A mixed recruitment picture is emerging as we head towards the summer months. Talent acquisition and retention is still top of the agenda and employment prospects and pay cheques appear to be on the increase.
But it is a mixed picture - the markets are not in the doldrums of the early 2000's but they have not and probably will never be able to match the glory days of the late 1990's. Some sectors are recruiting while others are taking stock of the numbers on board and are retrenching. Michael Moran, CEO of talent management and outplacement consultancy Fairplace Consulting says: "Outplacement is busy because organisations are letting people go. But at the same time you hear of firms that are actively recruiting. Some firms are reviewing their overheads and others are looking to expand particular teams and are actively poaching staff".
Others also point to reduced hiring in certain sectors, in particular investment banking. David Reynolds, Partner at executive search firm Sheffield Haworth, says: "Last year the banks started the year by hiring aggressively because they thought the markets were picking up. The first quarter went well but the second half did not, so at the start of 2005 they decided to get rid of a number of people who were surplus to requirements, in order to make hires in new areas where they want to focus their efforts".
Fund management, however, seems to have finally picked up its tail and is actively recruiting once again. The other huge areas of growth are consumer financial services, real estates and private equity. Banks are also increasing their focus in particular areas where they feel they can gain advantage on fees - in structured products, leveraged finance, derivatives, etc.
Simon Hearn, partner at Russell Reynolds, says: "Investment banking and markets business is still busy but not as busy as last year. In unit volumes we are doing less although revenues are the same - that is because the investment banks are hiring less at the moment. But investment management and consumer financial services businesses are up about 200%. Asset management houses are now bringing in skills on the institutional marketing side and there are a lot of distribution-related roles".
A recent survey by London-based Centre for Economics and Business Research also points to optimistic indicators for 2005. It forecasts 325,000 people will work in financial services next year, rising to 328,000 in 2007. It also picks up on increased buoyancy in fund management - investment houses are currently hiring more than any other sector, and were expected to add 1,000 jobs this year - up 3.0% form last year - this is being driven by both growth in hedge funds and amongst conventional fund managers.
The survey also raised estimates for the average annual job growth in financial services to 1.8% in 2009 up from 1.5%. Andrij Halushka, one of the report's authors at the CEBR, says: "We are optimistic and we still think the investment financial community in London will increase its workforce in the next few years. According to our estimates, the strongest growth this year will be in fund management but after this year, this sector is likely to be saturated and will start to reduce headcount. Securities will do quite well this year and will therefore need an increased workforce to cope with increased activity".
The increased need to qualified candidates with further exacerbate the war for talent. Moran says: "If you have got the right people you are fighting desperately to retain them, so talent management has become a real issue. One set of firms is trying to hire people out and another set id trying to hold them in. As competition in the talent management space becomes more intense, people who generate revenues will be fought over more aggressively".
This is also reflected in the attitude towards talent management functions by some recruiters. Alex Hartley, Consultant at MaST, a learning and development consultancy, says: "When referring to talent management the market is actually thinking about recruitment. Many firms are now recruiting talent management specialists who are also involved in the recruitment functions. So there is a potential risk of a narrow focus on talent in one arena only".
Talent acquisition and retention remains top of the agenda across sectors. Ben Anderson. Director at Capita Consulting, also points to changes in the telecoms and technology space: "Companies are very bullish at the moment. Revenues are growing very quickly and internet advertising is back up. These big platforms are being used in lots of different ways for companies to make money. They need more people and there is definitely a war for talent within these companies". He says, continuing: "Some of these companies are making huge hires quarter by quarter and there is tightness in the market for good people. Retention bonuses are returning and companies are locking their executives and it is getting hard again to pull people out of these companies. So it is a tough market to recruit in right now", he says.
Increased competition has once again brought changes in pricing structures. One City headhunter laments: "There are some significant changes taking place in the market at the moment around pricing. More of the investment-banking end of the market is going contingent, because a number of firms have sought to change their pricing models. Until such time that the buyers of those services realise they are getting sub-optimal service, they will be wooed by what they perceive to be more attractive pricing structures".
Overall there has been relatively good performance across all areas but the rate of recruitment growth is slowing. The first and second quarters are been used to hire and get the right people on board but recruitment is expected to taper off in the third and fourth quarters of this year. Halushka agrees: "We think that the increase in jobs is quite even across sectors in financial services, but growth in employment is slowing down. The sector added 2% additional jobs in 2003 and 1.7% in 2004. This year it added 1.6£ and we think this will decline to 1% growth in 2007".
Macro-economic factors could also undermine current hiring trends. The US is a major driver for what happens in Europe but this economy is currently suffering from a major balance payment deficit - this could potentially lead to inflation hikes and increased unemployment.
Moran points out: "After the UK elections, the next 12-18 months will see a tightening of belts by politicians in order to balance their books. The way Bush and Blaire have prime primped the economies to give good figures is also going to have an impact over the next 18 months. At the same time the energy market is very bullish about oil prices and this is bound to cause problems with the rest of the economy".
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