THE PRIZE IS RIGHT

This year’s salaries survey confirms 1996’s optimistic prediction. The report, compiled with the help of The Lloyd Group and Compass Data Services for Marketing Week, shows most marketers receiving above-inflation rises. But with an election l

This year’s marketing salaries survey shows a continuing pattern of recovery and higher pay rises. It substantiates last year’s prediction that marketers “should enjoy a year of steady growth”.

The economy is moving ahead, and is on course for sustained strong growth. The marketing community is growing in optimism as confidence is restored, and the pros pects look bright as companies feel their way out of the recession by adapting to the changing economic climate.

Across the industry salaries have risen by 7.1 per cent. Once more the rise is more than twice the rate of inflation, showing that salaries bear little relation to the inflation rate of 2.7 per cent (October). Indeed, the inflation rate has dropped in the past year from 3.2 per cent, whereas salaries have steadily increased for the third year running, from the all- time “low” of 5.9 per cent in 1994.

The marketing community continues to expect pay rises in excess of inflation, and next year has predicted a rise of 5.9 per cent. This is likely once again to be an under-estimate, but shows the growing confidence of marketers when compared with the 4.9 per cent predicted last year. This greater assurance seems justified when one considers that the number experiencing a pay freeze has dropped to seven per cent, compared with 13 per cent four years ago.

The biggest pay rises went to the middle managers, with group product managers gaining eight per cent, and senior product managers winning a substantial 10.7 per cent. This figure compares with the record rise all marketers enjoyed in the heady days at the turn of the decade. Product managers also did very well with a 7.7 per cent rise. Employers are evidently seeking to protect their rising stars in order to groom them for senior management roles. Elsewhere, marketing directors were awarded the average 7.1 per cent, and the most junior received 6.2 per cent.

The smallest rise of all went to the most senior professionals, with managing directors receiving 5.9 per cent. In contrast, the reward for being in the top ten per cent of this group is 10.3 per cent. One might expect mixed fortunes at this level, where salaries are more likely to be directly tied in to company profitability, and where the reward is greater for successfully steering a steady course through the rough seas of recession.

Salary surveys over the past three years have shown that the difference in pay between the average and the best is negligible. The general sentiment during these recessionary years has been one of “grateful to be on the payroll”. This year, at all but one level (product manager), the upper decile continued to secure better pay rises than the rest. With confidence returning to the marketing community, it could be that the high flier will once again be demanding bigger salary increases than the rest, and that critically, demand will be met to safeguard staff retention. The upper decile was the last group to be affected by recession, and their recovery is a good sign for the rest of the profession.

The salary difference between the best and the rest remains considerable. The average marketing director earns 54,187, but the top performers can command a salary of nearly six figures with 99,687, a massive 84 per cent pay difference. At product manager level the trend is the same, with an average salary of 23,364, but the high achievers earning 40 per cent more with 32,739, which is 2,026 more than the average marketing manager.

Financial reward for excellence is of paramount consideration for managers who recognise the need to lock into their most talented marketers, and the tables showing the reasons for a salary increase are revealing. For those going through the process of the annual pay review, the increase is an average 6.2 per cent (up from 5.9 per cent last year), but for those whose achievement has been recognised with an internal promotion, the reward is more than double: 13.1 per cent (12.5 per cent last year). Since 94 per cent of marketers cite financial reward as a major job characteristic and motivating force, employers must not be complacent. The biggest salary rises go to employees who are lured away from their current companies with rises of 15.2 per cent (up from 14.5 per cent last year).

The provision of fringe benefits has increased slightly from last year, but not significantly. The trend over the last four years has been in a reduction of benefits with the emphasis on reward for excellence. While still an essential factor in staff retention, it is only those providing value for money who can expect to receive the full range of fringe benefits. This is likely to be a permanent legacy of the recession.

This is clearly demonstrated by the case of the company car. Five years ago, 81 per cent of marketers had a company car. Today 64 per cent drive a company car, whose average worth is now 18,198. For the first 12 years that we ran this survey, the company car was predictably the chief perk, but now, for the second year running, it has been superseded by the health plan, which was awarded to 69 per cent (68 per cent last year).

With a 13 per cent increase in October sales, the motor industry has been enjoying something of a resurgence, but while a growth in the car market is predicted for next year, it seems unlikely that the provision of company cars will increase to anything like the record high of 86 per cent in 1991.

Free petrol is provided to 32 per cent of respondents, falling from 41 per cent two years ago. With a further 3p on petrol and diesel announced in the Budget, and record crude prices this year, managers may consider this form of benefit cost prohibitive next time round. The provision of petrol allowances has also fallen, to seven per cent. The number receiving a car allowance has grown by only one per cent to eight per cent, but car loans are given to just two per cent of our survey, a drop from last year. Travel expenses show no change from last year (39 per cent).

