Market indicators: Salary survey spells falling earnings for recruiters

15-Oct-2008

The earnings of fee generators in recruitment are falling in seven key sectors — accounting and finance; banking and investment management; commercial; HR; insurance; legal; and technology and telecoms — Recruiter can exclusively reveal.

The results of rec-to-rec firm Heywood Associates’ annual salary survey, which focused on these seven sectors, shows recruiters in the banking and investment management sector have been hardest hit, with a drop in on-target earnings (OTE) of 23.5%. This relates to the average earnings of a consultant with one to three years’ experience dropping from £72.5k to £54k.

Simon Gee, managing director of Heywood Associates, said: “In many cases the OTE is down, but the fee income is the same. The reason for this is that in many firms the commission plan has been amended as they try and keep an eye on the bottom line,” he said, adding several large firms have taken this approach.

Technology and telecoms recruiters have the lowest overall drop in OTE, at 8% and it is largely at divisional manager level. The OTE of divisional managers is set to slump by 24%.

Stuart Packham, director of Michael Page Technology, told Recruiter he expected his divisional managers’ remuneration to grow as they continue to expand their businesses.

“One of your key objectives is to grow business regardless of economic conditions. Having been a manager in the dot-com bust I would expect my managers to either increase or have like-for-like [billings]; there is no reason to go backwards.”

Consultants in the technology and telecoms sector have fared better, with basic pay for consultants set to increase from a range of £21k to £30k and from £23k to £30k, with OTE remaining flat.

Steve Ricketts, managing director at Manchester-based IT recruiter Circle Recruitment, told Recruiter: “Compared to last year, [pay and commission] will be pretty much the same. Everybody has an IT department and a computer — that’s why we haven’t really noticed a drop and we won’t next year.” In the commercial sector OTE are set to decrease across every position, with a 10% drop for consultants, 17% for senior consultants, 4% for divisional managers and 11% for operations directors.

According to the Heywood Associates’ study: “Industry knowledge and proven new business development abilities will always be in high demand [for consultants] and there are some excellent opportunities out there for the right candidate.”

Human resources has experienced an overall decrease at management level, with divisional managers facing a 30% decline in OTE and operations directors 29%. However, OTE for consultants remained level at between £40k and 70k, retaining last year’s 11% increase.

Recruitment consultancies are also taking longer to go through the interview process and make offers to new staff. This is particularly prevalent in the legal sector, where average offer time has more than doubled from 10.5 to 24.5 days. The human resources and insurance sectors also doubled, both increasing from 10.5 to 21 days.

The study put the increase down to client caution and greater candidate availability in the market. “Given the current climate, the timescale from interview to offer has increased. Clients are more cautious in hiring and this has led to an adjustment in the basic salary offered.”

Although earnings are down there is still demand for consultants and there are possibilities to earn top commission in most sectors, according to Gee. “Overall we are inundated with vacancies. Any reasonable candidates will be able to find a position and there are numerous companies hiring in all sectors.”

christopher.goodfellow@centaur.co.uk