Report 013 Compensation - Astbury Marsden

Report 013 Compensation Life Working Series 2014/5

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1.

Introduction Our annual review of City compensation trends during 2014 and the outlook for 2015. This second report in our Life Working series for 2014/5, explores the evolving nature of pay and bonuses on offer in the City. The research for this year’s report was undertaken by online survey between 16th October and 3rd November 2014. Requests to participate in the survey were sent to 27,710 candidates and clients of Astbury Marsden. A total of 1,468 responses were received and analysed to compile the final report. The information and data contained in this report are for information purposes only and are not intended, nor implied to be a substitute for professional advice. In no event will Astbury Marsden be liable to you or any third party for any decision made or action taken in reliance of the results obtained through the use of the information and/or data contained or provided herein. Please consider that the responses given are based on the respondents interpretation of the question and response options. If you have questions regarding the survey or the report please contact: Adam Jackson +44 (0)20 7065 1185 [email protected]

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2. Summary of findings

The most significant insights and trends identified in this year’s research. There has always been an ardent interest in the pay and lifestyle of city workers, whether that is the well documented ‘City Boy’ lifestyle of old or the strictly regulated bankers of today. With increasing government pressure on compensation, we look at how City workers attitudes towards pay and bonuses have changed this year. Base Salary At the salary level, we saw the average base rise by 8% to £96,458 with median basic pay 6% higher, at £85,000. This is the first increase to median pay that we have seen since 2011, suggesting that the City is finally seeing the light at the end of the tunnel. However, whilst the City as a whole is looking positive, the battle of equal pay for women is still on. When looking at the differences in men and women’s pay, we found that on average, women’s basic salary is just 84% of their male colleagues. In addition, whereas last year, women received a higher pay rise when changing jobs or receiving a promotion, this year, men are seeing their pay rise more quickly.

Bonus Expectations Expectations of receiving a bonus are slowly rising with two thirds anticipating receiving a payment, a 5% increase on last year. In addition, 40% are expecting to see a rise; this is 6% more than last year. However, we have also seen a small increase in those who expect to see a reduction in their bonus. With a decrease in those who are ‘unsure’, this could indicate a more realistic perspective as compensation becomes more stabilised following increased regulation and a settling of the market. Next Year When looking at next year’s pay, respondents are far more positive, with 5% more than last year expecting their pay to go up. However when looking on a job level basis, the report shows that the more senior the respondent, the less confident they are about receiving a pay rise. The most confident are at the Associate/ Manager level with almost two thirds expecting to receive a pay increase. By stark contrast, just one third of Managing Director/Partner level employees think they will see their salary increase in 2015.

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But what if expectations are not met? How will employees react? This year, over half of responses were to move roles if they were not happy with their bonus. This suggests that city workers are more confident in the job market than they have been in previous years. Only time will tell. I hope you find the report interesting.

Adam Jackson Director

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3. Basic Pay Exploring changes to employee’s base salary over the last year. Fig 3.1

Overview This year, the average salary across the City was £96,458, a further rise of 8% on 2013. Median basic pay was £85,000, a 6% increase on last year. During the year, 62% saw an increase in pay, a sharp increase on the last 3 years which saw less than half experiencing a rise in their base salary. Just less than 3% received a decrease. This is in line with previous years. 3.1.1

Recipients of pay changes

Changes to basic pay

2014

2013

2012

2011

Respondents receiving an increase

61.8%

47.0%

45.2%

44.0%

Respondents receiving an decrease

2.9%

3.1%

3.6%

1.2%

Increases in pay were made up of the following: • • • •

21% of respondents were promoted during the year. (Fig 3.1.2). Those promoted received just over a 19% increase in basic pay, a rise on the prior year. 24% of city staff changed jobs (Fig 3.1.3), 4% less than last year. By changing employers you could expect to receive a 17% increase to your pay. This represents a small rise on 2013. Just over 6% of respondents changed jobs and received a promotion and in return received on average 28% increase in pay. 61% of employees neither changed employers nor were promoted, these staff saw their basic pay rise by 5%.

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3.1.2

Changes to pay as a result of promotion

Average of 18.9% increase for those who were promoted

Average of 6.5% increase for those who were not





3.1.3

Changes to pay as a result of changing employers

Average of 16.5% increase for those who changed jobs

Average of 6.6% increase for those who did not





“The average salary across the City in 2014 was £96,458”

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Fig 3.2

Gender 3.2.1

Impact on pay of changes in circumstance

Men changing jobs or receiving promotions, saw their pay rise more quickly than women. This was also the case when they decided to stay in their current role with the same employer. Changed Jobs 2014

Promoted 2014

No Change 2014

Male

16.8%

20.1%

5.2%

Female

15.4%

14.1%

2.7%

Gender

3.2.2

Pay equality

According to the survey, women earn 84% of the average basic salary for men. This is a 6% increase on last year, however there is still come way to go before women and men’s earnings are equal.

