Almost a quarter (23%) of managers who underperformed last year still received bonuses, according to research from the Chartered Management Institute (CMI).
The National Management Salary Survey, which has been tracking executive pay since 1973, analysed remuneration data for more than 105,000 managers and professionals from 425 organisations. The average salary for managers is £34,479, and those who were rewarded despite underperformance received average bonus payments worth £4,270 (or 12% of their basic pay).
The number of managers receiving bonuses has also increased over the past year, from 54% to 57%.
Additionally, the report uncovered recruitment issues. Nine in 10 (91%) of the employers surveyed reported that they were facing recruitment problems, up from 89% in 2015 and 79% in 2014.
The main issue cited was the challenge of recruiting people with specific skills, identified by 87% (up from 75% in 2015 and more than doubled from 41% in 2014). Pay was also a factor, with a rising number saying that the problem lies with reward packages being too low to attract high-quality applicants – 36%, up from 20%.
According to CMI’s chief executive Ann Francke the findings reveal a costly problem for business that too many employers are failing to address.
“Pay and performance issues in the UK extend well beyond CEO-level,” she said. “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 underperformers who don’t measure up.”