Home Business NewsBusiness “Shock to the system” as managers see real terms pay drop and directors’ bonuses slashed

“Shock to the system” as managers see real terms pay drop and directors’ bonuses slashed

by LLB Reporter
12th Jun 18 7:52 am

What you need to know

New data from the Chartered Management Institute (CMI), the professional body for management and leadership, and XpertHR, the employment intelligence service, show basic salaries and bonuses for directors and senior managers have fallen in real terms, with inflation overtaking pay increases for the first time in five years.

This comes after separate CMI research found managers worked an extra 44 days a year last year over and above their contracted hours – up from 40 days extra in 2015. The same research found 59% of managers are ‘always on’, frequently checking their emails outside of work and one in 10 had been forced to take sick leave because of stress.

Petra Wilton, director of strategy for CMI, said: “This is a huge shock to the system for British business just as Government are proposing to shine a much-needed light on the pay ratio between the top and the workforce.

“The UK is at risk of sleepwalking into a new productivity crisis because too many managers are chronically overworked and stressed by an ‘always on’ culture.

“If businesses can no longer attract talent through large pay packets alone they need to be far more creative in providing an environment that will motivate, retain and attract ambitious managers.”

All tiers of management, from entry level professionals to top executives, suffered a slowdown in 2017. Basic salaries increased by just 2.4% to £34,526 – which is below the Consumer Price Index (CPI) rate of 3% for the corresponding period. This represents a salary cut of 0.6%.

In addition, directors have seen average bonuses slashed since last year by 16%, from an average of £53,504 to £44,987

Over the past five years, senior managers and directors have averaged 3.9% annual pay increases – equating to 2.3% in real terms. Now CMI/XpertHR data from 128,582 managers and professionals indicates those above-inflation increases have come to an end.

Wilton, continues: “This is today’s problem and cannot just be swept under the rug. Britain needs 2m more managers by 2024 on top of the existing 3.6m if it is to meet the demands of a post-Brexit economy, so it is imperative that businesses wake up and improve the workplace environment.

“To attract the necessary talent, businesses must focus on the softer, but no less important, workplace benefits. This means improving employees’ work/life balance, protecting wellness, giving them training and development opportunities, and fostering a sense of purpose and meaning in their jobs.

 “Those are actually far more powerful drivers of employee engagement than money, so this is a great opportunity for employers to reset their thinking about how to attract, motivate and retain their senior talent.”


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