning signs to look out for in a company offering umbrella / limited company services?

Unfortunately anyone can use the term ‘accountant’ and many providers aren’t formally qualified. Accounting and tax services for contractors is a specialised area encompassing complex and rapidly changing areas of tax and employment law that are often interrelated. Many providers simply don’t know what they are.

You should always be wary of:• Providers with no formal qualifications or recognised industry accreditations (FCSA etc.)• One size fits all solutions• Solutions that seem too good to be true – they generally are• Any solution involving an offshore component or an offshore provider• Pushy salespeople offering incentives to recruitment consultants.

What are the advantages to a recruitment agency of recommending or working with one accountant to provide this service?

Working with a range of providers is administratively cumbersome and increases the burden of monitoring their activities and compliance. Furthermore, in view of the points above, it is vital that agencies have a close working relationship with a specialist firm of accountants who they can call upon for advice as legislation and working practices change. Selecting one trusted provider after a process of due diligence makes the most sense all round.

http://www.bankofengland.co.uk/publications/Documents/agentssummary/agsum13feb.pdf

The Gambia has shortened the work week, making Friday a day of rest. Is this the perfect pattern for a working week?

In the tiny African nation of The Gambia, public sector workers will now clock in at 8am and clock out at 6pm, Monday to Thursday. They’ll still do a 40-hour week but have the luxury of Friday off.

President Jammeh wants the extra rest day to “allow Gambians to devote more time to prayers, social activities and agriculture”.

In the dark days of the 19th Century, many workers in industrialised nations considered themselves lucky if they got Sunday off. The achievement of a 40-hour week with Saturday and Sunday off for many was a major landmark for the labour movement.

But some have tried to go further.

In 2008, about 17,000 government officials in the US state of Utah started working four 10-hour days in a bid to cut costs. The experiment didn’t last: the five-day week was reinstated in 2011.

Other US states have also toyed with the idea. Oregon and Texas legislators considered – but did not pass – four-day work week bills, while Georgia and Virginia have trialled it at a handful of agencies.

The four-day week is also popular in the Netherlands, where one in three men either works part-time or 40 hours in four days. In the UK, certain professions – journalists among them – have often worked a four-day week of longer shifts.

But despite the companies that offer compressed hours, flexible working arrangements or shift work, the nine-to-five, five-day week is still seen as the typical way to earn a living in much of the West.

But what is the ideal working week, and could the four-day week become more widespread?

Steven Shattuck, 28, is a community manager at Slingshot, a search engine optimisation consultancy in Indianapolis, in the US, where everyone works 8am-6pm, Monday to Thursday. He thinks the four-day week is the way forward.

“Everything happens so fast in our industry, we think it’s important to have Fridays to recharge. We call them research days. They give people a chance to stay up on things, maybe do some independent research or spend time with their families,” he says.

As a result, Shattuck believes time in the office is more productive.

“On Monday mornings people aren’t so groggy – they hit the ground running. We have really tight deadlines, it’s very collaborative, we try to squeeze as much into our days as possible,” he says.

Clients don’t see it as a problem, so long as the company – which has 85 employees – delivers, and people are prepared to work in emergencies.

“The four-day week is a real selling point when it comes to recruitment. But we’re a young company, the median age is 27 or 28, so I guess it would depend on the company culture,” he adds.

There wasn’t such a collective approval in Utah, says Winston Inoway, public information officer at the state’s Department of Human Resource Management.

“Many employees loved it, but others had issues with childcare, and citizens raised questions over the availability of services on Friday. The projected savings were also higher than the actual savings,” he says.

Heating and electrical savings in year one, for example, were projected to be $3m (£1.8m), but the actual saving was $502,000 (£318,669).

An audit also found it hard to find any evidence of increased productivity.

However, proponents of the shorter week cite the three-day week during the recession in 1974, saying production fell by much less than expected. And they say the benefits are not just down to economics.

There are also environmental and social reasons why work hours should not only be compressed, but substantially reduced, says Anna Coote, head of social policy at the New Economics Foundation.

“If we worked less, there would be more jobs, and that would get people off benefits and reduce unemployment. It would also help people slow down – we are under pressure to live life at such a fast pace.

“We need to live more sustainably, stop buying ready meals because we haven’t got time to cook, reduce the carbon footprint by commuting less, and value unpaid things – like being active citizens, caring for people, being better parents,” she says.

Coote advocates a 21- to 30-hour working week, which she says would also involve reassessing the minimum wage.

Michael Honey is director of Icelab, an interactive design studio in Canberra, Australia. Office hours are Monday-Thursday 8am-6pm

“The pros are gaining 50% more weekend, four days’ commuting – which is good for the environment, mental and physical – and free time during working hours which is great for errands.

“I’m sure we could be marginally more productive per week if we worked five days – but is it worth it? Do we really need the extra money, when it comes at the cost of time, the only thing no-one can have more of?

“The other cons are paying seven days’ rent on office premises for four days’ use and client meeting or phone calls on Fridays that we just can’t reschedule.

