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Under-performing managers still receiving bonuses

Published 10/05/2016

Research found that many managers and professional staff were receiving bonus payments despite under-performing
Research found that many managers and professional staff were receiving bonus payments despite under-performing

Managers are being rewarded for failure, with more than one in five receiving a bonus even if they fell short of performance expectations in the last year, according to a new report.

Research by the Chartered Management Institute (CMI) and XpertHR found that many managers and professional staff were still reaping the benefits of bonus payouts despite failing to meet targets.

Of those deemed to be under-performing or developing, 23% still received a bonus payment on top of their basic salary. The average bonus payments to this group were worth £4,270, or 12% of their basic pay, taking their total packages to £40,067.

The data also suggests that so-called "rewards for failure" could be more common for more senior leaders.

Among senior managers who fell short of performance expectations, as many as 43% took home bonuses.

The survey, which has been tracking executive pay since 1973, analysed remuneration data for more than 105,000 managers and professionals from 425 organisations.

CMI chief executive Ann Francke said the findings revealed a "costly problem" for business that too many employers were failing to address.

"Pay and performance issues in the UK extend well beyond chief executive level. The truth is that bonuses continue to remain divorced from performance in too many organisations.

"Fixing the problem means setting clear targets, aligning bonus pay with performance, and being prepared to have difficult conversations with under-performers who don' t measure up."

Mark Crail, of XpertHR, said: "Employers have reined in a lot of poorly focused executive perks since this survey began back in the early 1970s. Subsidies for school fees and chauffeur-driven cars are not exactly commonplace these days.

"But the bonus is as significant a part of many managers' incomes as it ever was. Employers have come a long way in aligning pay and performance but, as our research shows, there is still some distance to go to get it right."

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