Employers struggle to retain and recruit for management roles

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Almost 300,000 managers walked away from jobs last year.

New figures released today show that employers are struggling to hang on to workers, despite the turbulent employment market, with more than 283,000* managers walking away from their jobs in the 12 months to September 2011. Data collected from 38,843 individuals across 160 UK organisations reveals that nearly one in 10 managers (9.4%) resigned from their jobs last year – more than twice as many as quit the year before (3.9%). Overall labour turnover for management roles – those resigning, retiring, transferring internally and being made redundant – has also increased dramatically, almost doubling from 10.5% in 2011 to 20.3% this year.

In addition to the 9.4% of managers resigning last year, other factors contributing to labour turnover include 2.7% being made redundant, 0.4% retiring and 6.0% transferring to a different role within their organisation.

The 2012 National Management Salary Survey, published by the Chartered Management Institute (CMI) and XpertHR, reveals that employers are facing an increasing amount of difficulty in trying to hold on to management staff and recruit new managers. Almost three in five organisations participating (58.7%) experienced problems with staff recruitment, up from 48.9% the year before. The most frequently cited reasons for recruitment problems were a lack of candidates with the right skills and the salaries employers are able to offer at present. Retaining managers is also becoming a bigger problem; more than half of organisations (55%) highlighted that they are having issues retaining staff, a 13% increase on last year’s figure and up from 31.7% in the 2010 survey.

The survey, now in its 39th year, shows that pay rises have increased over the last year. Overall, managers received an average pay rise of 3.1%, a significant increase on the 2.2% rise the year before. The average senior department head now brings home £79,904, up from last year’s figure of £78,873, while those at team leader level earn on average £42,821, compared to £41,117 in spring 2011. While 12 months ago Chief Executives and Directors recorded the highest pay rises (3.2%), this has fallen to 2.9% this year, with junior and middle managers enjoying marginally higher pay increases than those senior to them (3.1% and 3.2% respectively).

Perhaps in response to the widespread public debate about bonuses and impending Government measures to address pay perceived as excessive, those at director level are also now less likely to receive a bonus than colleagues at lower levels. 47.3% of managers below director level received a bonus payment compared to 44.2% of their senior colleagues. Looking back over a longer period, senior-level bonuses are now almost half as common as they were six years ago when 84.5% of Directors and Chief Executives were awarded them.

Looking at cash values of senior bonuses, Chief Executive and director level bonuses have fallen from a year ago, now standing at £64,921 compared to £77,866 in last year’s survey. Chief Executives were the only level surveyed whose combined basic salary and bonus fell compared to the previous year, albeit by only 0.5%.

The incidence of bonuses has also fallen across all levels – 47.3% of all those surveyed received a bonus last year, while 53.5% did the previous year. However, the average bonus paid has increased slightly year-on-year from £5,106 to £5,326. The average bonus for all managers is still just one twentieth of that of the average CEO (£5,326 compared to £103,754).

Christopher Kinsella, Acting Chief Executive of CMI, says: “Employers are struggling to recruit and to retain high quality managers. One in 10 managers resigned from their jobs last year, presumably for better offers elsewhere. However, there is a risk that a substantial proportion of these managers left the profession altogether, a grave situation when UKCES/Government data estimates that the UK needs 544,000 new managers by 2020.

“We understand that many organisations are still struggling to provide general salary increases due to recessionary pressures, but we urge employers to look to non-financial methods of rewarding good employees or risk losing them. A company that does not work hard to retain its employees and invest in its people will find itself in a difficult situation given we already have a shortage of high quality managers. Strong managers are the lifeblood of effective organisations and too many employers are realising this too late.”

Mark Crail, Head of Salary Surveys and HR Benchmarking at Xpert HR, says: “This year’s survey findings reflect the slow recovery in salaries that we are seeing throughout the private sector following the worst of the economic downturn. But it is worth pointing out that with an average basic pay rise of 3.1%, managers and professionals have still seen a fall in the real value of their incomes thanks to relatively high rates of inflation. With inflation now falling, this may change over the coming year, and for many that would mean the first real-terms pay increase in nearly five years.”

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