“We did it for selfish reasons – we wanted to have more space in our lives to do the things we enjoy outside work. Cycling, hiking, trips to the mountains or the coast – or just going to the movies, getting a haircut, running errands.

“I unreservedly recommend it. People need more time to think, to play, to reflect, to be human.”

The idea might seem radical, but in 1930, economist John Maynard Keynes envisaged we’d be working a 15-hour week by the beginning of the 21st Century, believing that would be enough to suit our material needs.

Instead, “we still have a factory-based model and mindset for the way we work – the more hours we put in the better, which creates a hamster wheel frenzy,” says Ian Price, author of Activity Illusion.

“Add technology, and the way it has revolutionised the scale at which we communicate, and there can be a 24/7 working culture.”

It is a sentiment shared by Prof Cary Cooper, an expert in organisational psychology and health at Lancaster University Management School.

“It’s crazy old-fashioned that people come in at 8am and leave at 7pm on busy commutes, given new technology means they can work from home. Going into the office seems to be part of our DNA, but longer hours are bad for health, and can cause stress,” he says.

However, Cooper doesn’t think compressed or shortened hours is the answer.

“It’s about flexibility – flexible time, flexible place. People want it to happen, it’s just a case of convincing managers it’s good for them.”

The CBI agrees flexibility is the future and says in the UK there is “very much an individual approach taken by employees and businesses towards work and finding an arrangement which benefits both parties”.

Its 2011 employment trends survey found 96% of respondents offered at least one form of flexible working, while 70% offered three or more.

However 53% of firms said the nature of work, or the operating hours of the business, was a limiting factor.

John Walker, the national chairman of the Federation of Small Businesses, says most small firms offer flexibility as a matter of course.

But he says a set four-day working week would be “impractical” for businesses like high street convenience stores or plumbers, who are expected to be on hand whatever the day.

“Faced with the need to get the economy into recovery, setting mandatory working days and hours would be far too prescriptive and simply unrealistic for the vast majority of employers,” he s

Who works the longest hours? Type your hours into the calculator linked below to find out how you compare with the average employee in your country, and the average across 34 developed nations.

• Calculate your hours
• Who gets the most time off?

The press and media continue to release mixed reports on the employment outlook for 2013.  Some report a hiring boom while others suggest that the UK is heading for a recession.  Connaught Executive  has put together a light summary of the trending market updates.  Overall, these reports suggest that the UK employment market will see a slow growth this year.

According to the Manpower Employment Outlook , employers in ten out of twelve regions plan to increase their staffing levels in Quarter 1, 2013.  Of the 2,101 employers surveyed, 9% expect an increase in headcount gains, 5% anticipate a decrease, while 83% anticipate no change.   The East of England, London and Wales were amongst the regions with the most optimistic hiring forecasts and employers in the Finance & Business Services, reported the most positive outlook.

The Overview of CIPD surveys: a barometer of HR trends and prospects 2013  showed the labour turnover for all UK employers is 13%.  50% of the organisations surveyed stated that the economic climate had a negative impact on their 2012/13 resourcing budgets.  61% of private sector companies stated they were either confident or fairly confident about the growth of their organisation this year.  The CIPD forecast is that the UK will see improvements in growth, however the uncertainties in relation to the European market presents a formidable risk.

The economic and fiscal outlook report from the Office for Budget Responsibility  (OBR) suggests that the forecast for the future is uncertain.  This report states that the UK will experience another year of weak economic growth although this will accelerate over the following two years.  The OBR predict that the unemployment rate will increase slightly in 2013, peaking at 8.3 per cent at the end of the year.

Valuable insights on how Head Hunters work and the recent changes in the market were provided by Alastair Paton.  His view was that most Head Hunters work predominantly to their client’s mandate, short-listing candidates based on the skills and characteristics required.  The shortlist usually includes five candidates, three of whom would be currently in roles.  Alastair urged Alumni members to stay ahead in the evolving market place by being flexible, creative and engaging, embracing social media and networking. 

Lewis Maleh reiterated the benefits of social networking and offline networking and reviewed how Head Hunters narrow their search for candidates.  This short-listing process involves searching for keywords using online tools including Google and LinkedIn , coupled with offline activities utilising telephone contacts, in-house databases and referrals.  Lewis gave tips on increasing your digital footprint including having an up-to-date LinkedIn profile with keywords, participating in group discussions and blogs.  He encouraged Alumni members to stay connected using the social tools at their disposal.

Mark Moreau covered the “Dos & Don’ts” of a job search.  This included doing research on companies and interviewers and creating a compelling CV  that provides specific, measurable and tangible information.  Mark suggested working with specific Head Hunters to avoid diluting your brand, treating your job search as a project with milestones and focusing your interviews on the three Ps, “People, Product and Profit”, emphasising the one that fits most closely with the focus of the company.

The general consensus of opinion from the Head Hunters was to actively network online and offline, remain flexible and create a strong compelling CV that works for you.

http://www.bankofengland.co.uk/publications/Documents/agentssummary/agsum12nov.pdf