UK
Markets may be plummeting but profits – and pay – for finance recruiters remain robust.
“The general feeling is that some of the smaller recruitment firms are having to offer big pay increases,” says Simon Hughes, a consultant at Strata Search, a headhunter of headhunters (‘rec to rec’) firm. “Consultants who would have earned a 30k base two years ago are now on 50k.”
Rising pay reflects recruiters’ rising profitability. Last week Michael Page and Robert Walters reported pre-tax profits up by around 50% year-on-year, on the back of strong global demand for lawyers, accountants and finance staff.
Hays announced a more modest 6% rise in profits, but revealed it was purchasing IT in finance and pharmaceuticals recruiter James Harvard for an impressive 24m upfront, followed by 19m over three years.
How much longer will finance hiring stay firm? Matthew Earl, a recruitment industry analyst at Investec, says City recruiters should be able to cruise through the remains of 2007 without too much trouble, and that 2008 looks fairly good too.
“We think conditions should be good for one to two years,” says Earl. “You’re seeing much higher jobs growth in the financial services sector than elsewhere in the economy and there’s a huge shortage in the supply of skilled labour.”
Individual recruitment consultants are likely to profit from this state of affairs, but by less than might be anticipated. Recruiters are increasing salaries, but Hughes says they are also increasing the benchmarks that need to be reached before commission is paid out. “A rule of thumb is that everyone gets a third of what they invoice, but only above a certain threshold – typically three times salary,” he says.
This article paints a very monotone picture of the headhunting industry, possibly more geared to low-mid level recruitment than executive search. The fact is that in many firms, especially the bigger more illustrious search practices, even top researchers are paid more than 50k and the best consultants’ basic salaries rival those of their clients at all the top investment banks – bar Goldman Sachs.
I agree with the above. However, people who are good in this industry are commission driven and realise that by increasing their base, they are increasing the hurdle which they need to clear in order to get to bonus territory. Some of the people we hire are happy to have lower base salaries in return for higher commission rates.
I run my own recruitment business and earn what I bill, most of which is taken out of the business in the most tax efficient manner by dividends. Why any decent recruiter works for a firm that only pays them one third of what they bill is beyond me. Consultants are only employed to make money for the proprietors/shareholders of the business. My advice is go solo and get a life!!
I agree with the view go solo if you can – I was, went to work for someone and went solo again- there are downsides but what you earn is your own and the only people to keep happy are your clients and candidates.