Performance bonuses and managers' perks fail to keep up

By GRAEME PERFECT*

Performance bonuses and incentives have been slow to catch on in New Zealand as a way of rewarding management, especially middle managers, when businesses do well.

While the salaries paid to general managers have moved up to an average $117,000 in the past five years, the performance and incentive bonus component has only just kept pace.

What is more, company perks or benefits are not what they used to be.

From the data we gathered in 1997, the average pay for over 480 senior managers was $107,000. Performance-based bonuses represented 20 per cent of total remuneration, or $20,300. By last year their pay had moved up 9.5 per cent to an average $117,000, but their incentives and bonuses package still represented much the same proportion of salary, 20 per cent or about $24,000.

The figures are from the Employers National Survey of Wages and Salaries, which has been running for eight years. They were aggregated from positions ranging across many sectors including production, warehousing, transport, manufacturing, local government, health and business services.

The same reluctance to increase the rewards to managers on the basis of business results is evident at the next tier down.

The bonuses and performance incentives paid to over 750 survey participants who are regional or branch managers and sales, marketing and information services managers moved from 13 to 15 per cent of their total remuneration packages between 1997 and last year.

In 1997 the average base salary for this group of middle managers was $62,700. It had moved up to $72,200 by last year, with performance bonuses 2 per cent higher at an average $11,000.

As might be expected, the larger the enterprise the more its chief executive can earn as incentives and bonuses. The 45 chief executives in our survey last year employing more than 200 employees earned an average basic salary of $160,000 with 35.6 per cent more paid as performance bonuses.

On the other hand, 136 general managers who employed under 50 staff had an average base salary of $84,000 with 20.6 per cent more in bonuses.

Company-paid perks such as cars, employer contributions to superannuation, medical insurance, expense allowances and professional association fees have all been dropping as proportion of the salary package for many managers.

Five years ago, 63.7 per cent of senior managers got a company car. Last year the figure was 58 per cent.

For middle managers, 60.1 per cent had a car in 1997; last year it was 57 per cent.

The cutting of other perks was even more severe. The numbers were:

* Senior Managers

Home phone

1997 37.2 2001 17.5


Expense allowance

1997 5.7 2001 1.7


Professional/club fees

1997 4.5 2001 3.4


Death/disability cover

1997 5.5 2001 5.95


* Middle Managers

Home phone

1997 50.3 2001 31.7


Expense allowance

1997 14.8 2001 8.95


Professional/club fees

1997 10.2 2001 6.0


Death/disability cover

1997 8.23 2001 4.35


The proviso applying to our survey's data overall is that the same precise participants were not necessarily in both the 1997 and 2001 surveys. Also, more people were included in the figures for the 1997 research than last year.

One thing has not changed much - all senior managers recorded long hours in their working week.

In 1997 the total was more than 51 hours; by last year it had gone up 43 minutes to a weekly average of 51 hours and 45minutes.

* Graeme Perfect is assistant manager of the Employers & Manufacturers Association Advisory Services.

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