Frozen reward: Recession affecting reward in housing associations
31% of chief executives of housing associations have had their pay frozen and 47% expect pay levels to be frozen in 2010, according to research from Smith & Williamson, the accountancy and financial services group.
Looking towards a cold 2010
Two thirds of participants in Smith & Williamson’s survey of senior level reward in housing associations were able to provide an indication of the likely level of general pay award for 2010. Inflationary trends are a key influence for 61% of respondents, so it is not unexpected that the median expected rise is just 0.5%. However, 47% expect to freeze their pay levels and the remainder predict a median rise of 1.25%. The highest predicted rise is 2.5%.
Matching the returns of the participants who have participated in both this year’s and last year’s survey revealed that executive pay has increased by an average of 2.1% over the past year. The average pay rise given to all staff in this group was 2.2%.
— 31% of these Chief Executives have had their pay frozen.
— 44% received increases of between 2% and 4%.
— The highest pay rise recorded was 7.2%.
Bonus culture
Most executive bonus schemes are discretionary and closely regulated by the association’s board or remuneration committee. We see that associations face a common dilemma, torn between setting up an objectively based scheme and ensuring sufficient room for discretion. Boards are focused on seeing a tangible improvement in corporate performance before bonus payments are made, but are still unsure about the quantum of payments to executives. As a result, many prefer to focus reward on basic pay.
- 42% of respondents operate some form of bonus scheme for their employees.
- 36% of Group Chief Executives were eligible for a bonus, but only half of these received a payment in the last 12 months. The average bonus received was 12.5% of basic pay (up from 7.3% last year).
- 26% of Chief Executives of single entities were eligible for a bonus. 86% of these went on to receive a bonus, with average payments of 6.7% (down from 7.7% last year).
Gender pay gap
With the Equalities Act due to be come law in 2010, equal pay issues remain a hot topic. The Smith & Williamson housing association executive reward survey analyses the overall reward packages of senior level employees at single and group housing associations across the UK. The average gender pay gap was analysed by hierarchical level amongst participants to compare the earnings of female and male workers.
The signs of progress in the sector are encouraging:
— at Chief Executive level, the gap has narrowed from 29.5% last year to 23.5% this year.
— at Group Director level the gap this year is 16%.
— at single entity Director level the differential remains slight - last year it was 2.6%, and this year it stands at just 2.4%.
— our analysis of Head of Function level indicates that the gap is low, at 1.8%.
By comparison, the Office for National Statistics reported in November 2009 that the overall full-time gender pay gap in the UK has narrowed slightly over the past year from 12.6% to 12.2%. At managerial level, the gap is 20.2%.
About the survey
This is our second annual survey of executive of executive remuneration in the housing association sector, with participants from a range of organisations across the country. It includes data from 38 housing associations, including 5 of the 10 largest groups. It covers 678 individuals in senior executive roles. Designed and produced by HR specialists, the survey report aims to provide an analytical approach to reward data, giving an accurate context for registered providers to use as they deliberate on executive reward decisions for 2010.
The full survey report is available to Housing Associations to purchase for £795. Housing Associations with less than 50 employees are eligible for a discounted price of £395. To order a copy please e-mail Rachel Bennett at rachel.bennett@smith.williamson.co.uk or telephone on 0117 376 2369
For further information contact
Rachel Stone, partner, People Management at Smith & Williamson on 0117 376 2066
Email Rachel Stone
Karl Ellis, HR consultant at Smith & Williamson on 0117 376 2082
Email Karl Ellis
PR enquiries to:
Jess Koslow 0207 131 4264
Kate Harrison 0207 131 4228
Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Note to editors
Smith & Williamson is an independent professional and financial services group employing around 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Maidstone, Salisbury, Southampton and Worcester.
Smith & Williamson Limited
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International, a worldwide network of independent accounting firms.
