The latest Pursuit NHA Salary Survey shows pay is picking up, but fmcg employees feel safer staying put in their current jobs than moving on

t may not feel like it but life is getting better. The figures don’t lie. Fewer fmcg companies have pay freezes in place, salaries are slowly but surely increasing, more companies paid bonuses in 2011 and additional benefits haven’t been cut back.

These are the surprisingly upbeat findings of the latest annual Salary Guide compiled for The Grocer by Pursuit NHA. The guide shows that while salaries have not improved significantly over the last 12 months - and lag significantly behind the circa 5% rate of inflation we’re currently seeing - some people have done pretty well, all things considered. “The highest salary increase was 4.7% for the role of senior national account manager and for the first time ever, a national account controller with a salary of £100,000 has been recorded,” says Pursuit NHA CEO Andy Ferguson.

Predictably, it’s in areas where there is a perceived shortfall of talent that employees are enjoying the greatest pay hikes, adds Mark Smith, recruitment director at SmithCarey. “The shortage of talent is pushing up money,” he says. “I did a job for a client last year who was looking for a senior account manager and the brief was £55,000. The person who got the job has since moved on to another role within the company and we’ve just been given the same brief but this time the salary is £65,000.”

Not everyone has cause to celebrate, however. Further down the management tree, national account executives, regional sales managers and territory managers have all seen minimum salaries fall. “This reflects the fact that some organisations are capitalising on the large number of inexperienced people available in the market,” says Ferguson.

As a result, employees in the fmcg sector remain cautious. Many of them are staying in their jobs for longer, even though they are a lot less satisfied with them than a year ago - and a perceived lack of job opportunities means they’re not likely to cut their ties any time soon, warns Ferguson. “People are handcuffed to their job,” he says bluntly. “Most people prefer the safety of the job that they are in rather than risk joining a company that they don’t know.”

This is borne out by the figures. Although attrition rates have crept up again, from 8% in 2010 to 11%, they are still well below the historic level of 20% - and more than half of all respondents have been with their current employer for more than three years, an increase of 30%. The average number of jobs applied for per person has consequently fallen from eight to five.

While employers might be happy with their retention rates - and the fact respondents report increased levels of satisfaction with their company, manager and training and development - loyalty that is forced rather than earned has its downsides. Only 21% of staff want to work for their current employer for another three years or more. As Ferguson puts it: “People are staying for longer but they don’t want to stay for longer.”

It’s a scenario that’s all too familiar to Smith, who says employees are staying put because they are scared. “They’re scared of the broader economy and they’re scared of the last-in first-out trend. Also, there’s the added element that when someone who changes jobs is married, there’s another voice - a husband or wife - that’s got a view on taking the risk.”

This lack of churn has serious repercussions for the grocery industry, says Smith. “If you’ve got people who are unhappy or dissatisfied then they’re not going to perform to their optimum,” he argues. “If you don’t have movement, you’re faced with blockage and dissatisfaction internally.”

Some fmcg groups are trying to address this by motivating their staff, says Ferguson, with one “crude instrument of stimulation” being the payment of loyalty bonuses. “You explain to an employee that you can’t offer them another role at the moment, but you offer them a financial reward if they are prepared to stay for the next 12 months,” he explains. “You offer to pay them x amount and if they see out the year they get to keep the money, but if they leave before the year is up then they have to pay it back. A loyalty bonus is a pretty blunt tool but it’s effective in the short term.”

As is a salary hike. It seems that many companies have adopted this tactic in the past 12 months, with the average salary increasing by 3% - below inflation, but better than the pay freezes of previous years. Encouragingly, these have fallen sharply, with the number of organisations reporting a pay freeze down from 53% in 2009 to 25% in 2010 and 20% in 2011. More companies also paid bonuses in 2011.

While Kellogg’s may not have paid out on its annual bonus scheme last year, the company intends to pay out this year, says UK HR director Nicola Morley, who adds that Kellogg’s retention rate remains high for the right reasons. “I think that’s largely to do with the benefits package that we offer our employees as opposed to people being scared to leave. Kellogg’s is seen as an employer of choice because we offer great benefits like flexi-time, summer hours and flexible benefits, so a lot of people are drawn to the organisation and stay, especially people with families.”

It’s a similar story at CCE, which also boasts strong retention rates, according to Tanya Pakeman, senior manager of GB talent acquisition. The flipside of all of this is that it makes it harder for fmcgs to attract talent from rival businesses. “It is always a challenge to find the best talent in the market as generally the better the talent, the more likely they are to be rewarded and stay in their current role,” says Pakeman. “We are looking forward in 2012 and hope our assets and competitive business position will allow us to continue to be a destination employer for key talent.”

While Nestlé’s HR director Matt Stripe feels that “2012 is likely to be tougher than last year for many in the job market”, he believes the company’s tactic of investing in the business and staff in such challenging times will leave it “well placed to come out of the other end fit to take advantage of an improved climate”.

These businesses have realised it’s “not just about giving somebody an extra £5,000 a year”, says Smith. “They’re doing a better job of articulating and persuading people to stay through their investment in the company, investment in brands and investment in individuals’ careers and training programmes.”

With the golden handcuffs of benefits and bonuses not what they used to be, it’s a trend that needs to continue if companies want to hold on to their most talented members of staff. It’s not as if they’re going to find them easy to replace in the current job market. The key is to invest wisely, says John Fortescue, search consultant at Wickland Westcott. There needs to be a greater focus on pay for performance so that the best talent is appropriately rewarded and remains loyal, he believes.

“Many people are grateful to be in a job at the moment and security is outweighing the desire for a pay increase,” he says. “Since 2008, there have been minimal salary increases and there hasn’t been a lot of job movement. That can only go on for so long until the dam breaks. When that happens, companies that have not invested in training and development and have not been making them feel valued may be surprised when they suddenly start to lose a lot of people.”

Those businesses that haven’t been appropriately rewarding their employees need not panic just yet. With most economists predicting a shallow recession, that breaking of the dam looks unlikely to take place in the next 12 months, particularly when you take into account that 65% of Salary Guide respondents state that the current economic climate will influence their decision as to whether or not they will leave their employer. As a result, Pursuit NHA’s Ferguson is predicting slightly more churn in the job market this year but doesn’t expect anything spectacular any time soon.

“On the GrocerJobs website, vacancies are up about 5% this month on the same month last year and I think that’s where the market is going to be - up 5% to 10%,” he says. “But I don’t see the recruitment merry-go-round spinning much faster.”