Daniel Behar / 29 November
November Newsletter – Pay rises, Promotions and the Pandemic
The current recruitment market is one of the busiest we have seen during the last decade of recruiting for the investment management sector. With COVID restrictions having eased, the furlough scheme ending, employees beginning to venture back into the office and a backlog from a slower-than-usual 18 months, firms across all sectors have seen a huge increase in the number of open vacancies which they are hiring for. This, of course, comes with a number of issues to both businesses and recruitment agencies alike, from sourcing top-tier candidates, to dealing with a surge of counter offers and unexpected promotions.
This newsletter will look into the issues faced in more detail and will discuss the potential implications the current job market may have on future hiring and salaries.
Candidate driven market
Traditionally, the job market has been driven by the employer, with salaries and job titles set in stone and in accordance with all areas of the business. However, somewhat of a power shift has occurred over the past months, with the candidate now harbouring more of a hand when it comes to both offer and pay rise negotiations.
A skills shortage, an influx of new roles and the desire for increased worker flexibility means that there is a shortage of top-quality applicants. Thus, if you are one of these applicants, or you are hiring one of these applicants, the chances are they have multiple processes ongoing. It is therefore unsurprising that when it comes to making an offer, the winner usually goes to the highest bidder. Far from the traditional 10-15% pay rise of the past when moving jobs, candidates are now receiving up to 20-25% raises, depending on the role and company.
For recruiters, this is both good and bad news. The financial rewards of placing quality candidates on much higher salaries than they would have been able to get 12-18 months ago are without a doubt a positive bonus. However, it has created somewhat of an epidemic of counter offers, with many firms’ deciding to match or better the offer received from another company as opposed to beginning a long and often stressful recruitment process of their own.
Promotions & pay rises
Many asset management firms are massively overstretched. Juggling a buoyant economic market with an extremely busy job market is difficult at the best of times, making it vital for these firms to retain some of their best talent. In order to do so, as well as counter-offering employees, we have also seen instances of clients giving pay-rises outside of regular pay review periods so as to detract top talent from looking elsewhere.
Indeed, one of our clients has given one front-office candidate three separate pay rises since February alone. Another client gave some employees a raise in the summer to bring them on par with what they believe to be the market rate. Whether this would have happened 12-18 months ago remains to be seen. The fact that it didn’t occur during their end-of-year reviews leads us to believe it wouldn’t have.
Another client has offered employees a company-wide extra bonus for the past two years as a good-will gesture for the hard work put in over the pandemic. This not only rewards and incentivises employees but also keeps them content in the current job market.
Clients have also been offering some employees promotions outside of yearly reviews in order to hopefully prevent talent from looking at other opportunities. Some clients have done this as part of their counter-offer to workers, whereas some have done it early so it doesn’t get to that stage.
With bonus season fast approaching, it has also become evident that any prospective offer would need to include a full, or at least partial buy-out of candidates’ bonuses. At this time of year, candidates always have one eye on their potential end of year bonus so this comes as no surprise. However, offering this can stave off the threat of a counter offer by showing that you appreciate the workers’ yearly efforts and you are serious about them joining your firm.
To conclude, the manic state of the current job market doesn’t look like slowing down any time soon. Currently, the candidate holds a lot more of the cards than they traditionally would have done when it comes to securing more money and promotions, so as clients it’s important to stay ahead of the curve when it comes to offers/counter offers. If you are making an offer, expect a counter from the candidates’ current employer – don’t low-ball the candidate in the hope of getting them cheaper, if you want the candidate then make them an offer they can’t refuse. If you are looking to retain talent, give the employee what they deserve – don’t wait until it’s too late. If a candidate is worthy of a pay rise, or a promotion, or even an internal move, then give it to them, as replacing these talents in todays’ market is extremely tough.