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Edmund Heery: Cardiff University, Cardiff, UK
Introduction
The ethics of remuneration have been a matter of keen interest in recent years as a result of the controversy over executive pay. Concern has been expressed over the expanding differentials which executives enjoy over other employees and attention has been directed both towards executive pay systems and the decision-making processes through which such systems are chosen. Among the Greenbury Committee's recommendations, for example, were that share options should be attached to rigorous measures of performance and that there should be both full disclosure of executive packages to shareholders and the exclusion of executive directors from company remuneration committees[1].
This article is concerned with substantive and procedural rules which govern remuneration, although its focus is not trends in executive pay but changes affecting a growing number of non-executive employees in British organizations. These are the movement towards greater risk in remuneration, such that salaries and benefits become less secure and predictable from the perspective of employees, and the movement away from employee representation in the process of selecting and applying reward systems. Both of these developments, it is argued, should stimulate the concern of ethicists interested in contemporary human resource management.
The article opens with a review of recent prescriptive literature on the "new pay". This is followed by a review of recent trends in pay practice in Britain which conform to at least some elements of the new pay model. Third, there is consideration of the themes of risk and representation and the ethical questions they raise. The paper then concludes with a new set of prescriptions for ethical pay management.
The new pay
The "new pay" is a term coined by Edward E. Lawler III and popularized by Schuster and Zingheim[2] in their book of the same name. Although of American provenance, it is a term which has begun to be used here and many of the themes enunciated by new pay writers in the USA have been echoed by pay specialists in Britain[3, 4].
Like many fashionable management concepts, the new pay is based on a perceived dichotomy. The old pay of job evaluated grade structures, payment by time, salary progression on the basis of seniority, and service-related benefits, it is argued, was developed to...