Bosses risk a lethal legacy of lost trust

APPARENTLY it took CBI chief Digby Jones until June to get the message that most people in this country think the bosses he represents are overpaid.

It has taken him until now to realise that a goodly proportion of the working population are terrified that the company pensions they have worked and saved for are under threat.

This speaks volumes for the head-in-the-sand attitude of so many at the top of our large corporations.

While they gaily pick up £1 million-plus salaries and bonuses that are increasing at ten times the rate of inflation, they expect employees to be grateful for a wage rise of a couple of%.

And as they head towards a platinum-lined old age, they think nothing of asking workers to pay more for reduced retirement benefits.

The CBI's 'think tank' on so-called rewards for failure last week produced recommendations on how business could begin putting a stop to the unseemly spectacle of executives pocketing a huge payoff on a Friday for running one business into the ground, only to turn up at a new, highly remunerated job on a Monday morning.

Jones now wants his organisation to turn its attention to the corporate pensions crisis.

To do him justice, Jones admits that bosses must start to think how they can justify pay rises significantly higher than those given to workers on the shop-floor and how directors can keep open their own pension schemes while closing those for employees.

Underpinning both these major issues is the fact that executives have lost the trust of many of their workers and investors.

This matters. Why on earth should wary investors plough their savings into shares if they have no faith in the bosses of UK plc? And why should employees uphold their side of the 'fair day's work for a fair day's pay' bargain if they have no confidence their pension will be safeguarded?

Today's bosses may be happy to continue to feather their own nests at the expense of public opinion, but they may be leaving a dangerous legacy for their successors.

Plastic push

THE giant GE Capital, which runs store cards for the likes of Harrods and Debenhams and has about 50% of the market, has said it will happily 'clarify issues' regarding its consumer credit business for the benefit-of the Office of Fair Trading, which last week launched a formal inquiry into possible price-fixing on interest rates.

That should prove extremely interesting. Not only does GE Capital charge extortionate rates - up to 30% - on its store cards, but it is also clearly being given considerable help at the shop counter to foist this usurious plastic on to shoppers.

An employee of one of the big retailers that uses GE Capital for its store card has been in touch with Financial Mail to complain that she and her colleagues are now under an obligation to tout these cards.

Jobs are under threat if the workers do not make their store card targets. Employees are even forced to take a GE Capital card to qualify for staff discounts.

'When I was first employed with the company, I was there to serve the customer with products,' says the employee, who for obvious reasons does not want to be identified. 'Now I am there to sell customers a credit card and insurance and only then to sell them the products.' She is now looking to leave her job because of these pressures.

With this type of malign conspiracy between GE and big retail chains to fleece shoppers, it would be a wonder if she were the only one thinking of leaving the retail sector.

Pensions alarm

PENSION fund consultants are a powerful lot. They have enormous influence over which fund manager is given the mandate to invest the money we rely on for our retirement. You would have thought that with this awesome responsibility they would be always pushing for better performance from the investment managers.

But no. The head of a leading investment firm told me that one of the big consultants recently said that unless he stopped making so many staff changes it would not put his company forward for new business. That was despite the fact that the changes he has made have had a huge impact on the investment performance of his company.

It is alarming that a fund manager, who has shown himself willing to weed out poorly performing investment staff in an attempt to produce better returns for savers, has effectively been told to stop or risk being excluded from beauty parades for future mandates.

This may be an unfortunate one-off. But knowing the case involves two of the biggest names in the world of pensions investment, I very much doubt it.