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How Auntie acts now could impact the BBC's employer brand

22nd Aug 2016
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The BBC is facing mounting pressure from a group of MPs calling for the broadcaster to publish the names of all high-earning employees. But to what end?

The whitepaper says that for the BBC to maintain its commitment to openness, honesty and transparency, the details of those individuals who are paid in excess of £450,000 per year should be made known.

However, the House of Commons Culture, Media and Sport Select Committee is calling for this figure to be reduced to those earning £143,000 or more a year – the same as the Prime Minister.

The argument is that because the BBC is a state-owned broadcaster funded by licence fee payers, the public has a right to know who earns what. But does anyone really care how much the heads of IT or procurement get paid, or is the aim simply to expose the pay of the BBC’s celebrity figures, such as Lineker and Norton et al?

It appears this may be the beginning of a political witch hunt from a group of MPs with little to gain other than ruffling a few feathers and feeding the tabloids with a few juicy [***] bits.

Regardless of the motivations behind the call for pay transparency, the way in which the BBC responds will be critical to the way in which its employer brand is perceived. For instance, will it be found on the back foot, having to defend the pay of some of its executives and celebrities? Quite possibly, if recent examples in the corporate world are anything to go by.

Indeed, earlier this year shareholders were up in arms in a sense of investor fury and ‘buyers remorse’ when the earnings of the likes of Messrs Sorrell (WPP), Darroch (Sky) and Dudley (BP) et al were made public. Personal brands took a battering, with many corporate reputations tarnished in the process and there is a real risk that Auntie will soon follow suit. But is that fair?

The row over executive pay shows no sign of abating and as soon as the salary details of the BBC’s highest earning figures enter the public domain, the media – particularly the tabloids – will invariably have a field day. While the BBC isn’t answerable to any shareholders, it does have stakeholders (that’s you and I) who have a vested interest in what the broadcaster does and doesn’t do. After all, we’re the ones paying for everything.

However, is the whole debate over how much those at the top of their profession get paid missing the point?

Whether someone gets paid £143k or £143 million per year is down to one simple equation:

Is the business financially in a better position with that person in place, and does their salary pale in comparison to the additional revenues they add to the bottom line?

If the answer is Yes, then the amount they receive is justifiable.

In 2015, Nike spent $3.2 billion dollars in advertising and earned $7.4 billion – for every dollar it spent it received $2.3 dollars in return. Would anyone question whether this spend was justified?

When Harriet Green assumed the role of CEO of Thomas Cook on an annual salary of £3 million, the travel operator was on the brink of bankruptcy. Within three years she had turned the company’s fortunes around. Her impact on the organisation’s bottom line was such that when she announced her decision to leave the company three years later, shares in Thomas Cook fell by 20% (£400m) – 133-times what she was getting paid.

Sir Martin Sorrell’s whopping £70 million salary has a major headline grabber, but equally justifiable. His company, WPP, which he founded thirty years ago, is currently valued at £21 billion, with his £70 million salary representing a mere 14,285ths of that amount. Shares in the business have more than doubled since 2001 and should he leave, what impact would that have on WPP’s value?

When determining if an individual is paid too much (or too little) we need to determine the contribution they make to the business.

Those people at the top of the earning tree are not your average workers, they are exceptional and have the power to influence and attract customers and audiences.

So if Messrs Norton and Linekar et al enable the BBC to boost its audience numbers, who is to say they are not worth their remuneration?

As long as the BBC states its position clearly and is able to demonstrate the return on investment it receives from said individuals, it will retain control of the situation and emerge from the inevitable media scrutiny relatively unscathed. However, if it adopts the NHS’s we-don’t-respond-to-criticism stance, the outcome will not be so favourable.

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