From the sacked supermarket boss who gets a million-dollar payout to the banking chief who is rewarded while his bank is investigated for rigging markets, we've long had anecdotal evidence that even when a business is failing, those at the top get their bonus.
Now new evidence has shown that bonuses have become so far removed from performance, almost half of all bosses will get a payout even if they underperform. A survey of over 70,000 employees shows that 45 per cent of those workers who had underperformed in the eyes of their managers still got rewarded. The average bonus paid to underperforming senior managers in 2014 was £8,873.
Anne Francke from the Chartered Management Institute, which conducted the research, said that the discrepancy between pay and performance is especially widespread among senior managers. "Unfortunately, it seems to be a lot easier to reward poor performance than to face the awkwardness of having difficult conversations with underperforming staff," she said.
It seems the gap may be getting even bigger in some sectors. At director level, bankers saw their bonus as a proportion of their salary rise 6 per cent to 70 per cent in 2015, while public sector directors saw a tiny increase of 0.6 per cent in 2015.
Meanwhile retail directors and IT directors all saw their pay decrease.
Employers told the CMI that they were finding it hard to recruit managers with the right skillset. This might be responsible for a noticeable leap in staff turnover in 2015 compared to last year, from just 4.8 per cent in 2014 to 11.4 per cent in 2015.
Francke said this was likely related to the decoupling of bonuses and performance.
“A toxic recruitment environment has been created by employers failing to invest in management training and addressing poor performance. The data show that managers are on the move again, and those with the most desirable skill sets are able to demand greater pay and higher bonuses – often without any link to performance targets,” she said.Reuse content