A just reward for an unusually demanding job? Andrew Cole asked chief executives about their pay

Published: 11/4/2002, Volume II2, No. 5800 Page 30 31 32

Mike Pollard Essex Rivers Healthcare trust Salary:£106,000

I suspect one reason chief executives'pay rises are consistently higher than the average might be the effect of attrition.The attrition rate of NHS chief executives is the highest in public services, without a doubt.When a chief executive leaves, the remuneration package is reviewed - usually upwards.With high attrition rates this practice, in aggregate, has the effect of accelerating the pay of chief executives.

But I believe the criteria for setting our pay rates is (and should be) market forces - and no-one can buck the market.My experience of remuneration committees is they are mindful of the need to balance market forces with the need to justify high salary levels to an NHS workforce where low pay is still rife.

Is pay a big factor in recruitment and retention? Well, chief executives are, by definition, ambitious people.To become a chief executive in public service is a privileged position.Salary must be one recruitment and retention factor, but it is only one years found an average salary rise of 5.3 per cent and an average total remuneration rise of 5.2 per cent (60 per cent above the fair 3.25 per cent limit).

Many remuneration committees have studiously ignored the government's stated policy of fair pay for all in the NHS.The term fair pay refers to total remuneration according to the NHS pay branch.The above-limit awards permitted in 1999-2000 and 2000-2001 were supposed to reflect good performance.

It is clear from both the public's and politicians'perception of a failing NHS that there has not been widespread good performance throughout the NHS in recent years that could justify the numbers of above-limit rises awarded by remuneration committees.

The Wednesbury principles Pay guidance is a matter of law, even though it seems to be considered by many as for guidance purposes only.

Many trust remuneration committees seem to consider that under the terms of the 1990 act they can give any level of pay award that springs to mind during the deliberations.The reality is that a trust has to exercise its executive discretionary powers given to it by Parliament in a reasonable and responsible manner.

The law recognises certain principles on which discretion must be exercised and these are known as the Wednesbury principles.

2The courts can strike out an action by a trust that exceeds the limits of its discretionary powers.Excessive awards made by a properly constituted remuneration committee can be subject to judicial review and overturned.The courts may interfere in the exercise of discretionary powers in cases of bad faith, dishonesty, unreasonableness and disregard of public policy.

2The principles are that when exercising an executive discretionary power, an authority must:

ntake into account matters which ought to be taken into account and not neglect or ignore them;

not take into account matters that are irrelevant;

not reach a decision so unreasonable that no sensible authority acting with due appreciation of its responsibilities would have reached such a decision.

Have remuneration committees acted sensibly and with due appreciation of their responsibilities to both the chief executive and the local shareholder population who rely on the frontline care delivered by the trust? When scarce resources are spent on above-limit executive pay awards, they will not be available for NHS modernisation and maximising the funds available to frontline patient care.

Many trust remuneration committees have failed to apply the Wednesbury principles in their discretionary decision-making by ignoring the fact that government policy is for fair pay for all in the NHS.They have failed to take into consideration specific and explicit details in the pay guidance letters.They have failed to follow their obligations laid down in the employee relations section of the code of accountability, and by also failing to produce compliance statements that explain and justify the above-limit awards have also broken the code of conduct that demands transparency in decision-making from a trust board.

There is clearly an urgent need for health secretary Alan Milburn and the DoH to review the workings of trust remuneration committees and ensure that decisions are reasonable, responsible and justified, and that the pay information and wording of the compliance statement in a trust annual report presents a true and fair view of executive pay expenditure that can be easily understood by the public 'shareholders'served by a trust.This would empower the public to hold a trust accountable for its pay award decisions and ensure that any above-limit rise is a true reflection of local performance. l factor.Yes, pay motivates me in that I want the very best for my family - just like everyone wants the best for theirs.

'Ros Lowe Hounslow and Spelthorne Community and Mental Health trust Salary (2000-01):£79,000 I think my salary is reasonable for running this organisation, but people in the mega trusts may well say something different.

I would suggest that the spectrum of chief executive pay at the moment is not wide enough.

Chief executives' fundamental motivation is making a difference and seeing things develop.

But pay is a proxy for how much you're valued.That applies to everybody in the NHS.

Certainly we are not well paid compared to the private sector. If you talk to non-executive directors who have had experience of the private sector, they are amazed at the complexity as well as the political nature of the NHS.

A day doesn't go by when you do not read of something ghastly happening.We are operating in a highly political red-hot atmosphere.

Then there are the high-profile sackings. It is a much less secure job than five years ago.You ensure there are systems in place to deal with untoward events.But however good a chief executive you are, you can't be prepared for something like the 'bodies in the chapel'or the 'baby muddled up with the linen in the mortuary'and yet you carry the can.

My remuneration committee are always very questioning.

There is a trust between them and me as the chief executive, but they're not a patsy.

