AIM National Salary Survey 2007 Findings (Small Company)

SMEs in Queensland fight to keep staff with high pay rises

Small companies in Queensland are losing staff at an increasing rate despite awarding the highest pay increase among small companies in the country of 5.9 per cent, significantly ahead of the overall market average of 5.0 per cent, the nation’s leading salary survey has revealed.

And the trend is set to continue with forecasts predicting Queensland small companies will again lead the states with salary increases averaging 6 per cent in the year ahead.

The Australian Institute of Management’s National Salary Survey 2007 was based on the responses of 779 companies, comprising large companies (561 contributors) and small companies (218 contributors).

“Small companies are falling behind large companies in their struggle to retain workers. Voluntary staff turnover at small companies has shot to 13.6 percent, up from 10.3 per cent last year and notably higher than the 12.6 per cent for large companies,” said Ms Carolyn Barker AM FAIM, Chief Executive of AIM Qld & NT.

As indicated by the Survey, the top reason for staff resignations in small companies, cited by 43.4 per cent of employees, was to pursue career progression or promotion opportunities.

“This shows that small organisations need to do a better job of developing career pathways for their staff. To date, their main strategy, revealed by an overwhelming 80.4 per cent of respondents has been to review staff remuneration and benefits, but clearly, higher pay alone is not enough.”

“In the current climate, staff need to be assured that they have a future with the organisation, so greater investment in training and career management should be a priority,” said Ms Barker.

According to the Survey, only 43.8 per cent of salaried staff at small companies have a development plan in place compared to 54.5 per cent at large companies. In addition, only 45.1 percent of small companies have a dedicated training budget compared to 52.3 per cent of large companies.

“Small companies clearly lag behind large companies in terms of staff training and career development. To better compete, their challenge will be to manage their staff’s needs more effectively within their means such as by offering more personalised mentoring and providing more clarity around progression opportunities within the organisation,” added Ms Barker.

Despite the local shortage of skilled staff, small companies have not relied on overseas labour as much as large companies, with only one in six small companies employing overseas candidates in 2006/2007 compared to one in three large companies.

“The Survey tells us that while as many as 54.9 per cent of small companies would consider hiring from overseas, few actually do. This may be due more to a lack of means than a lack of will. Overseas recruitment and sponsorship is a time intensive and costly exercise and may well be prohibitive for many small operators,” said Ms Barker.

It also appears that the tight labour market has made it difficult in practice for small companies to use the WorkChoices regime to rein in staff pay and conditions. Only 23 per cent of small companies said they intended to revise HR or pay policies as a result of the new laws.

Overall, small companies are striving to improve the competitiveness of staff benefits particularly in the area of Fringe Benefits Tax (FBT) liability where there has been a notable increase in the proportion of organisations absorbing the cost of FBT on behalf of staff across all job levels. However, the proportion of small companies making additional superannuation contributions for employees above the required Superannuation Guarantee Contribution rate has fallen significantly, by 5.1 per cent from last year, to 23.7 per cent.

“Superannuation seems to be the main exception to the trend of employers improving staff benefits. This sends a signal that employers, both large and small, are increasingly pushing the responsibility for retirement saving back on the individual employee,” said Ms Barker.

On a role-specific front, the Survey indicates that the highest annual salary rises were recorded for the Finance/Accounting and General Management job families at 5.4 per cent. In line with buoyant economic times, salary rises across all job families were higher in 2006/2007 than in the previous year, with the exception of the Information Technology job family which registered the lowest rise of 4.2 per cent.

Overall, the employment outlook in the small business sector is very positive with 61.2 per cent of small companies expecting permanent staff numbers to increase over the next 12 months, up from 47.1 per cent in the previous year, and only 4.9 percent expecting a decrease in permanent staff. In addition, salaries are forecast to increase at 4.9 per cent, exceeding the national average forecast of 4.7 per cent.

Other highlights of the 2007 Small Companies Survey include:

• The highest annual salary increases by job level were recorded for Senior Management and Professional/Technical staff at 5.1 per cent in 2006/2007, while the lowest increases were recorded for Other Management and Salaried Staff at 4.6 and 4.7 per cent respectively. Salary forecasts for the year ahead predict the highest increases for Senior Executives (5.3 per cent) and Professional/Technical roles (5.2 per cent) and the lowest rises for Salaried Staff (4.4 per cent)
• By job family, salary increase forecasts for the coming year are highest for Marketing/Sales and General Management positions at 5.0 and 4.9 per cent, respectively, and lowest for Manufacturing at 4.3 per cent
• On a state basis, Queensland recorded the highest salary increase of 5.9 per cent, followed by Western Australia (5.2 per cent), South Australia/Northern Territory (SA/NT) at 5.1 per cent and Victoria/Tasmania at 4.9 per cent. New South Wales/ACT recorded the lowest salary increase of 4.8 per cent
• For the year ahead, salary forecasts are highest for Queensland at 6 per cent, followed by WA at 5.3 per cent and VIC/TAS at 5.2 per cent. The lowest forecasts were recorded for SA/NT at 4.0 per cent and NSW/ACT at 4.5 per cent.

About the AIM National Salary Survey 2007

A total of 779 private and publicly listed companies from a broad range of industries contributed to the 43rd Australian Institute of Management’s National Salary Survey 2007. The Large Company (more than $10 million turnover) edition reports the data of 561 organisations, and the Small Company ($2 million - $10 million turnover) reports from 218. For more information go to www.aimsurveys.com.au.

For further information please contact: Vivienne Hardy at CallidusPR on (02) 9283 4111 or 0411 208 951 or Su Lin Ho at CallidusPR on (02) 9283 4111 or 0421 616 617.

To purchase your copy of the Salary Survey, please contact the AIM Bookshop on (07) 3227 4808.