Following a challenging year, yielding low to negative returns across most asset classes and investment strategies, town halls across asset management companies have reiterated the message that company bottom lines have been negatively impacted, in attempts to mitigate the disconnect between candidate expectations and what companies can afford to pay in increases and bonuses. Generally speaking, investment professionals should have a good sense of the company bonus pool and what to expect. Moreover, it’s important to note that, with inflation rates now remaining stubbornly elevated close to double digits, companies who have performed on par with 2021 in 2022 still are down circa 10% in real terms.
With many companies in a difficult situation, bonus pools are not as vast as they once were. Companies would be wise to consider giving a basic ‘equilibrium’ bonus across the company, and if not possible, ensure objective scoring methodologies are in place to determine how the bonus pool should be distributed. Objectivity, transparency, and meritorious recognition are essential to reduce the risk of cultural dislocations within teams and business units. A factor that will surely weigh on the minds of CEOs, CFOs and Heads of HR, will be the fact that, although markets have recovered somewhat in early ‘23, there is growing uncertainty about the strength of a broad investment recovery, with markets appearing to be on the brink of further downturn. With bonus pools and balance sheets materially impacted in ‘22, another bleak year would pose a substantial challenge for next year’s negotiations.
Bonus ranges per level and business units are unclear and will vary from company to company depending on 2022 returns, performance and deliverables. However, there is an enormous demand for ESG professionals, commanding 20-30% increases to move and demanding strong bonuses to stay. As there is a shortage of experts in this space compared to the huge demand for such skill sets, companies seeking such talent must be willing to allocate a premium budget to the professionals seeking a move to remain competitive. Overall, in-demand skills will yield premium bonuses, whereas experts in fields with a happy supply and demand medium will face leaner bonus considerations.
What can companies do
Companies should avoid trying to ‘sugar-coat’ the lack of bonus payments by fostering team cohesiveness and culture alignment under a banner of costly team-building activities and external ‘conferences.’ Such tactics can backfire, causing disillusionment for many employees. Hard-working employees would much rather see the cost of such events reallocated to their payslips instead, especially when bonuses aren’t an option. Where these events have received prior budgetary approval, we advise that these costs are reallocated as a one-off payment across the board, to help mitigate attrition.
If you are interested in learning more about live opportunities, or you would like to discuss how we can support your hiring processes in the current market, please get in touch with Gareth Connellan, Principal Recruiter in Asset Management.