Average

Median

Drilling into the results and looking at average pay differences based on job level we see the following: Female

Male

Female salary as a percentage of males

Analyst/Executive

£43,701

£58.905

74%

Associate/Manager

£60,355

£64,806

93%

Assistant Vice President

£66,688

£76,046

88%

Manager

£62,354

£76,504

82%

Vice President/Senior Manager

£93,001

£99,049

94%

Director/Executive Director

£137,471

£126,780

108%

Managing Director/Partner

£145,000

£213,421

68%

Other

£86,693

£93,765

92%

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Fig 3.3

Job Level 3.3.1

Impact on pay of changes in circumstance

When changing jobs, AVP level staff expect to see the largest increases in basic pay. This contrasts significantly with the increases experienced by the AVP’s who were promoted or did not change jobs; these individuals received the smallest increases of any level. Promotions at the senior end were the most fruitful but those at the most junior end received the highest increases without a promotion or a job change.

Impact on Pay Job Level

Changed jobs

Promoted

No Change

2014

2013

2014

2013

2014

2013

Analyst/Executive

18.0%

17.7%

16.5%

23.7%

7.3%

8.5%

Associate/Manager

13.3%

19.3%

13.3%

18.1%

2.7%

5.6%

AVP

27.7%

16.6%

21.2%

14.5%

5.0%

3.6%

Manager

14.2%

14.4%

20.7%

17.1%

3.9%

3.6%


14.5%

12.2%

14.5%

12.2%

3.8%

2.0%


17.9%

11.3%

25.1%

13.8%

3.7%

2.7%


19.1%

29.4%

26.1%

16.7%

5.9%

1.4%

Other

15.7%

14.0%

16.1%

15.1%

7.1%

3.0%

3.3.2

Shifts in median and average salaries

Median pay for Analyst/Executive level staff grew the fastest in the year with an increase of 11%. On an average basis, AVP level pay was the quickest rising by 10%. Average and median salaries increased across all job levels this year.

Job Level

Median Salary

Average Salary

2014

2013

Variance

2014

2013

Variance

Analyst/Executive

£50,000

£45,000

11.1%

£55,319

£52,017

6.3%

Associate/Manager

£60,000

£55,000

9.1%

£63,846

£61,007

4.7%

AVP

£70,000

£68,375

2.4%

£75,210

£68,139

10.4%

Manager

£72,000

£68,250

5.5%

£74,089

£69,120

7.2%


£95,000

£87,250

8.9%

£97,859

£91,545

6.9%


£125,000

£120,000

4.2%

£128,167

£118,438

8.2%


£192,500

£175,000

10.0%

£208,289

£191,011

9.0%

Other

£80,000

£72,000

11.1%

£92,168

£84,004

9.7%

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Fig 3.4

Function 3.4.1

Impact on pay of changes in circumstances

This year, staff working in Compliance experienced the largest increases in pay as a result of changing jobs or a promotion. This demonstrates continued demand for the skillset over the last year. Revenue Generators and Sales & Distribution staff received over 14% more pay without changing jobs or being promoted. This is a positive change for Sales and Distribution staff who received a 1% decrease last year.

Impact on Pay Function

Changed jobs

Promoted

No Change

2014

2013

2014

2013

2014

2013

Administration

18.1%

-

30.0%

-

5.9%

-

Compliance

36.9%

26.8%

32.2%

19.5%

3.7%

5.1%

Finance

11.2%

21.5%

10.8%

15.3%

2.8%

2.5%

HR

23.4%

22.4%

12.7%

18.7%

2.6%

14.7%

Internal Audit

20.8%

33.3%

n/a

22.2%

4.4%

3.7%

Operations & Middle Office

19.9%

12.4%

24.4%

20.3%

4.1%

3.0%

Revenue Generator

2.3%

11.0%

7.0%

14.0%

15.1%

3.1%

Risk & Governance

14.2%

15.2%

17.4%

13.6%

3.6%

8.0%

Sales & Distribution

13.8%

11.0%

14.8%

22.0%

14.1%

-1.0%

Strategy & Change

21.1%

19.3%

18.5%

22.5%

4.1%

4.4%

Technology

12.6%

13.4%

23.4%

15.6%

3.2%

3.4%

Other

19.7%

11.6%

28.1%

13.2%

4.4%

3.7%

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3.4.2

Shifts in median and average salary

Internal Audit staff saw their median income rise the fastest at a rate of 16%. On an average basis, Revenue Generators and Strategy and Change employees saw their pay rise the fastest. In contrast Technology and Risk & Governance functions saw a decrease in their average salary this year.

