My post Take Back Control yesterday on the cost-of-living crises and energy prices was primarily about the obscene profits (gas and electricity £30bn plus) and high salaries paid to the Chief Executives in the utility industries, paid for by consumers, and ways of helping the least well off customers and small businesses in a none stigmatising way by charging for the first so many units of gas, electricity and water at a reduced tariff – or possibly making them free.

It prompted a very lively debate with much of it focussed on the salaries of the Chief Executives which ranged from £1m per year at EDF to £6.5m for the Chief Executive of the National Grid.

The article drew comparisons with the public sector and the Chief Executive of Birmingham City Council who is paid £186,000, for arguably a more complex and wider ranging job, and suggested a salary of £200,000 for just two Chief Executives, one for gas and one for electricity, in nationalised services. Several people questioned whether £200,000 would attract the right calibre of Chief Executive? It would be interesting to see the “person specifications” of the existing posts and the CVs of the incumbents. Capacity is the product of intellect x knowledge x experience.

Are the right people in the jobs now? Is the aim of the utilities to make a profit or to provide a cost-effective service? What do we expect of these Chief Executives? Is anyone worth 30 times more than the Chief Executive of Birmingham City Council – do such beings exist – and what impact must it have on the motivation of those on whose efforts the Chief Executives are dependent?

To quote Charles Handy from the Age of Unreason:

“The leader must remember that it is the work of others. The vision remains a dream without the work of others. A leader without followers is a voice in the wilderness.”

What must it do to the motivation of those on low salaries in the National Grid knowing their Chief Executive is paid £6.5m?

Ensuring that staff at all levels have the capacity to match the complexity of work, are employed on the work which interests and motivates them, believe in the aims of the organisation and receive appropriate recognition is paramount. The role of the manager is then to train and enable.

Over the last decade the rich have got richer whilst the majority, subject to austerity, have got poorer. According to a report by the Paris-based World Inequality Lab, 2020 saw the steepest increase in billionaires’ wealth on record.

I have long argued that the highest salaries in large organisations should be restricted to an agreed multiple of the lowest salaries in the organisation and that bonuses should be restricted to an agreed percentage of profits (not share value or salary) and shared between all who contribute. This would not apply to people who get royalties on patents, books or records, sell concert tickets or people who earn money on their sole efforts but to large corporations around which the elite circulate creaming off millions.

According to Tom Peters, who a few years ago was voted the most successful businessman in the world (ahead of Bill Gates of Microsoft), the most important characteristic of a successful leader is “optimism” (who would follow a general into certain defeat), followed by “a passionate belief in his/her product or service” and “all to the customer”.

This brings me back to what we expect of these Chief Executives and our utilities – profit or service?

Tom Peters continues that good leaders empower people to extraordinary achievement by:

• delegating and devolving responsibility
• giving people the confidence to take decisions up to the extent of their discretion
• recognising that things will go wrong – if they are not making mistakes they are not trying
• focussing on gains, not losses. Focussing on opportunities, not problems, and creating winners not losers
• rewarding success
• assuming that everyone wants to do a good job and train and enable them to do so
• employing them on the work which interests and motivates them
• not employing people whose only job is to say no
• sharing information and giving power to gain influence.

Jim Kouzers and Barry Posner in their book The Leadership Challenge found that the five leadership practices common to successful leaders were that they:

• Challenge the process
• Inspired and Shared vision
• Enabled others to act
• Modelled the way
• Encourage the heart.

Managers of large organisations – be they in the private, voluntary or public sectors – are responsible for painting the vision, managing the external environment, high level co-ordination, giving strategic direction, training and enabling, monitoring and evaluation, policing the boundaries.

It would seem from the above that too high a pay differential between the high and low paid in an organization is likely to reduce rather than increase its efficiency and effectiveness.

* Chris Perry is a former Director of Social Services for South Glamorgan County Council, a former Director of Age Concern Hampshire, a former Non-Executive Director of the Winchester and Eastleigh Healthcare NHS Trust and a former presenter of an award-winning public affairs programme on Express FM.