Bonuses are a little more widely available this year, with 55 per cent having the opportunity to win a performance-related bonus (51 per cent last year), and seven per cent receiving a guaranteed bonus (a rise of only one per cent over the previous year). Performance-related bonuses carry a greater value, but only for those hitting target, underlining the fact that greater benefits go on merit to the best performers.

A performance-related bonus is worth at least 11 per cent of salary to 32 per cent of those who receive a bonus, but worth the same amount to fewer (26 per cent) with a guaranteed bonus. A guaranteed bonus is worth less than six per cent of salary to 53 per cent receiving one, but worth less than this figure to just 38 per cent on a performance-related bonus.

Share option schemes have increased for the first time in eight years, to 34 per cent of our sample (formerly 31 per cent), with marketing directors benefiting the most (47 per cent). The provision of profit © share has slightly increased to 28 per cent of our respondents, and is fairly evenly distributed throughout the marketing department. However, it is a particularly significant benefit to managing directors, being worth a salary top-up of at least a third to 23 per cent of this group, but to only four per cent of marketing directors.

Ninety per cent of our sample are in a company pension scheme, compared with 87 per cent last year. Twenty-two per cent are in the fortunate position of being in a non-contributory pension scheme, while 68 per cent have a contributory pension. Both types of scheme are operated evenly throughout the marketing department, but non-contributory pension schemes are more prevalent in larger marketing departments.

The number of marketers enjoying a flexible benefits policy is steadily increasing. It reached 45 per cent this year, up from 41 per cent last year, and 37 per cent in 1995. Evidently a more tailored approach to benefits suits both employer and employee alike, with departments of all sizes being equally able to facilitate this practice. Previously larger departments were 50 per cent more likely to operate such a policy.

Not surprisingly, larger companies are able to offer a greater diversity of benefits. In departments of 100 or more, you are twice as likely to have a profit share or share option scheme, or benefit from relocation expenses than if you work in a department of fewer than 11.

Mortgages are available to 25 per cent of those in the largest departments, product discounts to 59 per cent and crèche facilities to ten per cent, compared with a respective average of seven per cent, 39 per cent, and one per cent. Company credit cards are also more common in larger companies.

The provision of benefits appears to have stabilised, albeit at a much lower level than at the turn of the “boom” years. With companies having to work harder to keep their heads above water, it looks likely that benefits will continue to be a reward for attainment, rather than the anticipated handout. Over the next two years we will also see the impact of Kenneth Clarke’s recent Budget, with equity payments being subject to tax and national insurance on a monthly basis, and from 1998, tax relief on profit-related pay being abolished.

A look at the make-up of the marketing department shows the marketing profession is witnessing positive signs of growth. This year 43 per cent reported an increase in the size of their marketing departments, compared with 40 per cent last year, and 35 per cent two years ago. Headcount has increased in marketing departments of all sizes, for example in departments of between three and ten, 44 per cent reported growth, while in departments of over 100, 47 per cent reported an increase in marketing staff.

Growth is at an average of four staff per department, the same as last year, this steady progress laying the strongest foundation for an expanding marketing community.

Redundancy has become a feature of corporate culture in recent years, but our survey shows that for the fourth year running this process is on the decline. Fifty-five per cent of our marketers are working in companies where redundancy programmes have been implemented in the past 12 months, compared with 59 per cent last year. Within the marketing department, the number reporting a reduction in colleagues has dropped by four per cent to 21 per cent; two years ago the figure was at 28 per cent. Once again there is an increase in the number of marketers optimistic about their company’s growth prospects (72 per cent), a promising omen for the industry.

Job security is not as critical as it has been (it is very important to just one quarter of our sample), and mobility is increasing. Nearly half of our respondents changed jobs in the previous 12 months (37 per cent with an internal promotion, 11 per cent at a new company), with 54 per cent anticipating a move in the next 12 months. This contrasts sharply with our survey five years ago when only 17 per cent moved jobs, and 34 per cent were optimistically hoping for a change.

To make that next move, 37 per cent anticipate using the services of a recruitment consultancy, the most popular route to securing a new © job. Twenty-five per cent expect to find their next job by responding to an advertisement in the trade press, and 18 per cent in the national press. Twenty-one per cent envisage an approach from a headhunter. Not surprisingly, this method is particularly favoured by managing directors (35 per cent) and marketing directors (37 per cent), although 30 per cent of senior product managers also have high hopes of being head-hunted. Personal contacts are also important, with 15 per cent making use of the “old boy network” to secure their current job.

The prospect of moving to Europe is welcomed by 61 per cent of our respondents, a figure which has gradually dropped from 69 per cent in the past five years. Marketing directors are particularly keen to broaden their experience abroad (67 per cent), otherwise all levels show an equal willingness.