Function

Median Salary

Average Salary

2014

2013

Variance

2014

2013

Variance

Administration

£58,000

£52,500

10.5%

£85,500

£75,125

13.8%

Compliance

£70,675

£67,750

4.3%

£87,292

£77,567

12.5%

Finance

£76,500

£73,500

4.1%

£80,753

£76,833

5.1%

HR

£69,200

£65,000

6.5%

£79,131

£75,185

5.2%

Internal Audit

£87,000

£75,000

16.0%

£58,500

£77,333

10.6%


£65,000

£60,000

8.3%

£74,556

£68,809

8.4%

Revenue Generator

£125,000

£110,000

13.6%

£124,509

£97,496

27.7%

Risk & Governance

£88,250

£82,000

7.6%

£96,630

£113,278

-14.7%


£80,500

£71,250

13.0%

£94,545

£90,790

4.1%

Strategy & Change

£102,500

£94,500

8.5%

£122,539

£80,816

51.6%

Technology

£90,000

£83,000

8.4%

£94,027

£111,964

-16.0%

Other

£87,500

£85,000

2.9%

£106,198

£89,193

19.1%

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Fig 3.5

Sector 3.5.1

Impact on pay and changes in circumstances

On a sector level there were some stark contrasts. The greatest impact on pay for those changing jobs in 2014 was experienced by ratings agencies at 83%. However, those in private equity experienced a 7% decrease. Those in corporate broking and stockbroking received a 43% increase in pay on promotion. However those in private banking & wealth management experienced just a 7% increase. For those who remained loyal to their employer, without a promotion or a job change, the highest increase in pay was in commodity trading. Corporate broking and stockbroking received no change.

Sector

Changed Jobs

Promoted

No Change

2014

2013

2014

2013

2014

2013

Commodity Trading

5.7%

18.5%

10.7%

25.7%

10.4%

1.4%

Consulting

13.2%

-

13.1%

-

4.5%

-

Corporate Broking & Stockbroking

42.9%

0.9%

42.9%

17.0%

0.0%

0.0%

Exchanges & Trading Platforms

25.6%

12.2%

34.1%

19.6%

3.6%

3.2%

Fund Services

15.9%

12.0%

8.6%

12.9%

4.7%

3.8%

Insurance

12.2%

19.0%

19.7%

15.9%

5.4%

5.1%

Investment Banking

22.3%

14.1%

22.6%

15.5%

6.2%

2.8%

Investment Management

8.6%

13.5%

12.0%

14.2%

4.9%

3.8%

Non Financial Services

18.6%

18.5%

31.7%

19.8%

1.5%

5.6%

Payments, Clearing, Custody & Counterparty

10.8%

3.2%

21.7%

18.3%

1.8%

-1.7%

Private Banking & Wealth Management

27.3%

17.8%

7.2%

13.5%

3.4%

3.7%

Private Equity

-6.9%

5.3%

10.9%

12.5%

5.6%

4.3%

Ratings Agencies

83.1%

9.6%

21.0%

11.9%

2.9%

0.5%

Regulators

15.2%

27.6%

-

8.7%

1.7%

3.3%

Retail Banks & Building Societies

7.0%

14.4%

14.3%

11.2%

3.3%

14.3%

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3.5.2

Shifts in median and average salaries

For the second year in a row, median pay for regulators grew the sharpest in the year rising by 17%, followed by private banking & wealth management where pay rose by 12%. Ratings agencies saw average pay grow by 19% with the lowest growth seen for exchanges and trading platforms.

