The Guardian has spiked a news report and comment piece on pay gaps across FTSE 100 companies citing flawed research by a think tank.
On 18 August, the newspaper published the research by the High Pay Centre on page 17, under the headline: “Pay gap widens at biggest UK companies”.
Included in the article was the false claim that Randgold Resources’s chief executive’s £4.4m salary was “nearly 1,500 times that of his average employee, many of whom work in the company’s African mines”. This would mean the average Randgold Resources employee earned around £2,933 a year.
The story reported that “bosses of Britain’s 100 biggest listed companies are earning on average 143 times more than their staff”. These figures were also used in an online poll.
However, this general figure was wrong, and so were the figures relating to at least two other companies – including Randgold Resources.
An apology published on 21 August said: “In an article about how much more bosses earn on average than their staff there were a number of errors as a result of inaccurate data supplied by the High Pay Centre, on which the story was based (Pay gap widens at biggest UK companies, 18 August, page 17). Mark Bristow, the chief executive of Randgold Resources, was paid £4.4m last year, which is 270 times more than the £16,412 earned by the mining group’s average employee, not 1,500 times as we had it. The mistake arose because the High Pay Centre stated that Bristow was paid 1,498 times more than the average salary of £2,968 per employee. In its calculations, the High Pay Centre wrongly included the 12,128 contract staff employed by Randgold, leading to a lower average pay per employee. In fact, Randgold employs only 2,979 people directly.”
Readers' editor Chris Elliott took the article down while resolving problems with it because it would take more than 24 hours, but “realised a little late that I had left the poll online with the incorrect ratio”.
The think tank adjusted the Randgold figures and the average ratio – which was affected by Randgold – before The Guardian realised there was a further discrepancy with another company’s figures. The paper asked the think tank for confirmation that all figures for top ten companies were correct.
Elliott said: “The High Pay Centre’s problem is that analysing 100 FTSE companies’ pay data in a way that allows like-for-like comparisons is too big a job for a small not-for-profit company, so the thinktank commissioned a highly respected external institution to do the original work for them.
“As I asked the High Pay Centre to confirm that the data was now completely accurate, the deputy head went through the top 10 companies and found a further error with a third company. Once again this altered the ratio, this time to 130 times average salary. But neither the Guardian nor the think tank had the resources to check the other 90 companies’ data, and so the article and the poll have been permanently deleted, with a footnote on the page making clear that both have been taken down because we were unable to verify all of the data.”
Elliott added: “It is a painful lesson for both the High Pay Centre and the Guardian, which also pulled a Comment article based on the erroneous figures just before it was published.”
He also quoted the director of the think tank Deborah Hargreaves – a former Guardian and Financial Times journalist – as saying that problems arose because guidelines on companies publishing data on annual pay, chief executive pay and number of employees are “sometimes not clear”.
“This is where the problems arose. Some companies include contractors and so-called associates in the overall number for their employees,” she said.
“But pay data for these additional people is not included in the pay bill. So when working out averages, the data is flawed. Once we started checking all the employee figures we realised where the problems had been caused. To be fair to PIRC, the employee data is not clear in some annual reports and needs careful checking. I think it is vital that we continue to work on this data. However, we have decided that we need to do our checking in-house … It is an important lesson in the use of data – it needs to be checked and checked again.”