The Group Performance Scheme (GPS) pool was reduced from £464.5 million in 2018 to £310.1 million in 2019, a 33% reduction. The main reason for the reduction was PPI claims but other significant conduct risk issues, including the Cranston Review and the ongoing sore that is HBOS Reading, cast a long shadow over the bank’s results. And the HBOS Reading scandal is not finished yet. In respect of the Cranston Review, Lloyds senior management have been asked to explain how and why the failings occurred in the first place. The FCA has said that it is looking into what further action to bring against Lloyds senior management. If that involves a further fine, then that should be paid by Mr. Horta-Osorio personally and not by staff.
The Dog That Didn’t Bark
To agree a pay pot of 2.4% – which is below the current rate of inflation (RPI, 2.7%) – when you know full well that bonuses are going to be significantly reduced is not just naive, it’s stupid. You can’t with any credibility say on the one hand we have reached a good settlement on pay and then say a few weeks later: “hard working staff are having their total earnings for the year reduced. This just doesn’t seem fair”. No, it’s not fair but it’s not as though the bank didn’t tell the two in-house staff unions, Accord and Unite, what it was planning to do. It told them both months ago that bonuses were going to be reduced significantly but yet they rushed headlong into an agreement on pay. Why? It’s because both unions are afraid to say ‘No’ to the bank and hold out for a better agreement or at least until they knew what’s happening to total earnings.
Sherlock Holmes famously talked about the dog that did not bark. Well, it seems that whatever the bank says and does, Accord and Unite refuse to bark.
Bonus Award v ‘On Target’ Award
Line Managers have been communicating awards to members over the last few days and explaining the impact of the modifier on bonuses. Divisions will be applying different modifiers ranging from a 30% reduction in Risk to 26% in Retail. Across the Group, the average bonus award is being reduced by 30%. Members should focus on the bonus awarded by your Line Manager, before the modifier is applied, compared to the ‘On Target’ award for your grade. If the bonus award is less than your ‘On Target’ award, you should consider seriously whether your whole job performance justifies such a reduction. If it doesn’t and you want to pursue a grievance, you should contact the Advice Team on 01234 262868 (Choose Option 1) immediately. The Advice Team will guide you through the necessary actions.
It’s Progression, Stupid
The bank is making great play of the fact that Mr Horta-Osorio’s pay relative to the median employee in the Group has reduced by 24% between 2018 and 2019. That’s true but only because the CEO decided not to take his Group Performance Share award this year. In terms of fixed pay, the ratio between Mr Horta-Osorio and the median employee in Lloyds only reduced by1%. And to put this more starkly, 25% of staff in Lloyds Banking Group earn between £18,200 and £22,227, and most of those will be women, which is 114 times less than that Group Chief Executive Officer. It’s those staff who can little afford to lose up to 30% of their bonuses, whereas the bonus given up by Mr Horta-Osorio is little more than pocket change.
Mr Stuart – he’s a “Charismatic Winner” – Sinclair, Chairman of the Group’s Remuneration Committee, says: “We believe our approach to pay progression has contributed to the reduction of the 2019 median pay ratio and supports reducing the gap between executive and wider colleague pay over time”. When you read such a stupid statement you don’t know whether to laugh or cry. If he wants to reduce the pay gap, then start by paying those staff in the bottom 25% the proper rate for the job. You don’t have to be one of Dominic Cummings’s ‘superforcasters’ to realise that the pay gap is not going to be reduced any time soon given the current rate of salary progression for Lloyds staff.
In the meantime, members with any questions on this Newsletter can contact the Union’s Advice Team on 01234 262868.