Sector

Median Salary

Average Salary

2014

2013

Variance

2014

2013

Variance

Commodity Trading

£78,000

£75,000

4.0%

£94,947

£87,289

8.8%

Consulting

£98,500

£91,600

7.5%

£120,853

£111,189

8.7%


£60,000

£60,000

0.0%

£77,200

£73,600

4.9%


£82,500

£80,000

3.1%

£91,518

£87,901

4.1%

Fund Services

£68,825

£65,500

5.1%

£74,346

£70,893

4.9%

Insurance

£76,500

£70,000

9.3%

£85,857

£80,312

6.9%

Investment Banking

£91,000

£83,000

9.6%

£99,534

£91,456

8.8%


£90,000

£85,000

5.9%

£92,129

£87,254

5.6%


£69,200

£65,000

6.5%

£82,954

£75,575

9.8%


£67,500

£65,000

3.8%

£81,660

£75,540

8.1%


£80,000

£71,300

12.2%

£90,685

£85,332

6.3%

Private Equity

£125,000

£125,000

0.0%

£126,625

£117,156

8.1%

Ratings Agencies

£86,750

£81,000

7.1%

£97,125

£81,400

19.3%

Regulators

£70,000

£60,000

16.7%

£71,327

£68,000

4.9%


£95,000

£90,000

5.6%

£97,933

£92,881

5.4%

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4. Bonus Expectations A look at sentiment towards bonus payments for the current year. Fig 4.1

Overview 4.1.1 Overall bonus expectations Overall bonus expectations have increased this year with 66% expecting a bonus - a 5% increase on last year.

4.1.2 Expectation of change in bonus This year, 40% of respondents are expecting an increase in their bonus compared to 34% last year. However, 16% are expecting a decrease, which is 3% more than last year.

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Fig 4.2

Gender

This year, the average expected bonus for men is almost double that which is expected by women. However, the bonus as a percentage of average salary has increased for both sexes by just over 8%. 2014

Gender

2013

Average Bonus

% Average Salary

% Expecting a bonus

Average Bonus

% Average Salary

Female

£17,429

26.3%

78.1%

£14,996

17.9%

Male

£32,080

40.0%

78.8%

£26,674

31.9%

Prefer not to say

£7,500

11.3%

66.7%

£9,000

10.8%

TOTAL

£29,437

37.9%

78.6%

£24,573

29.4%

Fig 4.3

Job Level

In line with last year, bonus expectations rose for all levels. Managing Director/Partner level staff expected the highest bonus at an average of £124,680, 60% of average salary. 2014

Job level

2013

Average bonus

% Average Salary

% Expecting a bonus

Average bonus

% Average Salary

Analyst/Executive

£6,411

11.6%

71.3%

£4,008

7.7%

Associate/Manager

£10,298

16.1%

77.4%

£9,725

15.9%

AVP

£8,330

11.1%

76.6%

£6,468

9.5%

Manager

£21,239

32.3%

80.6%

£20,505

29.7%


£23,961

24.5%

89.2%

£20,405

22.3%


£55,354

43.2%

82.8%

£43,135

36.4%


£124,680

59.9%

81.4%

£102,930

53.9%

Other

£5,440

5.9%

47.0%

£7,441

8.9%

TOTAL

£29,437

30.5%

78.6%

£24,573

27.5%

Looking at the comparatives based on gender and job level: Female

Male

Percentage

Analyst/Executive

£2,721

£7,384

36.8%

Associate/Manager

£9,509

£10,505

90.5%

Assistant Vice President

£21,000

£6,697

313.9%

Manager

£7,542

£24,447

30.8%


£17,921

£25,452

70.4%


£42,059

£57,319

73.4%


£120,000

£125,040

96.0%

Other

£2,867

£6,244

45.9%

TOTAL

£17,429

£32,080

54.3%

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Fig 4.4

Function Bonus expectations as a proportion of pay were fairly consistent across most functions when compared to last year. The highest proportions were found with Revenue Generators who expect to receive 74% of their salary as bonus. Those in Compliance have the lowest expectations at just 17%. Over 90% of Risk and Governance and Internal Audit professionals expect to receive a bonus compared to just 71% of Operations and Middle Office staff.

2014

2013

Function

Average Bonus

% Average Salary

% Expecting a bonus

Average Bonus

% Average Salary

Administration

£22,375

26.2%

75.0%

£21,531

28.7%

Compliance

£14,674

16.8%

83.3%

£11,582

14.9%

Finance

£23,772

29.4%

83.6%

£19,774

25.7%

HR

£17,046

21.5%

80.8%

£13,446

17.9%

Internal Audit

£19,538

22.9%

92.3%

£18,488

23.9%


£15,609

20.9%

70.7%

£14,781

21.5%

Revenue Generator

£91,609

73.6%

81.0%

£81,683

72.1%

Risk & Governance

£24,079

24.9%

92.7%

£22,374

24.6%


£38,116

40.3%

79.6%

£34,235

42.4%

Strategy & Change

£47,387

38.7%

86.2%

£27,018

24.1%

Technology

£18,098

19.2%

77.9%

£15,770

17.7%

Other

£45,455

42.8%

72.9%

£40,981

42.0%

TOTAL

£29,437

30.5%

78.6%

£24,573

27.5%

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Fig 4.5

Sector The highest bonus expectations were held by staff working in Private Equity at £145,625. The lowest expectations are with Regulators, and Fund Services firms. In addition, all Private Equity and Ratings Agency employees are expecting to receive a bonus compared to just 62% of Regulators.

