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Where have all the managers gone?

Posted on May 04, 2012

Management resignation figures grow at an alarming rate

In excess of 15% of managers in the UK resigned or changed job roles last year. Statistics from the 2012 National Management Survey, published by the Chartered Management Institute (CMI) and XpertHR, have displayed worrying findings regarding the assurance of keeping key roles filled in management hierarchies across the entire country. The most common reason for managers leaving has easily been resignation (9.4%).

This prompts the obvious question, why?

It is no secret that a good manager is a difficult commodity to come across. Finding an appropriate candidate who fits into the working environment in the right way, and possesses the necessary skills and talents required to drive the company in the right direction is now proverbial gold dust. This has largely removed the concern of experienced managers in regards to finding new employment should they not feel comfortable where they are currently employed.

Christopher Kinsella, CEO of the CMI, stated "The results show the best people can move on and that they are, in increasing numbers."

Effect on Businesses

With need out-weighing supply, there have been obvious repercussions to businesses across the UK. It is no surprise talented management is heading towards the highest bidder, the largest salary increases have been seen in the South-East (5.5% average pay rise). Healthier reward packages are also becoming a necessity in order to both keep and lure the most talented of managers. The domino effect has caused this trend to knock on towards junior and middle management, with salary rises at this level now reaching an all-time high.

Any suggestions?

With retaining not only management but staff in general proving more problematic than in recent times, it would appear that the necessity to preserve an incentivised and appreciated workforce is now paramount.

There are a variety of methods when considering incentivising employees, one of the most successful and effective options would be to implement a share scheme. Share schemes provide financial reward for employees that show drive and commitment to push the company forward. They are also a fantastic way of eliminating the problem of alienating or allowing key employees to feel unappreciated as they ultimately become part of the business. Another advantage of share schemes is their versatility; they can be tailored to suit almost any business structure. The most common tax-efficient share schemes are Enterprise Management Incentives (EMIs)Deferred Share Purchase Plans (DSPPs), and Share Incentive Plans (SIPs).

Enterprise Management Incentives

The Enterprise Management Incentive is a highly tax-efficient method for providing targeted incentives to key employees or employee groups. It is structured as an option scheme, whereby an employee is granted the right to purchase company shares in the future at a price set at the date of grant. The employee benefits financially when the company's targets are met and the value of the shares rises above the purchase price.

Deferred Share Purchase Plan

Under a DSPP, the shares are purchased outright for a small initial deposit. The remainder represents an unpaid balance payable on the shares. This will be paid up on the occurrence of a defined event, such as flotation or a trade sale. Assuming the shares have risen in value, the participant will then be able to pay up the balance on the shares and take the profit with gains treated as capital gains and not as a benefit of employment, resulting in a substantially lower tax rate on any realised profits.

Share Incentive Plan

Share Incentive Plans are highly tax efficient method of providing incentives in the form of company shares.  All employees must be offered the chance to participate, but can be subject to a qualifying service period of up to 18 months. The value of awards allocated to eligible employees can vary in proportion to salary, length of service and hours worked.

Not sure which would be most effective plan for your company? Contact RM2 today!

If you have and questions or are interested in implementing a share scheme, get directly in touch with us on 020 8949 5522, or alternatively by emailing Liz Hunter at Liz.Hunter@rm2.co.uk.

 
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