Earning power falters, adding to record recruitment problems in HR sector

Organisations across the HR sector are struggling to attract staff as movements in earnings drop for the first time in 4 years and bonuses become less frequent. A survey of 42,205 individuals by the Chartered Management Institute and Remuneration Economics also shows that resignation levels are up, despite employers offering a variety of incentives, as they try to hang on to the best talent.

The 2007 National Management Salary Survey shows an average increase in earnings of 5.3 per cent, down from 5.7 per cent in 2006. Representing employees from trainee level to chief executive, this figure is also the lowest movement in earnings since 1996. At 5.9 per cent the HR sector is top of the ëpay rise league tableí, for the 12 months to January 2007. Transport and logistics, at 2.6 per cent, is bottom.

In real terms, the findings show average total earnings, for managers in the HR sector, of 47,674, compared to 47,449 across the whole of the UK. The figure places managers in the sector as the fourth highest ëindustry earnersí, with managers in the pharmaceutical sector coming top (50,525). In regional terms, the top earning managers are London-based (54,808) and their take home pay represents a 29.9 per cent difference against the lowest paid managers in Northern Ireland (38,399).

It is also clear that bonus payments are playing less of a role in overall ëtake home payí. Across the HR sector, in 2007, 75.8 per cent of executives were awarded bonuses, compared to 78.6 the previous year. The findings go on to reveal an average bonus payment across the sector of 4,075 for employees, but shows vast sector differences. Employees in the utilities sector, for example, were awarded 10,390 on top of their annual salary compared to 5,189 in IT and 4,030 in retail.

The survey, now in its 34th year, also reveals that 81 per cent of employers are reporting recruitment problems - a fourfold increase since 2002. In a sign that employers are becoming increasingly desperate to find the right calibre staff, 32.6 per cent now offer ëgolden hellosí, compared to just 16.3 per cent in 2006. 82 per cent also indicate that they will make ëreferral paymentsí to staff, up from 62.5 per cent, last year.

Asked why they are experiencing difficulties recruiting staff, the majority of employers (73.2 per cent) blamed a lack of qualified candidates. Competition from other organisations ranked highly (68.4 per cent), but employers also admit that they have failed to learn lessons from recent years. 51 per cent said they offered little in the way of training or career development, a figure that has risen from 37 per cent, last year. More than 1 in 4 (27 per cent) also said restructuring had caused job insecurity (up from 20 per cent).

The survey also reveals that resignations in the HR sector have increased; now standing at 5.3 per cent compared to 4.5 per cent, last year. In industry terms, the HR sector is not suffering resignations as much as retail (11 per cent) or insurance (8.2 per cent), but it is faring worse than the pharmaceutical industry (4.4 per cent) and food and drink sector (3.8 per cent).



Jo Causon, director, marketing and corporate affairs at the Chartered Management Institute, says: ìThe steep climb in organisations reporting recruitment difficulties, mixed with an increasing number of resignations should be ringing alarm bells for employers. The marketplace is clearly tipping in favour of the employee, so if they are serious about retaining the best talent organisations urgently need to meet the needs and expectations of their staff.î

Looking at wider benefits, the proportion of organisations providing a ëcomplete remuneration packageí continues to climb. For example, childcare voucher provision is up to 70 per cent (from 67 per cent, last year) and life assurance is offered by 57 per cent of employers (up from 52 per cent). Protecting the environment is clearly climbing the organisational agenda as company car provision is declining and more organisations (70 per cent) encourage use of public transport through season ticket loans, compared to this time, last year (67 per cent).

Paul Campfield, director at Remuneration Economics says: ìThis yearís survey shows how benefits packages are increasingly being offered to employees amongst all levels of seniority. When reporting first began, in 1974, provision of medical insurance was largely the domain of directors. Today, over 70 per cent offer the same benefit to staff across the organisation.î