- £327 m spent on counter-offers in 2010 by companies vying for top talent
- Stalled pay following recession is causing massive unplanned wage hikes for UK companies
- 35% of resigning accountants now offered average rises of 15% to stay
- Counter-offers in the capital are twice as frequent and double the size of those in the rest of the UK
Massive salary rises offered by employers to accountants who tell them they are resigning to take a new job will cost UK companies £327 m in 2010, according to research by accountancy and finance recruiter Marks Sattin.
Seven of every 20 finance workers in the UK are being counter-offered now, compared to just one in eight last year.
The average rise made in a counter-offer in the UK has risen from 5% in 2009 to 15% in 2010.
With average wages in the sector standing at £42, 000 in 2010 and average staff turnover at 13.5% , the cost of offering wage rises of 15% to this proportion of the UK’s 1.1 million finance employees is in excess of £327 m.
Laura Wilson, associate director at Marks Sattin says “Counter-offers this year have expanded rapidly and this has led to huge unplanned expenditure for companies. Big employers have been caught out by how quickly the market recovered. Keeping hold of employees by making counter-offers creates instability within companies, as those who were thinking of staying put begin to realise that they can significantly increase their earnings by looking to leave.
“The size of these offers should also make payroll controllers think hard about any future decisions to freeze wages as the result is rapidly spiralling costs that reward employees who get itchy-feet and which companies can do little to control. It may be that the rise of the counter-offer will fundamentally change the way finance companies negotiate wages and for now the power rests firmly with workers who have had to tolerate frozen wages during the recession.”
The phenomenon is being experienced in both practice and industry. Industries where counter-offers are most prevalent include retail; media; oil, gas, and mining; and private equity. The largest counter-offers are to be found in the investment banking industry in London, where rises of 30% have become common, fuelling expectations that bonuses this year may rise significantly.
Laura Wilson says “With the investment banks leading the way in counter-offer wage inflation, we may be about to see a bumper bonus season in the City. Companies will be anxious to prevent the instability and unpredictability of having to enter a bidding war with other employers and bonuses are a highly effective way of sweetening the deal for restless accountants before they start thinking about jumping ship”.
Just a year ago, candidates were typically offered one job out of three interviews - a 33% success rate. Now, in 2010, they are being offered two or three jobs out of five interviews - a 50% success rate.
Seven out of every 10 successful applicants are in multiple bidding offers. Clearly, this recent growth in counter-offers demonstrates not only improvements in the market but also an increasing sense of self-worth and confidence from the accountancy profession.
In London counter-offers are even more frequent and involve sums that are twice as large. Seven out of every 10 candidates are now being offered more money to stay in their roles, and counter-offers of up to 25-30% of base salary are not unheard of.
Laura Wilson says, “Firms in London have shown that they have significantly more money to throw at maintaining the quality of their workforce than the rest of the UK and this may be an indicator of a two-tier recovery in this sector. This is troubling news for regional companies trying to prevent an exodus of talent to the capital and as counter-offers have a powerful impact on workforce stability, this is a problem that could leave regional companies lagging behind the City in the long-term.”
