BBC pays price for big rises

The BBC is on the back foot again, after revealing that top execs have been given a 17% pay rise...

Last Updated: 31 Aug 2010

After a year when the BBC revealed plans to make 1,800 people redundant, bumper pay rises for the top brass was always going to be a tough sell. Sure enough, it’s taken a hammering today after its annual report revealed that director-general Mark Thompson and nine other senior managers pocketed an extra £700,000 in wages – including one hike of £103,000 – in a year when most of its staff had to make do with (at best) a 4% rise. So much for Alistair Darling’s pay restraint calls…

The figures involved might have been even higher, but Thompson declined to pick up his £60,000 bonus (on his £816k salary, mind) on the grounds that ‘it didn’t feel right’ given the ‘scale of disruption and uncertainty’ across the BBC – presumably a polite way of referring to the 1,800 people he’s about to make redundant. Thompson also slashed director bonuses by 40% to reflect the various phone-in scandals and the controversy over that doctored documentary about the Queen.

Thompson’s argument is that the BBC needs to pay top people their market value – and that value is set not only by public sector organisations, but also by commercial broadcasters like ITV and Channel 4. If it’s going to compete for top executive talent, it’s got to pay the market rate – or it won’t get the best people. As he puts it: ‘When you actually get out into the external world, some potential candidates almost roll on the floor laughing when you talk about potential levels of pay.’  (He also argues that the restructuring has actually made many of their jobs harder, but surely this is true of people throughout the organisation?)

This is true - up to a point. But equally, the BBC is an unusual beast: its cachet and public ownership mean jobs there are not really equivalent to jobs at ITV and co. It’s also harder to assess the performance of Thompson and his team, since there’s no share price or revenue numbers to go by.

And either way, it’s unlikely to endear the management to staff. Despite the success of the iPlayer and commercial arm BBC Worldwide, the BBC has a tough year ahead. As well as the redundancies, it’s also been forced to postpone property sales thanks to the falling housing market, while rising inflation is eroding the value of its latest licence fee settlement (which it wasn't happy with at the time).

Still, ultimately the only way for Auntie – and Thompson – to win the public over (and stem widespread opposition to the licence fee) is to make better programmes. If recruiting top talent proves the best way of doing this, he might just decide that it’s a price worth paying...

In today's bulletin:
Sorrell goes hostile after TNS knock-back
Trouble building in the housing sector
We ain't Trading with the Enemy, says Bud
BBC pays price for big rises
'35 Under 35' 2008: The corporates

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