People are realistic about bonuses

I hope you’ve enjoyed the Easter holidays. We’ve certainly seen a slowdown in activity due to the holidays, and actually I think post COVID holiday seasons seem to slow firms down more than ever. Obtaining feedback for candidates can be hard work, as can arranging interviews. However, I think teams feel stretched and in need of a holiday and, as long as we know that this is the new way of working, we can cope with it. However, it’s very hard for shortlisted candidates to be left in limbo when feedback isn’t forthcoming.

Teams are stretched for a variety of reasons. It’s hard for IR teams when performance isn’t great as client interaction increases. There’s a lot of transformation projects on the go (data governance and operational resilience regularly pop up in conversation), firms are reviewing their product offerings to adapt to a new environment, but as I also feel there’s been far more redundancies than perhaps people are aware of. A few let go here, a few there, and so not the headline grabbing announcements we’ve seen in the past, but firms have been cutting, which puts strain on those left to pick up the excess workload. Infrastructure areas (finance and operations) have been areas where firms often cut, or are slow to replace people, when markets are poor. ?

Central Banks definitely have a hard job as some parts of the economy are booming, while others are left in the doldrums. I’d like to see a rate cut sooner rather than later to ensure that the layoffs in financial services, building and other affected industries don’t spread to other areas of the economy. At times there’s been more demands placed on our team, who have been working with higher numbers of job seekers seeking advice on CVs and how to make themselves more attractive in the market. However, I think we’re though the worst. Bloomberg reported the first positive net inflows for two years into equity long/short funds. Capital raisers in general seem more upbeat. M&A pipelines are better. Our vancancy numbers are up 15% on last year.

For many firms this is bonus season. Bonuses are of course down, but I think most people are realistic about where we are in the cycle. My job is strange, as I know so many peoples’ earnings. We need this information for our role in the hiring process, and clients expect us to know, but candidates are often very candid. Most treat their bonus as exactly that, a bonus, and try and bank it when it’s paid.

Firms don’t often lose people because of one bad years’ bonus. I think if you’ve remained in work in financial services over the last few years, your earnings have grown at pace. As an example, people with a base salary of ￡120K coming into the pandemic could easily be on ￡180k now (some received 50% uplifts in one move during the post-COVID hiring frenzy). The cost of wages has meant huge margin compression for many firms and added to the layoffs. That said, in real terms many didn’t receive a pay rise for years after the financial crisis. I digress a bit, but people are intelligent enough to understand the market and don’t complain too much about one bad year. The challenge at the moment for management is inertia. When businesses are growing, they can promote people and give them new challenges. In the stodgy market we have, this is hard. Even some leaders seem a bit bored if I’m honest, as they can change their business but not the macro environment they work in. Therefore, I suspect when the market improves firms will see a higher level of turnover than in previous years simply because employees don’t feel they are developing at a pace they’d like. I’d certainly recommend giving top performers additional coaching and development opportunities at the moment.

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