Yes, there were redundancies, but with weak corporate governance structures cited as one of the main causes of the financial crisis, it appeared that many companies were wary of laying off too many governance professionals to avoid the ire of shareholders, government regulators and investors.
“Lay-offs were not as deep as those found in other areas such as front office or IT, and in fact many of the so-called ‘lay-offs’ in corporate governance were a smokescreen for senior management to use the crisis as a convenient vehicle for upgrading their staff and reducing costs by hiring younger, keener and cheaper people,” says Matt Anderson, manager of the finance and banking team at Legal Futures.
Nevertheless, Anderson estimates the size of the average legal or compliance team at the large global players has still decreased by about 15 to 20 per cent. Not good per se, but it could have been much, much worse.
It was a challenging year too for proprietary traders, but “very good traders proved to be very employable” with firms that have deep-rooted prop cultures and intact balance sheets, says Paul Guevara, an equities recruitment consultant at Boyd & Moore Executive Search.
“FICC traders, in particular, have fared very well. And also, with a less crowded marketplace in equities, very high-calibre equities-focused prop desks have also performed. Three key words to emphasise though: positive track record,” he adds.
While significant cuts took place across almost all research departments within investment banks, ranked analysts or otherwise well-regarded middle to senior-level research analysts were in strong demand.
“It is rarer nowadays, but we have seen some very top-tier analysts make transitions to other firms for sometimes double the previous base and bonus salary, negotiated on multi-year guarantees,” says Guevara.
The first half of 2009 was anything but stellar, but as the year came to a close there was something of a recovery in equity research hiring.
“Things picked up late in the year and we saw extensive hiring for associate and analyst-level candidates in Q3 and Q4, and some of our clients are predicting a better than expected 2010,” says Toni Kitchaixankul, a senior consultant at Legal Futures.
2009 was a tough year for many senior professionals in the finance industry, especially in the foreign firms.
“We saw some firms moving a big part of trading to Hong Kong, with many senior professionals from operations and front office IT in Tokyo being let go. Another area that suffered was risk. ORM and IRM departments were in some cases closed in Tokyo and the function was taken over by the APAC HQ,” says Iwona Bancerek, senior consultant for finance at CDS Consulting.
Quite a few MDs and senior professionals were also let go in the equity research and credit areas and there was also a wide trend for upgrading. “Some firms were seeking younger, less expensive candidates with high potential in order to replace more senior incumbents on much higher packages,” says Bancerek.
It only takes two words to sum up the IT sector in 2009: cost cutting. “Cost cutting sliced hard into IT with cancelled projects, workforce downsizing, off-shoring and outsourcing. Some teams that were hit hardest suffered a 50 per cent reduction in staff levels, but even those that did relatively well still found themselves 20 to 30 per cent down,” says Jason Nolen, a consultant at Legal Futures.
Perhaps it should be no surprise then that 2009 also saw something of an exodus of top talent. “A number of top tier front office candidates have packed up and moved on, finding work where they could. Singapore, Hong Kong, New York and London were popular destinations for the top talent,” adds Nolen.
Here is one type of candidate that could fall into both the bad and good(ish) categories. Salespeople certainly felt the full force of the Lehman shock, but some have also prospered. “Sales teams have been one of the harder hit areas across front office, however, by and large, very experienced mid-level salespeople with a list of established strong client relationships are usually snatched up by rival firms rather quickly,” Guevara says.
There were some pockets of real estate hiring, but many firms were forced into downsizing and headcount planning was all about restructuring rather than growth, says Martin Eastgate, senior consultant for real estate at CDS Consulting.
“The 2008 trend in bankruptcies for Japanese developers and real estate platforms (over 30 bankruptcies) continued in 2009 with firms such as Joint Corporation and Pacific Holdings seeking sponsors. The situation may have been worse if the JREIT market been not been propped up by the Japanese government, major banks and some leading real estate firms,” says Eastgate.
Many foreign investment funds and asset managers were also hit hard. “From Q4 in 2008 and through 2009, several major foreign capital asset management and investors reduced their acquisition, asset management, and portfolio and fund management teams. Typically firms were cutting 20-25 per cent of their staff with some platforms cutting over 50 per cent,” adds Eastgate.