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MPs should show how to use pay to reward talent

May has been a very embarrassing month. People keep talking about money. Not the anonymous multi-trillion pound bailout/quantitative easing/fiscal stimulus piles of money, but the cringingly personal &ldquo;my house is bigger than yours&rdquo; monthly pay-cheque sort of money.<br /><br />One of CNBC TV&rsquo;s guests last week hit the nail on the head when he said; &ldquo;the problem is we Brits are brought up to think of money as slightly rude&rdquo;.<br /><br />Rude or not, the MPs expenses debacle has forced the pay issue upon us just as bank nationalisation puts some of the UK&rsquo;s highest-paid individuals on the government payroll, shareholders ponder executive pay in a recession and top earners face a 50 per cent tax rate.<br /><br />Since the recession began there has been much talk about the end of capitalism. Nonsense. Financial gain will always be the best way to coax people to achieve, so getting the incentive right is all the more important as we scramble to find a way out of this downturn. <br /><br /><strong>LEADING BY EXAMPLE</strong><br />To that end bosses must lead by example. Last week British Airways reported a record loss and chief executive Willie Walsh promptly pledged to working for nothing for a month.<br /><br />With a salary of &pound;735,000 (and presumably plenty of frequent flyer points in the bank to keep him in holidays), Walsh should have a few bob to spare, but it does show leadership and the gesture should keep him his job for a bit.<br /><br />Investors have a role to play too. Last week Shell approved executive bonuses even as the company failed to meet targets. Calls for directors to hand back the cash and for the head of the remuneration committee to quit are encouraging. Pre-recession shareholders were criticised for letting executives do their own thing, now it&rsquo;s time to hold executives to the rules.<br /><br />In theory, an efficient economy will pay workers as much as necessary to attract the right people to the appropriate jobs and the whole thing would be entirely dispassionate.<br /><br />In practice, we&rsquo;re variously fascinated and embarrassed by the whole issue as proven by the torrent of interest in BBC presenter Carrie Gracie earlier this month when she revealed live on air that she makes &pound;92,000. (Note to self &ndash; ask boss for payrise)<br /><br />The MP expenses row is a great example. What we&rsquo;re essentially told is that they thought they deserved more money but it was all a bit icky, so they just bumped up the expenses a bit.<br /><br />Potentially, this is a great opportunity for our politicians to show leadership and build their new pay and expenses policy on transparancy and reward for talent.<br /><br />Rebecca Meehan co-anchors Capital Connection each weekday on CNBC.