Poor performing managers are still being rewarded with large bonuses according to the Chartered Management Institute and XpertHR.
New data from the National Management Salary Survey 2015, which for the first time has recorded performance ratings alongside pay, reveals that poor performance is being rewarded on a widespread scale. Nearly a third (30%) of all managers ranked as under-performing received a bonus from their employer in 2014.
Ann Francke, chief executive of CMI, comments:
“Too many managers are reaping the rich rewards of their positions despite being poor performers. This unacceptable discrepancy between pay and performance is even more widespread among the ranks of senior managers. Unfortunately, it seems to be a lot easier to reward poor performance than to face the awkwardness of having difficult conversations with underperforming staff.”
“Change must start at the top with CEOs’ pay, as there’s plenty of scope at that level to bring pay and performance more in line. To improve performance, managers must be prepared to have honest conversations with their staff and provide regular feedback and coaching. Managers should also have clear targets and be measured against them. Organisations and their employees will only benefit from a culture in which pay closely reflects performance.”
Looking at the top of organisations, almost half (45%) of all senior managers and directors were handed a financial bonus despite their performance being rated as ‘not meeting expectations’. An average bonus of £8,873 was paid to under-performing senior managers.
The survey has also revealed that managers’ salaries are on the rise. On average pay increased by 3 percent in the past year, the biggest annual increase since 2012.
Mark Crail, Content Director at XpertHR, adds:
“Another reason so many low performers get bonuses is that there is often a culture of rewarding past glories. The biggest and most significant indicator of whether someone will get a bonus this year is whether or not they got one last year. The longer that goes on, the more people come to rely on the money and the harder it is to stop paying it. In those circumstances, employers really should think about whether it would be better to address the level of basic pay rather than finding spurious reasons to add on an arbitrary annual bonus that has little basis in performance.”
Amie Filcher is an editorial assistant at HRreview.
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