It is notable that our propensity to learn a foreign language has increased by only two per cent in six years, with 15 per cent able to converse fluently. Language aptitude is equal to all members of the marketing hierarchy. French is the most commonly spoken language, with 41 per cent having at least a rudimentary knowledge, but only eight per cent speak it fluently. Four per cent speak German fluently and two per cent Spanish.

Since recession has required companies to retrench, many have strategically adapted their operating policy to achieve greater efficiency. Accordingly, nearly half of our sample has been affected by restructuring in the past 12 months. Category management is a relatively new phenomenon which emerged in response to the dramatic change in trading conditions, and it represents the main influence on change management in our survey (other than redundancy). Thirty-six per cent of our sample have seen category management implemented in the past five years, while 20 per cent have experienced it in the past year. Interestingly, category management is now equally present in departments of all sizes, although it originated in the companies with the largest marketing departments. Category managers require a broad skill base with a grounding of brands, trade and accounts experience. Our survey suggests that the average category manager is a senior player with several years experience, on an average salary of 32,333, but able to command anything up to 50,000.

Divesting of brands is also an influential factor in operational structure. Thirteen per cent have reported a reduction in their portfolio, with five per cent in the past year. Elsewhere, a change in management accounted for restructuring in five per cent of cases, and business unit reorganisation accounted for three per cent.

Advertising expenditure is always a reliable barometer of the nation’s economic health. It is therefore good news that advertising budgets have been sustained over the last year. Twenty-seven per cent of respondents work in departments where advertising expenditure is greater than 4m, and 19 per cent where spend is over 8m. In departments of over 76, three-quarters have budgets over 8m, while even in departments of 11 to 20, one fifth are in this big spending category. The Chancellor has predicted a growth in consumer spending of 4.25 per cent in the coming year, this is echoed by the Advertising Association, which forecasts a rise in ad spend of about 4.5 per cent. We should expect to see a significant growth in advertising expenditure in next year’s survey.

While both recession and economic growth change the profile of the marketing industry, there are some issues which do not come under that influence. The major issue is the salary discrepancy between the sexes. The Equal Opportunities Commission may be in its 22nd year, but there is still a tremendous gulf between male and female salaries, with men earning an average 32 per cent more than women (35,942 against 27,170). This is a massive amount, yet represents an improvement of three per cent for women over the past year. Only the top five per cent of women earn more than 45,000, but over a fifth of men do, with the top five per cent of men earning over 75,000.

Women are consistently worse off than their male counterparts at every level in the marketing department. At assistant product manager level, where the average salary is 16,593, there are twice as many women as men, and yet the salary difference is 731 in favour of men. There is also a greater proportion of women to men at the next two stages of the corporate ladder, and yet the same story prevails, with men earning more than women. By the time we get to the more senior position of group product manager, men have a larger presence, suggesting that many women do not make the leap into senior management.

It is ironic that women rate “opportunity for advancement” and “challenging work” more importantly than men, and yet the most senior positions remain very much male dominated. For those women who do make the top grade (only 19 per cent of marketing directors are women), the rewards are less for the same job. This is reflected by fringe benefits, where at this level 88 per cent of men drive a company car compared with 81 per cent of women, and where 78 per cent of men have the opportunity to achieve a performance-related bonus in contrast to 61 per cent of women.

Pay rates in the various industry sectors also defy recession: the best paid (grocery, toiletries and financial), and worst paid (leisure and industrial), remain the same year after year. In the grocery sector a marketing director can expect to earn an average 59,048, which is 4,861 more than the going rate for the job. The average product manager earns 23,364, but in the toiletries sector can expect an average 24,363. The financial sector has the largest marketing departments, with over a third of departments in excess of 76 staff, traditionally it always pays well. In this sector an assistant product manager earns 18,499, compared with the average 16,593.

Industrial and leisure remain the “Cinderella” sectors with relatively low pay. The average salary for all marketers is 32,127, but for those in the industrial sector it is 26,718. In the leisure sector group product managers earn 6,302 less than the average rate.

Of the emerging sectors, hi-tech represents 12 per cent of our sample (four per cent three years ago) and pays above the norm, whereas the service sector, which has grown by 14 per cent in the past three years to become the largest sector, pays slightly below par.

The driving force behind marketers is the challenge of work, with 98 per cent considering it important, and 62 per cent very important. Career advancement is imperative to 92 per cent of respondents. Other key job characteristics are responsibility, recognition, and, of course, financial reward. A friendly working environment is not a primary consideration for our respondents, and since marketers do not feel as threatened in their jobs, job security is taking a back seat once more.

The marketing community has enjoyed a year of steady growth, with higher pay rises and continued recovery. With a more stable economy and restored confidence, the prospects appear bright. However, with only four months to go until the general election, what happens next will be determined by who gets into power. Traditionally, the pre-election period signifies a rise in interest rates, and after May, we could have a Labour government inexperienced in economic management, or a further term for a Conservative government which has been losing the sympathy of industry. The results of next year’s survey should prove very interesting.

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