I used to work as a health visitor and yes, I am now doing a job That is worth three to four times what I would be earning as a health visitor.The breadth and depth of this job is much greater - and even these days a health visitor's job is a lot more secure.

'Alan Randall Eastbourne Hospitals trust (currently on secondment to the Commission for Health Improvement) Salary: 'Just over'£90,000 'If you compare our pay with that of frontline health service staff then We are very generously paid and you could argue some of these comparisons are obscene. I am paid four to five times more than somebody with a very responsible job running a ward, for example.

But if you compare my pay with somebody in the private sector, you'll realise that for the financial responsibility, the number of staff and the complexity of the organisation, an NHS chief executive is very poorly paid.

The other factor is that the pressures on chief executives have grown and grown.

I read recently that the turnover of chief executives last year was 25 per cent, which is almost football management proportions.Why is there that level of turnover? I would guess that some people are finding the pressures are just impossible and are walking away from the job.

There needs to be some degree of compensation for the fact that you are so vulnerable.

Does the money motivate me? Well, it helps. It may depend on how old you are. In my day you didn't go into health service management to be well paid because it wasn't.You go into it because you think It is an interesting job and a worthwhile organisation to be working for - and that still motivates most people, I believe.

But I am worried by the number of colleagues one step away from being a chief executive who are hesitating about whether they want to do the job.

I do not think the people you want going into health service management should be primarily motivated by money. It is more to do with the right sort of values. It is about looking after your frontline staff and ensuring quality of care for patients.So the key is making sure the job of chief executive is a satisfying and rewarding one where they do not feel under siege but feel valued and supported, and There is a general recognition from government and the public that they are doing a difficult job. I would rather put these things right by changing attitudes than through money.

I am also glad that performance-related pay is becoming less of a factor. I never felt very comfortable with it.

'Mark Britnell University Hospital Birmingham trust Salary:£120,000 I think I am paid a reasonable amount of money for the responsibility I have. It is important the remuneration committee holds the chief executive to account but equally includes a performance element.My basic pay was uplifted in line with national pay awards.But there is also a performance scheme, worth up to 10 per cent of salary.As long as the committee carries out its work fairly I think That is an appropriate way to remunerate, and I have no complaints.My remunerations committee is nothing like a poodle or a patsy.

Overall I feel we are paid a fairly derisory amount of money for the size of jobs we hold down in comparison to the private sector. I wonder who in the private sector would be prepared to accept the sort of pay we get for handling a£275m budget and a number of big private finance initiative schemes? But if we compare ourselves with the NHS, then the relativities between various grades of staff and chief executives are about right.

And I wonder whether we have got the differential right between primary care trusts, district general hospitals and large teaching trusts.

For instance, I see the chief executive at Leeds Teaching Hospitals is earning£133,000 with a turnover of£0.5bn.Now we are getting some PCT chief executives on£100,000 holding a budget That is about a third of that.The level and complexity in a large teaching hospital is almost beyond comparison with other healthcare institutions.

The job is less secure than in the past. I have spoken to a lot of directors who wonder what the benefit is of moving from director to chief executive.Fortunately there still is a significant cadre who like the responsibility and accountability to improve public services.But I do not know whether we can continue to rely on them if they are not supported and looked after.

'David Williams Swansea trust Salary (2000-01):£122,000 People who are critical of the levels of chief executive pay know absolutely nothing of the pressures of the job. I worked previously as a chief executive in private medicine and I estimate I earn half as much as chief executive of a healthcare organisation. I am leaving at the end of April and I expect to earn a lot more.

When I was at Birmingham I was never invited to express an opinion about my own pay.That was always the human resources director's job.That is exactly how these things should operate.And if the remuneration committee doesn't provide the right package, there are plenty of other chief executive jobs to consider.

Salaries have to reflect what you ask people to do.

Undoubtedly chief executives get paid substantially less than their opposite numbers in commerce.But these jobs carry a high degree of satisfaction.

I do this job because I want to do it. It is not necessarily because of what I get paid for it.But people do expect their employers to pay the rate for the job - whether you're a consultant or chief executive or clinical nurse or director of finance. If trusts want to recruit effective leaders they have to recruit the best people.

It is difficult to compare the job of a trust chief executive and of a PCT or health authority.They have different values and different worth.But undoubtedly it has been more difficult to recruit the right calibre of people into running trusts than other senior jobs in the health service.

But trying to attract the kind of person into the health service that has run a£300m to£500m organisation outside is very difficult unless you have the salaries at the top end.

The dilemma is: if we are really to modernise the health service, are we going to do it with the managers we have got? If you're looking to franchise zero-rated trusts out to consultancy organisations that pay their partners double the salaries of NHS executives, you're going to have to look at pay.The big question for the health service is: what is value for money?

'Robert Naylor University College Hospital London trust Salary (2000-01):£129,000


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