Shock to the system: the pay of UK senior managers drops in real terms as bonuses are slashed
The Managers and Professionals Salary Survey shows pay is down against inflation, while bonuses fall 16%
The Chartered Management Institute’s (CMI) latest research has revealed a substantial drop in basic salaries and bonuses for middle, senior and executive managers, with inflation surpassing real wage increases for the first time in five years.
Supported by employment intelligence service XpertHR, the analysis of 128,582 professionals found the average UK manager experienced a sluggish 2.4% pay rise in 2017 to £34,526, lower than the latest Consumer Price Index (CPI) rate of 3% for the same period.
Furthermore, the average bonus payment to directors has diminished by 16% since last year – 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.
WORK/LIFE BALANCE IS IN DECLINE TOO
The managerial pay plight is further exacerbated by separate CMI research, which shows the overworking culture continues to hamper the wellbeing of managers. The CMI Quality of Working Life report from January 2018 reveals managers worked an extra 44 days of unpaid overtime last year – up from 40 days in 2015.
Some 59% of managers admitted they suffer from being ‘always on’, frequently checking their emails and work communications outside of the office. A tenth of respondents had been forced to take sick leave because of stress.
Describing the latest pay figures as a “shock to the system for British business” the CMI’s director of strategy Petra Wilton has urged employers to reassess their recruitment and working practices to ensure they can attract and support high quality management talent.
“At a time when we need to attract two million more managers into the workplace, 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,” Wilton said.
“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.”
Data shows that the UK economy will need the two million more managers by 2024 – (1.5 million of which will need to be women to achieve gender balance). Estimates suggest this could add up to £150bn a year to the UK economy by 2025.
MORE EXECUTIVE PAY DATA TO COME
The release of the Managers and Professionals Salary Survey data follows the government’s unveiling of new rules that will require large businesses to publish the pay ratio between the earnings of their chief executive and the average worker.
The move reflects a growing consensus among managers on the need for reform.
Petra Wilton added: “The government’s timely plans reflect the changing mood in business. CMI research reveals that 74% of all managers and two-thirds of directors or partners support curbing disproportionate executive pay. This shows that even senior managers understand that business needs to fix the pay system to make it fairer for all.”
However, evidence of pay rises that are below the cost of living has still been met with concern. One senior manager told CMI Insights today that her own experience had left her feeling “humiliated” and questioning commitment to her career.