There is a general perception that the pay gap between top executives and their staff has increased dramatically in recent times. With huge bonuses for some banking chiefs in the news, it's easy to see where the idea comes from, but is it true more generally?
The XpertHR National Management Salary Survey has been running since 1973, so we could go back decades to show how pay has changed, but the past five years - from just before the start of the economic downturn to the present day - is more interesting.
Taking data from the survey, the figures below show how average basic salaries changed at all levels between 2007 and 2012.
Pay gaps in Basic Salary (Average). (a)
| Levels |
2007 |
2012 |
Diff. |
| Directors (11-12) |
£130,875 |
£138,744 |
6.0% |
| Senior Function Head (13) |
£96,877 |
£96,803 |
-0.1% |
| Function Head (14) |
£73,937 |
£79,904 |
8.1% |
| Department Manager (15) |
£58,263 |
£62,718 |
7.6% |
| Section Manager (16) |
£46,533 |
£50,076 |
7.6% |
| Professional Level 4 (20) |
£38,926 |
£42,821 |
10.0% |
| Professional Level 3 (21) |
£32,272 |
£34,829 |
7.9% |
| Professional Level 2 (22) |
£25,750 |
£28,508 |
10.7% |
| Professional Level 1 (23) |
£20,927 |
£21,393 |
2.2% |
| Entry Level (24) |
£16,346 |
£16,870 |
3.2% |
The largest increases have gone to professional staff - most notably those at XpertHR's Professional Level 2 (10.7%) and Professional Level 4 (10%). Directors' pay went up 6%, while Senior Function Heads saw a marginal 0.1% fall in pay.
Taking the average basic salary of staff at the entry level grade as a starting point, the figures show that a director earned 8 times as much as their lowest paid staff in 2007 and 8.22 times as much in 2012.
On this measure, the gap between entry level staff and those at all levels of the organisation with the exception of Senior Function Heads and Professional Level 1 employees widened over the five-year period.
But if you look instead at total earnings, the picture is subtly different. On this measure, Directors saw their pay rise by just 1% between 2007 and 2012 - a lower increase than that enjoyed by any other level of seniority.
Pay gaps in Total Earnings (Average).(b)
| Levels |
2007 |
2012 |
Diff. |
| Directors (11-12) |
£172,233 |
£174,016 |
1.0% |
| Senior Function Head (13) |
£114,247 |
£116,537 |
2.0% |
| Function Head (14) |
£86,954 |
£96,442 |
10.9% |
| Department Manager (15) |
£68,398 |
£72,025 |
5.3% |
| Section Manager (16) |
£53,911 |
£56,688 |
5.2% |
| Professional Level 4 (20) |
£43,121 |
£47,433 |
10.0% |
| Professional Level 3 (21) |
£34,482 |
£37,709 |
9.4% |
| Professional Level 2 (22) |
£27,383 |
£30,860 |
12.7% |
| Professional Level 1 (23) |
£21,935 |
£22,368 |
2.0% |
| Entry Level (24) |
£17,365 |
£17,844 |
2.8% |
Based on total earnings, Directors saw their multiple of entry level pay fall from 9.92 to 9.75.
More surprising, based on earnings, Directors have lost ground against every single level within the organisation. This analysis suggested that reductions on bonus and commissions have affected Directors the most.
Sources:
The National Management Salary Survey 2012 (38843 individuals)
The National Management Salary Survey 2007 (42205 individuals)
The National Management Salary Survey provides an overview of pay and benefits for managers and professionals across the UK. Published since 1973, it is endorsed by the Chartered Management Institute and includes data up to and including chief executive level.
(link)
(a) Basic salary:
Basic annual salary before deductions for tax, national insurance, pension contributions etc but including London or other location allowances, performance or skills supplements but excluding any bonuses, commission payments and mortgage subsidies.
(b) Total earnings:
Basic annual salary before deductions for tax, national insurance, pension contributions etc but including London or other location allowances, performance or skills supplements plus any bonuses, commission payments and mortgage subsidies as well as any shift or standby allowance paid.
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