Too many managers are flouting the principles of good performance management, as despite being rated as poor performers, they are still being rewarded by their employers according to new research published 3 June 2015 by the Chartered Management Institute (CMI) and XpertHR.
Data from the National Management Salary Survey 2015, which for the first time recorded performance ratings alongside pay, shows that rewarding poor performance is widespread within organisations, as nearly a third (30%) of all managers ranked as underperforming were handed a bonus in 2014.
Looking at the top of organisations, the salary and performance data reveals that of those senior managers and directors whose performance was rated as ‘not meeting expectations’, almost half (45%) received a financial bonus. The average bonus paid to underperforming senior managers stood at £8,873.
Data from the survey, taken from 72,206 employees in 317 UK organisations, also shows that managers’ salaries are on the rise. Pay increased by 3% on average in the past year – the biggest annual increase since 2012 – compared to a 2.7% increase the previous year. The average salary across all executive levels now stands at £38,328. The average bonus pay-out for all managers was £8,836, rising to £44,687 for directors.
Ann Francke, chief executive of CMI, commented:
“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.”
Mark Crail, Content Director at XpertHR, added:
“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.”