The executives enjoying the biggest pay rises in the industry are main board directors at housebuilders with a turnover of £26m-100m. Their salaries have risen 28.5% to average £90 000 a year. Stuart Cullum, senior manager at Hays Executive Recruitment, says the increases reflect the state of the housing market. “This is the most buoyant sector, with many companies reporting increased growth and expanding operations,” he says.
In the building sector, the largest rises have been in the smaller firms. The typical chief executive of a firm with a turnover of less than £25m trousered £80 000 last year – a rise of 14.2%; the managing director probably got £70 000, 16.6% more than in 1997. These increases reflect greater workload across the board. There has been an abundance of smaller contracts for the small players – and enough larger contracts to keep the big boys from competing for them.
Unfortunately, salaries in the civils sector show little movement. “Salaries are keeping pace with inflation,” says Cullum. “It is a reflection on the state of the civils market, which has stayed flat.” The civils market is still suffering from the lack of public investment in infrastructure such as roads and bridges. A chief executive in a firm with a turnover of £26m-100m has averaged no salary increase at all.
What the chiefs are driving
A company car is part of the pay package for contracting bosses. Keith Clarke, the chief executive of Kvaerner Construction, drives a Peugeot 106. Despite heading one of the largest construction firms in the UK, he chooses to drive an unassuming vehicle and, if the last budget is anything to go by, he probably made the right decision. Chancellor Gordon Brown used his speech to outline plans to change the way company cars are taxed. The government has yet to finalise the details, but from 2002 the bigger and more powerful the car, the more tax the individual will pay. Senior managers driving gas-guzzling status symbols may find themselves presented with a large tax bill. So, are there moves in the industry to offer an alternative to costly company cars?
The Hays Executive/Building guide to perks shows little change in the types of company cars offered to senior managers. At the top end of the scale, a chief executive, managing director or main board director will be offered a Jaguar, Mercedes or a BMW 7 Series. In terms of plans to offer alternatives perks to cars, Stuart Cullum, senior manager at Hays Executive Recruitment, says: “There has been small movement compared with other industries.” But he adds that some firms are considering offering a car allowance rather than a car.
However, some major contractors would dispute the survey’s findings. Several outfits already offer alternatives to the company car. Carillion has introduced a cash alternative, as has Bovis, which says the scheme is becoming increasingly popular.
Some firms are beginning to look seriously at who needs a company car. At Kvaerner, employees have to prove that they really need the car for work. Directors are generally entitled to one because they travel. But the firm is open to alternative suggestions.
Most firms are already aware of the need to reduce noxious emissions. Laing keeps its company cars for a maximum of three years because younger cars tend to be more economical and environment-friendly. The firm has also done a deal with Vauxhall to provide Vectras, Astras and Corsas for less senior staff, because Vauxhall seemed to offer the best fuel consumption.
So, some larger contractors are already opening their eyes to the fact that company cars may not be the prestigious perk they once were. Kvaerner boss Clarke may be a particularly enlightened car user who does not really represent the industry. But if the government has its way, other senior managers may be turning in their status symbols for a little runaround.
But there will always be some who are lured by a fancy car. One recruitment consultant outside the executive sector interviewed a candidate who, when asked whether a company car was important, replied: “The best car to drive is some other bugger’s.”
