Value is ignored in decisions about pay

How do we decide how much value a person is really bringing to an organisation? For all the performance metrics and other measures of effectiveness out there, quantifying an individual's value without taking into account the context (ie, state of economy, efficient systems, other members of the team and so on) is difficult, if nigh on impossible.

When it comes to pay, the complex issue of value is that 'third' person, always there yet pushed to one side, a presence too difficult to countenance. Instead, we prefer to fall back on the accepted thinking of the day to justify remuneration. Today that received wisdom is based on a combination of 'the market decides' and that McKinsey chestnut, 'the war for talent'.

Nowhere is this more obvious than in the financial sector where bumper bonuses are now being paid out. The generally unchallenged argument is that such rewards are required to ensure the 'best talent' does not flee to rivals. Yet, as David Bolchover points out in his new book, Pay Check, senior executives pay lip service to talent but rarely do anything concrete about it. Indeed, he goes further, declaring the myth of talent to be a smokescreen for corporate plunder. "The intention of the talent ideology is to further the interests of current high-fliers, not to improve company performance," he writes.

It's refreshing therefore to see few mentions of talent in our cover feature on whether public-sector HR directors are worth their pay (p24). Indeed, only the BBC's reward director, Robert Johnston, defends high levels of pay in his organisation in terms of getting the HR talent required. Rather, Westminster Council HR director Graham White, who happily reveals his six-figure salary to us, talks about transparency and accountability. He is adamant: HR directors should justify their salaries based on business contribution.

So are public-sector HR directors worth their pay? With the unsustainable cost of the public sector at the top of the political agenda this year, there is surely no better time to debate this issue.

So are HRDs worth their pay? Turn to p24