Heads of recruitment at investment banks and fund managers give their verdicts on pay and hiring for 2012

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This morning we held our quarterly roundtable in London for heads of recruitment at financial services firms. Numerous investment banks’ heads of recruitment were present. So were some fund managers’.

The event was confidential, so we’re not at liberty to disclose who exactly was there, nor what was discussed on a bank-specific basis. Generically, however, we can say what was said, and what it means if you happen to be looking for a job in Europe now.

There is hiring, but it’s in specific areas. It’s not really in London

Contrary to popular opinion, heads of recruitment said hiring is happening. Things have picked up. However, the action is not really focused on front office positions in the City of London.

Instead, banks are interested in valuation professionals and product controllers. They are especially interested in hiring for technology positions. One bank said 70% of its current vacancies in the UK are for IT professionals. This doesn’t mean IT professionals can easily get hired:  banks are short of developers but they're overwhelmed with applications from business analysts and project managers.

Rather than hiring in London, banks seem focused on hiring for provincial and near-shored back office and technology centres, where the emphasis is on bringing in new graduates – or transferring existing staff.

Heads of businesses are being far more cautious about hiring. They want to be seen as ‘good corporate citizens’

In the old days, the head of a sales and trading business might have demanded a new hire be made as soon as possible – regardless of the cost implications.

Today, this has changed. Everyone wants to be seen as a ‘good corporate citizen’ and to appear to be keeping costs low. Line managers are asking HR to resist hiring until after bonus vesting dates, something that would never have happened previously.

Hiring is getting pushed further and further back in the year

Hiring didn’t happen in the first quarter. It’s picked up in the second quarter. It may yet continue in the third quarter, when it normally slows down.

At US banks, hiring in Europe has become a political issue

Even if European line managers want to hire, it can be difficult to make the case for recruiting in Europe to senior management in the US.  Problems in the eurozone are making US bosses keener to hire in Asia. It’s a political issue internally.

Deferrals have come to the middle and back office. This is causing issues for hiring

Bonus deferrals have become much more common outside the front office.  In HR and the back office, deferrals are being implemented at very low thresholds. This is unpopular, and seems contrary to the rationale behind deferrals, which are ostensibly to reduce risk.  In this case, the real motivation for deferring pay seems to be managing cash flow.

With middle and back office pay now being deferred, there’s a need for people in these roles to be bought out. This requires a change of attitude. At the moment, at lot of banks are resistant to hiring a back office employee who requires £30k of stock to be bought out before they’ll move.

However, some banks will buy out deferred stock upfront if it’s below a certain amount. One bank said it will perform cash buyouts as long as a candidate's stock is below $50k. Others were frankly astonished at this.

On developing the pipeline

There’s a big push for banks to ‘grow their own,’ from seedlings if not seeds. Within 24 months, one bank wants 50% of its lateral hires to have graduated no more than 2 years’ previously.

On moving to the buy-side

Senior people on the buy-side are generally unwilling to hire people form the sell-side. They relish the sense of  schadenfreude when sell-side people apply and  they turn them down.

Sell-side people also tend to be focused on being paid for their own personal performance.  For example, they may try to demand a percentage of the funds they bring with them. This isn’t what buy-side culture is like. It's much more collegiate. People making these sorts of demands will be filtered out at the first hurdle (ie the head of recruitment will reprimand a recruitment agency for even daring present such a candidate). Beware.