Remuneration Policy Trends
The latest 15th edition of AIMS Human Capital’s Compensation and Benefits Survey presents analytical results attesting to new and dynamic trends on the labour market. Remuneration packages have been actively diversified according to employees’ market needs and contribution to company goals achievement.
The Average Salary – A Function of Many Factors
Basic salaries certainly remain the most powerful incentive and their average levels are very important for the companies in search of new team members. Nevertheless, AIMS Human Capital upholds the principal methodological understanding that the “average salary” concept is a conditional one. It can only serve as an approximate indicator but should not be used for decision-making purposes. The average reflects both maximum and minimum remuneration levels. Thus, citing an average salary per sector practically results in a value reflecting and unifying remunerations that are essentially incongruous – e.g. the whole range of positions starting from Executive Managers’ and Top Management salaries and reaching down to administrative and blue-collar staff levels. That is why, due to the very mechanism of calculating averages smaller companies of 20 persons usually may reach higher average salaries than large-scale operations where 60-80% of the personnel have low or no qualification and therefore comparatively low pay.
Stressing once again the conditional relevance of these figures with regard to the above-cited limitations, AIMS Human Capital Survey indicates an average level of gross monthly pay amounting approximately to 1150 BGN, the annual calculation of gross remuneration being 15600 BGN. On these figures’ background, the average additional variable pay (additional salaries, bonuses, premiums and commissions) reaches nearly 13% of the gross annual salary.
Senior and middle managerial positions (Managers/Directors, Top and Middle Management) have an average gross remuneration levels almost 2.6 times the general one.
The Best-Paying Employers on the Market
Defining the sectors offering the highest salary levels is rather difficult. Almost all sectors contribute several maximum market levels to the total number of observations, analyzed in the Survey Reports. AIMS Human Capital Bulgaria has a specific report on the best-paying companies on the market (or Blue Chip report). This report encompasses the employers paying to at least 70% of their employees remuneration levels above the median. Currently these companies are 58 and their names are strictly confidential. Their employees amount to a total of 6220 people, or 20% of all employees the Survey analyses. The best-paying employers’ positioning by sectors is visualized by the following graph:
100 % = all Blue Chip participants in the Survey
Different Salaries for One and the Same Job Position
AIMS Human Capital’s methodology applies the concept of job position with precaution, too. Similarly to the average salary one it is a function of a range of factors and varies significantly. That is why whenever salaries for specific positions are cited they should be very carefully interpreted. No matter how accurate the definitions of the various positions compared by the Compensation and Benefits Surveys, differences in remuneration will always exist. For example, it is highly indicative that one and the same company pays different salaries even to employees occupying one and the same position. This salary variety can generally be traced back to the great number of parameters and performance appraisal criteria that remuneration reflects.
Smaller margins (variation between maximum and minimum levels) by job position are being witnessed for the “smaller” sectors (advertising, airlines, etc.) and for positions which are highly sector-specific. Such positions are the ones of Call Centre Team Leader/ Shift Coordinator, Trade Marketing Manager, Sales Engineer, etc. Bearing in mind the progressive growth of the number of companies participating in the Survey, high attention should be paid to the analytical benchmark - that is, which and what kind of companies’ salaries a specific organisation is compared with.
Adequate benchmarking is of topmost importance. It should be noted that a peer group need not necessarily include the sector the analyzed company operates in. For example, when financial, administrative and even sales departments are concerned the whole market can be a relevant benchmark. On the basis of our thoroughly elaborated analytical practice regarding remuneration levels and policies, AIMS Human Capital strongly recommends multiple benchmarks (that is, peer groups of companies that will be the comparison object) for the analysis of salary levels of different job categories within one and the same organization. Benchmarking can be done by different criteria – turnover, number of employees, type of ownership, etc.
Still, a trends for the general decrease of the margins between maximum and minimum compensation levels is being observed – that is, for salary homogenisation by job position. The cases when an increase with regard to a previous period is witnessed are usually ones with “stretched” maximum indications – that is, an increase in the higher salaries offered for a specific job position.
Bonuses as a Remuneration Element
Despite the central role of basic salary in remuneration packages, a growing attention to its alternatives is being paid by employers. Additional variable pay by means of bonus sums are paid by 63.8% of the companies participating in the 2006 Survey edition. Percentages are a little higher for management and non-sales positions – 72%. Nearly 60% of the participants provide bonuses to marketing and sales professionals and managers due to the application of different additional variable pay schemes (such as sales premiums and commissions) for these positions.
Additional variable pay frequency and alternative ways of its provision differ by companies according to their activities’ specifics. The most common frequency of bonus payment is once per year – this is the practice of 50 to 70% of the participants. 25 to 40% provide their employees additional sums more often (every 6 months, quarterly, monthly), the frequency resulting from the specifics of the positions and sector of a company. Only 8-10% of the participants have a non-regular and ad hoc bonus payment policy - per project implementation, special result achievement or managerial decision.
Annual bonus payment by means of rather aggressive schemes (amounts standing for more important percentages of the gross annual salary) is applicable for high hierarchical levels. For different organizational levels, the frequency of bonus payment decreases in descending order. The gross annual salary percentage that a bonus corresponds to is defined by the job position specifics.
Fringe Benefits – Increasingly in the Focus
The trend for emancipation of remuneration policies from the basic salary dependence is also witnessed by the great variety of non-monetary means of motivation and compensation. Almost all the companies participating in AIMS Human Capital Bulgaria’s Survey provide fringe benefits. The 15th edition of the Compensation & Benefits Survey encompasses more that 20 different benefits. They vary significantly, from the common ones (mobile phones, transportation and food allowance), passing by the ones in dynamic development (preferential bank terms, life/disability insurance, medical service, sports activities) and reaching the less usual clothing allowance, vacation allowance, medical service for family members, maternity benefits, company-sponsored education, etc.
Managerial levels typically benefit from a company car, no charge mobile phone, flexible working hours, options/ shares (already provided at top hierarchical levels by 20% of the participants), a life/disability insurance with a payout exceeding several times the annual salary, additional pension scheme, etc.
