Bosses still being rewarded for underperformance

Underperforming managers still receiving bonuses.
Latest data reveals managers are still reaping the rewards.

Despite falling short of performance expectations, nearly a quarter of managers are still taking home extra pay on top of their salaries, according to research published today by XpertHR and the Chartered Management Institute (CMI).

The 2016 National Management Salary Survey analysed data from 105,000 managers and professionals from 425 organisations. It revealed that 23% of managers who are said to be “developing” or “underperforming” in their roles still received a bonus, amounting, on average, to 12% of their pay.

In the case of senior managers, the proportion receiving a bonus increased to 43%.

XpertHR content director Mark Crail said: “Employers have reined in a lot of poorly focused executive perks since this survey began back in the early 1970s… But the bonus is as significant a part of many managers’ incomes as it ever was. Employers have come a long way in aligning pay and performance, but, as our research shows, there is still some distance to go to get it right.”

On average, bonuses comprise 38% of CEOs’ and directors’ total pay – equivalent to £55,969. But across the wider management population, they represent just 17% of pay packages, despite an increase in the average size of bonuses for this group from £8,836 to £11,413.

The data also suggested that managers below senior ranks are feeling the effects of employer belt-tightening. They experienced the lowest rate of basic pay increases since 2011, at just 2.6%. Overall, the average salary across all managers now stands at £34,479.

As well as issues addressing performance, 91% of those surveyed reported that they were facing challenges to recruit managers. This has increased from 89% in 2015 and 79% in 2014.

Key concerns are:

  • recruiting for specific skills – 87%, up from 75% in 2015;
  • reward packages in general being too low to attract candidates – 36%, increased from 20%; and
  • the high cost of recruitment – 32%, up from 23%.

Ann Francke, CMI chief executive, said: “The labour turnover data also show that the rising financial cost of attracting, recruiting and keeping management talent is now a huge challenge for employers. This makes it imperative for employers to look at how they engage, train and retain key staff.”

The National Management Salary Survey has been tracking executive pay since 1973. Click on the image below to download a PDF.



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