Andium in the Spotlight

Andium in the Spotlight

STAFF in States-owned ‘arm’s length’ companies have received salary increases that failed to keep pace with the rising cost of living while executives were awarded inflation-busting rises, it has been revealed.

Andium chairman Frank Walker said that Mr Gallichan and Mr Hamon’s pay rises that year were a ‘one-off’ as staff at the former Housing Department transferred to market median rate wages, and the pair would receive pay rises comparable to other staff in future. ‘The only two people in the organisation who were underpaid, according to the median pay scales, were Ian Gallichan and John Hamon,’ he said.

(Jersey Evening Post)

So according to Mr Walker, all the other staff, who transferred from the old Housing Department, were actually overpaid, so their pay could slip relative to the cost of living? I’d like to see the figures to justify this statement. Quite frankly I find it incredible.

But where did the JEP get their figures? And how can we assess figures from the accounts for 2016 and 2017 – which have broken links on the Andium site, but can be found via google. Webmaster, take note!

Looking at staff costs in the 2017 accounts, wages were £2,890,000 in 2016 and £2,930,000 in 2017 including directors’ emoluments

The average number of persons employed in the period was 48 (2017) and 51 (2016), while the average full time equivalent number of persons employed in the period was 47 (2017) and 49 (2016).

The total salary of the directors in 2018 was £458,000, while in 2017 it was £370,000. Ian Gallichan’s pay increased from £150,000 to £189,000, while John Hamon’s went up by £120,000 to £141,000.

So number crunching, wages apart from directors were £2,472,000 in 2017 compared to £2,520,000 in 2016, which is a drop in total salary.

However we also have to take into account the reduction in staff, so average pay per annum is £51,500 in 2017 compared to £49,412 in 2016. This gives an increase on the average wage of around 4.22%

If, however, we take the average full time equivalent number of persons employed, this gives us £52,596 compared to £51,429, an increase of only 2.27%.

Which no doubt is why the JEP can say: Andium’s staff did not receive a pay rise in 2016 and were transferred to market rate contracts in 2017, when a two per cent award was made.

The retail cost of living calculator between December 2016 and December 2017 comes out as a 3.6% rise.

Now one would really have to look at medians and the percentage on that to get a better picture and of course the accounts do not give us that information. However, they do suggest that the picture the JEP paints is by taking the lowest possible figure from those available.

Some more clarity from Andium would be helpful, and of course it is notable that as soon as Chief Officers become CEOs of Quangos, their pay suddenly jumps up.

The rationale behind the increase in the top executives is given in the company report:

"The salary and benefits of the Executive Directors and the Company Secretary are reviewed annually by the Committee with recommendations made to the Andium Homes Board, with material changes being subject to the prior agreement of the Guarantor. The Committee endeavours to ensure that the value of remuneration packages of these roles matches the Board’s policy on market position and sits appropriately against comparable organisation benchmarks. "

The Guarantor is the States of Jersey, so and this was just signed off for approval at the AGM by Senator Alan Maclean as Treasury Minister at the time by Ministerial Decision. No reasons were given in the decision, which is I suppose what one expects of politicians.

Part of the problem with all these kinds of figures is that what is essentially meaningless verbiage is bandied about, and it looks fine, but says nothing. For instance, “sits appropriately against comparable organisation benchmarks” sounds good but there are no details of what these are, and how they are used to arrive at the value of remuneration packages, although in fairness it should be noted that the Andium bosses do, as Frank Walker notes, come far below the other quangos.

Salary benchmarking should involve making comparisons of figures between a large number of other businesses. As part of the analysis, for example, the research should determine the overall mean, as well as lower and upper quartiles, of the value of each component of directors’ overall compensation packages. These then give a clear indication of how their directors’ pay compares with the market.

But unless there is a degree of transparency, it is difficult to judge how it was done, and what assumptions were made during this assessment. Where are the “market median rate wages” to be found? What other businesses were the basis for this comparison? And was the same assessment applied to all staff members or only to those at the top? And if not, why not? Some clarity would be welcome.

Instead it is like someone giving the answer to a mathematical problem where not only is there no working out, there is also no clear definition of what the question is. That’s not satisfactory, and unless it is improved, there is some justification in the headlines we see in the JEP.