A new report from Bankwest reveals Australian small to medium-sized enterprises (SMEs) are investing in their leadership, with many paying very large salaries to senior leaders in order to attract and retain top talent.
The most senior leader in a quarter of Australia’s small and mid-size businesses earns at least $500,000 a year, while the highest salary is $1 million or more in close to one in ten of these companies.
The 2016 Bankwest Future of Business Series’ Leadership Report follows a survey of 500 senior managers and found that on average, SMEs had budgeted 27.5 per cent of their overall annual salary spend to leadership roles over the next 12 months.
Bankwest WA State Manager Business Banking Donna Dalby said businesses recognised the important role leaders played in the future of their operations.
“Strong leadership is crucial to business success, especially in a tough economic environment,” said Dalby.
“While incentives aren’t always monetary, the research found some businesses are paying high levels of remuneration to attract and retain top talent.
“The trend is largely driven by medium-sized businesses – more than a third (35.7 per cent) pay their top leader at least $500,000 a year, compared with only 8.5 per cent of small businesses.”
The report showed nearly three in five (58 per cent) SMEs plan to increase their leadership spend over the next 12 months.
Close to one in four (23.2 per cent) SMEs have Generation Y representatives on the board or an advisory committee in their business.
The key areas in which Generation Y has a strategic influence include business planning, product design and public relations.
“The next generation has so much to offer and can ensure a business is ready to meet the demands of its next wave of customers,” Dalby said.
“We ensure Generation Y’s are consulted on projects across our business where the view of a younger consumer can be very valuable and insightful. We have a program for graduates that involves ongoing engagement at a senior level and find that working together in this way has a positive influence not only on employee morale but also on the customer experience.”
The report also highlighted that diversity among senior leadership in SMEs is improving. More than three in 10 (30.8 per cent) SMEs have increased the representation of women in senior management in their businesses over the past two years, while more than one in five (21.6 per cent) have seen a rise in the proportion of openly lesbian, gay, bi-sexual, transgender and intersex (LGBTI) people in senior management during this period.
The Bankwest Business Leadership Report surveyed more than 500 respondents in C-suite and senior management positions within small and mid-sized businesses.
