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Management loses out on bonuses and profit shares

Joe Williams , 07 Jan 2011

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Bonuses and profit shares for senior and middle managers have fallen more than for other employees over the last two years.


Research by professional service providers, Tower Watson, suggests that senior managers earned 35% of base pay in bonuses and profit share last year, compared to 45% in 2008.

Middle managers were also awarded smaller amounts than two years ago, taking home 13% compared to 16% in 2008.

However, "lower level" employees earned almost the same amount in 2008 ne 2010 on average in bonuses and profit shares as a proportion of their earnings, the figure standing at just short of 10%.

Tower Watson’s research — published this week in their Global 50 Remuneration Planning Report — also showed the disparity in policies towards payments abroad. Senior managers in Switzerland are paid almost 48% of their base pay in bonuses and profit shares, with more junior staff only being able to expect 7%.

At the other end of the scale, payments for Danish senior managers stand at 25% of base pay, with lower paid staff being awarded on average 8% of their base salary.

The BBC reported yesterday tht the government is "resigned" to UK banks paying out billions of pounds in bonuses this year, estimating that Royal Bank of Scotland will pay £1 billion more than last year's £1.3 billion.

Towers Watson’s Anne Severeyns said: "Variable pay such as this, vitally, offers employers the ability to manage cost and performance as well as rewarding and retaining key talent. 

In the current economic environment it has never been more important to have tools at hand to work out remuneration in the context of strict budgets and at the same time using it to develop those employees who are vital to business success."

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