HR & Management

"Underperforming" managers are still being rewarded with bonuses

4 min read

03 June 2015

New research has found that many senior managers and directors aren't delivering the contribution they're expected to, but are continuing to reap financial handouts.

The Chartered Management Institute (CMI) and XpertHR have announced the results of the National Management Salary Survey for 2015. The report of over 72,000 employees across 317 UK organisations examined rewards, remuneration and labour turnover.

They found that nearly a third – 30 per cent – of all managers ranked as underperforming were given a bonus in 2014. This increased as it went up the career leader – almost half of senior managers as directors whose performance didn’t meet expectations received a financial bonus. The average bonus paid to underperforming senior managers was £8,873.

This marked the first time the survey recorded performance ratings alongside pay and CMI said the results showed rewarding poor performance is “widespread” within organisations.

Ann Francke, chief executive of CMI, said: “Too managers are reaping the rich rewards of their position despite being poor performers.”

She added that the “unacceptable discrepancy between pay and performance is even more widespread among the ranks of senior managers”. Francke suggested it could be considered the easy way out to just “reward poor performance” rather than “face the awkwardness of having difficult conversations with underperforming staff”.

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The research also indicated that managers’ salaries were on the rise, with pay rising by 3 per cent on average in the past year – up from 2.7 per cent the year before. This was the biggest annual increase since 2012 and the average salary across all executive levels stood at £38,328.

The average bonus pay-out for all managers was £8,836 and this rose to £44,687 for directors.

Mark Crail, XpertHR’s content director suggested that a reason those underperforming still reap financial reward is because there is often a “culture of rewarding past glories”.

He said: “The biggest and most signficicant indicator of whether someone will get a bonus this year is whether or not they got one last year.” Once it has been given, it becomes increasingly tricky to take it away again as “people come to rely on the money”.

While Crail suggested a way of tackling this should be to “address the level of basic pay rather than finding spurious reasons to add on an arbitrary annual bonus”, Francke said change “must start at the top with CEOs’ pay”. She thinks managers should have honest conversations with their staff that provide regular feedback and coaching, with clear targets for managers to be measured against.

Elsewhere, the research also found that employers were having recruitment difficulties. The number of those experiencing problems when recruiting new staff has risen from 97 per cent in the 2014 survey to 89 per cent in 2015. Issues cited included difficulty recruiting people with specific skills – 75 per cent flagged this up as a problem – and poor quality of applicants, which 37 per cent pointed to as a reason they had been having trouble with recruitment.

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