2014

2013

Sector

Average Bonus

% Average Salary

% Expecting a bonus

Average Bonus

% Average Salary

Commodity Trading

£30,547

32.2%

87.0%

£25,958

0.3%

Consulting

£27,822

23.0%

77.4%

£22,709

0.2%


£14,000

18.1%

83.3%

£8,500

11.5%


£27,594

30.2%

81.8%

£20,078

22.8%

Fund Services

£7,184

9.7%

70.0%

£7,211

10.2%

Insurance

£14,486

16.9%

77.9%

£14,799

18.4%

Investment Banking

£27,301

27.4%

76.9%

£23,663

25.9%


£63,117

68.5%

81.2%

£61,704

70.7%


£36,151

43.6%

77.2%

£12,857

17.0%


£18,131

22.2%

79.2%

£16,371

21.7%


£24,167

26.6%

76.0%

£19,604

23.0%

Private Equity

£145,625

115.0%

100.0%

£117,125

100.0%

Ratings Agencies

£19,125

19.7%

100.0%

£18,500

22.7%

Regulators

£3,246

4.6%

61.5%

£4,731

7.0%


£20,533

21.0%

90.0%

£19,807

21.3%

TOTAL

£29,437

30.5%

78.6%

£24,573

27.5%

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5. Expectations & Reactions The sentiment of City staff towards pay prospects for 2013. Fig 5.1

Overview

5.1.1

Expectation of salary increase

5.2.1

Expectation of salary increase

Half of respondents this year, believe that they will receive a pay increase in 2015. This is a small rise on last year’s findings.

Fig 5.2

Gender Both men and women have similar expectations towards pay increases in 2015, with women just slightly more optimistic than men.

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Fig 5.3

Job Level There is a stark contrast between the different levels in terms of expecting a pay increase. Nearly three quarters of Associate/ Manager staff expect a pay rise in 2015, compared to just one third of Managing Director/Partner level employees.

Fig 5.4

Function Operations & Middle Office and HR staff were the least optimistic about pay prospects for the coming year. Compliance and Strategy & Change staff are the most optimistic.

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Fig 5.5

Sector Payments, Clearing, Custody & Counterparty, Commodity Trading, Ratings Agencies and Non Financial Services are the most optimistic sectors. Corporate Broking & Stockbroking, Private Equity and Regulators expect continued pay pressure in the coming year.

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Fig 5.6

Bonus Dissatisfaction 5.6.1 Action taken if dissatisfied with bonus payment This year we have seen the biggest increase in those who would change roles as a result of a poor bonus to the highest levels since the survey began. Employees are more interested in moving overseas when compared to last year, but this has not returned to the levels experienced in 2011. This year we have seen the highest level of employees who would take no action if they are not happy with their bonus. This suggests that employees are becoming more accustomed to a lower bonus than they have done previously.

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Market Insight Where do you expect the most new financial services jobs to be created in the next year?

1 London (45%) 2Singapore (14%) 3 Shanghai (12%) 4New York (9%) 5= Hong Kong (8%) UAE (8%) 7 Kuala Lumpur (4%) 21

In which location would you prefer to work?

1 London (70%) 2New York (12%)

3 Singapore (7%) 4= Hong Kong (4%) UAE (4%) 6 Kuala 7 Lumpur (2%) Shanghai (1%) 22

About Astbury Marsden We specialise in recruiting uniquely talented people in business technology, business transformation, regulatory and assurance functions and specialist technical skills. We intimately understand the dynamics of the financial services, energy and professional services markets; making sure we know the people our clients need to occupy critical roles throughout their business. We help clients determine the people they need and then we find the best of them. We have a global perspective and we are territory-neutral. We look for market identifiers that we recognise, and apply our experience and intelligence to solve the challenges they face. Our regional hubs established in London and Singapore allow us to serve our clients across EMEA and throughout Asia. You can find more out at www.astburymarsden.com London

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