Between them, Birt and Dyke gave birth to this top-heavy BBC
It's high time for a cull
John Birt brought people to the BBC with business skills and high salary expectations, Greg Dyke's 'one BBC' policy led to pay inflation.
It's high time for a cull
Monday 2 November 2009
Lord Birt: raised pay expectations. Photograph: Murdo Macleod
Of course it is impossible to disconnect entirely the BBC's announcement on senior management pay and staffing from the prevailing political context. General election round the corner, Tories on the warpath etc etc. But although the problem – too many managers too highly paid – has considerable, if on occasion overstated, symbolic significance, it is real enough. The fact is that the BBC does have too many "senior" managers and many of them are overpaid.
There are two questions here – why are there so many of them? And why are they paid so much? Having too many managers is a condition that tends to affect all large organisations – public and private. It is an iron law of bureaucracies that if unchecked they grow.
There are always good reasons to create new management posts – or at least that's how it looks to other managers. And for an ambitious executive in a place like the BBC, the more managers you manage, the more important you are. This is why management in big organisations – and especially the BBC – simply has to be culled from time to time.
But how is it that so many senior managers in the BBC are paid as much as they are? Here a closer reading of the management's weighty report to the Trust is instructive. It was the former director general, John Birt, who began to open up the BBC's senior management to outsiders.
In trying to manage the organisation through reductions in the licence fee amidst the sheer hostility of the Thatcher regime while trying to plot a course towards the digital future, Birt went out and hired people with financial and business skills that the BBC – with its strong in-house culture – simply didn't have.
Many of these outsiders brought with them salaries at private-sector levels. The report acknowledges that this "probably did create inflationary pressure on salaries across the BBC". Throw in increased competition from other broadcasters and demand from the growing indie sector for the best creative management talent, and the stage was set for Birt's successor, Greg Dyke.
Dyke's "one BBC" policy led, according to the report, to a drive for salary parity across the corporation and a major increase in bonus payments – in many cases up to 30% of salary. Naturally, no one's salary was reduced to take account of the increased bonus potential. Add Dyke's desire to make the BBC feel better about itself after the years of Birtist austerity and the bumper licence fee settlement Birt himself bequeathed to Auntie, and in terms of management pay at the BBC it really was chocks away! "Internal relativities", as they are known in the jargon, saw management pay across the BBC "levelled up" towards the highest pay in each "band". And the rest is, as they say, history.
If you want to succeed in a competitive market, then exceptional pay for exceptional people is an inevitable consequence. The BBC's problem has arisen because good but less exceptional people with no great market value have ended up being paid the same as their more exceptional and in-demand colleagues.
The plan to jettison 100 senior managers and to reduce their pay bill by 25% by 2013 is good for headlines but hardly amounts to a stretching target. Natural wastage will see to most of that. The bigger and more fundamental question is whether the BBC's approach to salaries can be flexible enough to reflect conditions in the different markets in which the BBC operates. Quite the opposite of "one BBC".
So as the BBC finds itself once again trying to undo part of the legacy of (New Labour) Greg Dyke to the corporation, who should pop up at the top of the leader board for chairmanship of Channel 4? Step forward the chairman of the Conservative party's media policy review group, Greg Dyke.