Press Release

Resignations increase as organisations fail to meet expectations

28 June 2006 – Resignation rates have increased in the year to January 2006 as organisations fail to meet the needs of their staff. A survey of 22,480 individuals shows that despite an increase in earnings, the UK’s executives have become frustrated by company pay structures and a lack of job satisfaction.

The 2006 National Management Salary Survey, published by the Chartered Management Institute and Remuneration Economics, reveals a labour turnover rate of 11.9 per cent, compared to 7.6 for the previous year. Resignations stand at 4.6 per cent for managers, compared to 3 per cent in the 2005 survey and requests for internal moves have climbed to 4.9 per cent, from a low of 1.4 per cent twelve months ago.

This desire to change jobs comes despite employers offering an average increase in earnings of 5.7 per cent - the highest annual increase since 2002. The findings reveal that the average total earnings for managers in the UK are £47,055, with managers in the North West bottom of this year’s ‘earnings league table’. At £41,329 their earnings represent a 33 per cent difference against the top earners (Inner London at £55,302).

Over the last year 79 per cent of organisations have given bonus payments to their staff, compared to 70 per cent in the previous year. This wide-scale distribution represents a return to the heights of 2002, the last time more than three-quarters of UK employers made bonus payments to all executives. The average managers’ bonus is now worth 10.9 per cent of their salary, compared to 10.4 per cent the previous year. Directors’ bonuses are worth 38.9 per cent of their salary (38.6 per cent in last year’s survey).

However, despite the increase in earnings, the UK’s employers are finding that financial rewards, alone, are no longer enough. More than half the organisations (55.1 per cent) reported retention problems in the 2006 survey (up from 45.4 per cent, last year) and 6 in 10 admitted difficulty recruiting.

Asked to explain these retention and recruitment problems, many organisations cited dissatisfaction with the working environment, frustrations with company pay structures and a lack of skills or development opportunities:

- Adverse environments: 20 per cent said restructuring or job insecurity caused uncertainty. 15 per cent suggested staff were unhappy with office location or relocation plans and 9 per cent focused on the lack of facilities available at work

- Distribution of pay: 39 per cent claimed they lost staff because of the salaries on offer and many organisations also identified dissatisfaction caused by the distribution of bonus payments. Although the overall incidence of bonus payments in organisations is high (79 per cent, as stated above) this year’s survey shows that 62 per cent of managers received a bonus, compared to 69 per cent last year. The proportion of directors receiving bonuses has, however, increased to 85 per cent, from 77 per cent

- Truncated training: over one third (37 per cent) admitted they offered little in the way of career development or training, and of these organisations, 29 per cent suggested structured training was not open to all staff (up from 23 per cent last year). More than half (53 per cent) also said they could not find staff with the required specialist skills

Jo Causon, director, marketing and corporate affairs at the Chartered Management Institute, says: “The reported increase in resignations is a matter for concern, especially as organisations continue to identify skills gaps in specialist areas. Of course, a certain amount of labour turnover can be a good thing, but if the current trend is allowed to continue it could breed dangerous levels of uncertainty and impact on the strategic development of UK organisations.”

In an attempt to redress the trend in resignations, the 2006 Survey shows that organisations are offering a range of benefits to staff. These now include private medical cover (72 per cent), childcare vouchers (67 per cent) and life assurance of 4 times the salary (63 per cent). Almost all offer some form of pension provision (99 per cent), but the number offering contributory final salary schemes has dropped from 34 to 28 per cent.

Paul Campfield, director of Remuneration Economics, comments: “The report, which is now in its thirty-third year, shows that many organisations are creating packages that offer the flexibility to match employees’ differing requirements. With the increase in staff turnover this is an area that will inevitably attract greater attention as employers look to retain the best talent.”

Further details, including regional and industry breakdowns, information relating to benefits and movement in earnings are available from the Chartered Management Institute on 020 7497 0496.