Data from the National Management Salary Survey 2015, which for the first time recorded performance ratings alongside pay, has revealed that rewarding poor performance is widespread within organisations in the manufacturing Industry: while only 23% of managers were rated as having exceeded performance expectations, 38% received a bonus in 2014, rising to 55% in the manufacturing sector.
Data from the survey, taken from 10,822 employees in 53 organisations across the manufacturing industry, also shows that managers' salaries are on the rise. Pay increased by 2.9% in the sector on average in the past year, compared to a 2.2% increase the previous year. The average salary across all executive levels in the manufacturing industry now stands at £43,625. The average bonus pay-out for all managers was £4,914, rising to £56,321 for directors.
Ann Francke, chief executive of CMI, said: "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."
She added: "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."
Mark Crail, content director at XpertHR, said: "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."
In other findings, the number of manufacturing employers experiencing recruitment problems has been significant in the past year at 89%. The main recruitment issues cited by organisations were difficulty in recruiting people with specific skills (81%), while 28% cite a poor quality of applicants, which indicates a skills shortage emerging among these managers.
Competition for skills in the sector is being driven in part the increase in labour turnover, from 1 % in 2014 to 14% in 2015. Resignations account for 36% of labour turnover, compared to just 22% of manufacturing managers who were made redundant.
Download the National Management Salary Survey 2015 infographic and find out more about improving performance management by visiting www.managers.org.uk/salarysurvey or join the conversation @cmi_managers #CMISalarySurvey
