Accountants primed for biggest bonuses in four years
The average bonus for 2014/15 is expected to be 19% – up from 17.5% in 2013/14 – to match the percentage bonus last achieved in 2010/11. It means accountants will take home £12,691 on average during bonus season (Christmas 2014 to Q1 2015) if their hopes are fulfilled.
Salary growth over the last four years means that a 19% bonus now equates to 22% more in monetary terms than in 2010/11, when it amounted to £10,438. Accountants are on course to receive an extra £2,253 this year.
Table 1: Average bonuses from 2010/11 to 2014/15
Comparing year-on-year, accountants are expecting an extra £1,007 in this year’s bonus pay-out having received an average of £11,684 in 2013/14.
This is the biggest annual increase of the last four years and means that bonuses will have risen 9% in the last year alone: far exceeding the latest 1.3% annual inflation rate (CPI). If accountants’ expectations are realised, their bonuses will have risen in cash terms in each of the last three years.
Figure 1: Average accountancy bonuses 2010/11 to 2014/15
Optimism fuelled by better business prospects
The anticipated rise in bonuses reflects a continuing sense of confidence within the sector, which has seen strong growth following the end of the recession. Marks Sattin’s 2014 Salary and Market Trend Report revealed that nearly four fifths (79%) accountants felt their jobs were secure, while two thirds (66%) were expecting a pay rise.
Two fifths (40%) were more confident about the economic prospects facing their company during 2014/15 compared with the previous year, and nearly half (44%) were expecting an increase in business profitability during 2014/15. This confidence now appears to have translated into higher bonus expectations.
Dave Way, Managing Director of Marks Sattin, said, “Accountants clearly feel that their bonus prospects are good this year and are looking forward to a larger windfall that reflects the improving outlook for many businesses in the sector. There is a sense that activity and output are on the rise, and a clear expectation that bonuses will be carried with them.
“In cash terms, a return to 19% bonuses after three years of lower payouts as a percentage of salaries looks set to leave accountants with an extra £2,253 in their pockets than the last time they enjoyed this scale of reward. After bonuses dropped in 2011/12, the sense of malaise has been well and truly shaken off as the economy has turned a corner and brought a new optimism to the sector.”
Bonuses a key factor in attracting and retaining talent
Marks Sattin’s research suggests that remuneration strategies are likely to feature high on the priority list for HR departments in 2015/16 as they seek to attract and retain the best talent. Almost a quarter (24%) of accountants left their last role due to the offer of a higher salary elsewhere and just 46% feel satisfied with their current pay.*
Bonus packages form an important part of this effort, with accountants rating annual bonus schemes as more important than private healthcare, insurance, childcare arrangements, sabbaticals and season ticket loans when considering a new role.
Way added, “Financial remuneration is a very important part of accountants’ job satisfaction, and as businesses seek to expand their headcounts as the economy grows, many experienced professionals will undoubtedly receive some tempting offers. Senior managers and HR professionals would be wise to take this into consideration during bonus season.”