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Crime propels brain drain of top executives
A new survey has found that pay packages for the best managers have not improved in real terms, writes SVEN LUNSCHE
IT HAS been a tough year for SA's top 1 200 executives. Nearly 13% of the best executives emigrated last year - and those who stayed behind don't earn more in real terms than they did 10 years ago. These are the key findings of FSA-Contact's annual top executive survey of wages and working conditions. The survey is based on face-to-face interviews with the managers and executives of 1 200 public and private sector corporations. The most worrying finding is that the crime wave is propelling the executive brain drain. Almost 13% of executives have left their jobs in the past year to emigrate. Nearly 84% of emigrating executives - some 6% of whom were chief executives or general managers - cited crime and violence as their reason for leaving. The remainder blamed falling standards in education and declining health care. Only 4.6% cited better employment opportunities abroad. Kris Crawford, head of FSA-Contact's remuneration information services, says emigration was the third highest reason for turnover of executive personnel in the year to end-July 1997, behind retirements (36.4%) and moving to another company (22.4%). Fewer than 8% of executives resigned their jobs to start their own businesses. Executive positions most affected by emigration were those in sales and marketing (25.4%), information technology (18.3%), and finance (16.9%), with emigration lowest among human resource executives (4.2%). Most migrating executives went to Australia (26.3%), followed by the UK (18.8%) and New Zealand and the US with 15.6% each. Crawford warns that the brain-drain leaves SA companies ill-equiped to compete in the international economy. The only positive aspect emerging from the flight of executives is that it could lead to premium pay being offered to executives with the right skills and experience. This would be a welcome reversal of the trend over the past decade when the salaries of top businessmen have remained stagnant in real terms. And when the effect of indirect taxation is taken into account, business leaders today might be even worse off than they were in the late 1980s, says Crawford. The situation has been compounded by the fact that in the 12 months to end-July executives received their lowest total cash increases - and indeed the lowest package increases - since 1993. She warns that salary increases in the year ahead are likely to be lower still. In structuring their salaries executive are making increasing use of car perks - they are worth more than remuneration from any source other than the basic cash portion, and considerably more than performance bonuses. Non-cash fringe benefits constitute about 30% of the remuneration packages of senior executives, the survey finds. Only in the remuneration packages of chief executives are the car perk and performance bonus given almost equal weight: each contributes around 16% to the total package. Crawford says there has been little change in the cash vs non-cash portion of executive remuneration in the past 10 years, probably as a result of increased taxation on fringe benefits. The basic salaries of executives who are employed by companies which pay performance bonuses or incentives, are much the same as those whose companies don't pay bonuses or incentives.
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