- Annual pay rises for senior managers in finance grind to halt
- Bonuses for directors in finance plummet by an average 40.9% from £49,177 to £29,062
- Managers now work an average 44 days unpaid each year
- Work/life balance for managers must improve to avoid sleepwalking into new productivity crisis, warns CMI
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.
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 shock to the system for the finance sector 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.”
Nationally, 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 – beneath the Consumer Price Index (CPI) rate of 3% for the corresponding period. This represents a salary cut of 0.6 percent.
For finance, basic salaries across all tiers of management increased by just 2.4%, with a real terms fall of 0.6%. The average salary for managers and professionals in finance now stands at £42,297.
In addition, nationally, directors have seen average bonuses slashed since last year by 16%, from an average of £53,504 to £44,987. But bonuses for directors in finance have fallen dramatically by an average 40.9% from £49,177 to £29,062.
Over the past five years, directors in finance have averaged 3.5% annual pay increases – equating to 2% in real terms. Now CMI/XpertHR data 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.”
Mark Crail, content director for XpertHR, said:“There has been a sharp divide in the rewards on offer to senior managers and almost everyone else over recent years. Where those at the top have forged ahead, the rest have seen their pay eroded by below-inflation ‘increases’. The picture now appears to be slowly changing – and, on the whole, pay awards are now at or above the level of inflation. But there is a long way to go to restore any sense of balance in how rewards are shared around in many companies and the accumulated difference remains wide, raising serious questions of fairness and equity.”
The Managers and Professionals Salary Survey also found that 90% of employers experienced problems with recruitment over the last 12 months. The most common reason was difficulties in finding key skills, experienced by three-quarters (76%).
While down on the last two years (when it was 86% and 87%) this remains high compared to just a few years ago, having soared from 49% in 2011. Three in 10 employers this year said that reward packages are too low to recruit high-quality applicants.