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UK Managers Bonus and Profit Share Remuneration Falls

UK Managers Bonus and Profit Share Remuneration Falls
 
The proportion of earnings that UK senior and middle managers received in the form of bonuses and profit share in 2010 has fallen far more over the past two years than lower level employees, according to latest research from global professional services company, Towers Watson. 
 
The Global 50 Remuneration Planning Report which shows Towers Watsons analysis of differing patterns of 'at risk' pay, found that UK senior managers in 2010 were earning on average 35.1 per cent of base pay in bonuses and profit share compared to 45% in 2008.  The proportion of bonuses and profit share were lower for middle mangers than for their senior counterparts however they also saw an equivalent level of decrease.  The average percentage of base pay they received in the form of bonus and profit share was 12.6 per cent, down from 16 per cent two years ago. 
 
By contrast lower level employees have fared relatively better in the past two recessionary years in terms of at risk pay.  The proportion of base pay given as bonuses and profit share for lower level employees was 9.7 per cent in 2010, only slightly down from 10 per cent in 2008.   
 
Across Europe analysis in the report shows a lack of consistency about what senior managers were paid in bonus and profit share in relation to their more junior colleagues.  In Switzerland, for example, senior managers were rewarded with bonus and profit share at an average of 47.6 per cent of base pay, the highest in Europe, while its lower level employees received only 7.1 per cent.  In Denmark, however, senior managers earned bonus and profit share worth on average 25.1 per cent, one of the lowest in Europe, while middle managers also received a comparatively low 11.7 per cent and lower level employees 7.7 per cent, which is about average for that level.
 
Anne Severeyns, Head of Operations Data Services EMEA at Towers Watson says: "Bonuses and profit share are an important part of the overall reward package in most European countries.  However, there are marked differences in the size of 'at risk' pay compared with base pay amongst countries as well as differences in the weight given to 'at risk' pay at difference job levels.   Variable pay such as this, vitally, offers employers the ability to manage cost and performance as well as rewarding and retaining key talent.  In the current economic environment it has never been more important to have tools at hand to work out remuneration in the context of strict budgets and at the same time using it to develop those employees who are vital to business success.
 
Bonus and profit share as percentage of base pay (excluding sales roles) across EMEA

Country

Senior Manager (%)

Middle Manager (%)

Lower level Employee (%)

Austria

31.3

13.1

6.8

Belgium

32.1

12.7

6.2

Denmark

25.5

11.7

7.7

Finland

37.5

15.6

7.7

France

35.5

12.0

8.2

Germany

38.7

14.4

7.7

Ireland

29.8

15.7

8.0

Italy

29.7

15.4

6.5

Luxembourg

39.8

14.2

5.0

Netherlands

37.7

11.7

8.8

Norway

28.0

12.2

6.1

Spain

25.1

13.4

7.5

Sweden

29.8

10.9

7.3

Switzerland

47.6

14.9

7.1

UAE

48.9

16.0

14.3

United Kingdom

35.1

12.6

9.7

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