Resignation rates amongst HR Managers increase as salaries stutter

Resignations amongst HR managers have increased in the year to January 2004 as movements in earnings stutter, according to research by the Chartered Management Institute and Remuneration Economics. The results, from a survey of 21,987 managers, also show major changes to lifestyles and employee reward schemes since the survey began thirty years ago.

The 2004 National Management Salary Survey reveals that despite a growth in the number of bonus payments, the average total bonus fell by almost 500, from 3,955 in 2003 to 3,509. Combined earnings for HR managers rose by only 0.7 per cent, from 43,263 to 43,571. Managers in the chemical industry currently top the ’earnings league table’ on 55,359 with those in retail earning the least (35,748).

Although the average income for managers is now 42,050 compared with 4,067 in 1974, this rate of increase has not kept pace with spending on essentials such as housing, or consumables such as beer. Thirty years ago the average UK house cost 9,900 against 162,000 today and a pint of beer could be bought for less than 7 per cent of today’s average price (17 pence against
2.50).*

The findings reveal some stark changes in the way employers provide benefit packages for their staff over the last 30 years. Back in 1974, 87 per cent of directors had sole use of company cars, compared to 65 per cent today. At managerial level these figures have fallen from 72 to 44 per cent. Ford is still the favoured manufacturer but the Cortina has been replaced by the Focus Zetec as the UK’s most popular car.*

In an effort to secure employee loyalty, benefits increasingly feature in the overall remuneration package. In June 1974 private medical insurance (47 per cent) and share option schemes (22 per cent) were not widespread. However, the number of organisations now providing similar incentives has dramatically increased to 70 per cent (medical insurance) and 50 per cent (share options), with other commonly offered benefits being company pensions schemes (96.7 per cent) and mobile phones (79.5 per cent). Thirty years ago parental help was almost non-existent, but 1 in 5 employers now offers some form of provision for childcare. However, 4 out of 10 still have no form of flexible working to offer.

Yet despite the overall improvement in benefit offerings, the number of HR
executives handing in their notice has increased. Over 6 per cent of HR
directors and managers resigned their posts, compared to 5 per cent in the year to January 2003. Resignations are highest amongst professionals in business service functions (8.6 per cent) and human resources (6.2 per cent), but in the manufacturing sector only 1.5 per cent of labour turnover is accounted for by voluntary resignation. The most loyal executives are in the West Midlands, where only 2 per cent resigned in the last year.

Petra Cook, head of policy at the Chartered Management Institute, says: The increase in resignations is a major concern because, unchecked, it will impact upon the future strategic development of UK organisations. There is also a growing need to develop benefits packages to suit a range of lifestyles as employees are clearly focusing on the value of their remuneration package as a whole before deciding whether to change jobs.

Surprisingly the survey found that senior managers are increasingly likely to move jobs despite the belief that ’seniority equals stability.’ Over one-tenth of chief executives (12.9 per cent) changed employer in the last year, an increase from 4.8 per cent in 2002 and a dramatic change from thirty years ago, when 36 per cent of senior management had been with the same company for 20 years or more. Organisational loyalty has clearly declined across all levels though, with 58 per cent of businesses citing competition from other organisations as a reason for losing staff.

Commenting on the findings of this year’s report, Paul Campfield, director of Remuneration Economics says: In 30 years of reporting, this research has created a valuable picture of management progress. It is encouraging to see that organisations are increasingly offering more flexible working patterns as one of the practices to retain key managers.

Only 23 per cent of organisations questioned demonstrated a willingness to provide flexible benefits as part of the remuneration package. However, of those who do so, 82.5 per cent offer cash as an alternative to standard benefits such as pension contributions, life assurance and annual leave.