HR salary survey results - are we on the road to optimism?

Written by
Changeboard Team

05 May 2011

05 May 2011 • by Changeboard Team

Are turbulent times behind us?

It's been a troubling couple of years in economic terms. We've seen freezes on pay, an inability for companies to offer pay rises in line with the rise in cost of living and a failure to pay out on bonuses. All in all, it’s been a tough time for all employees as well as HR Professionals, with both the public and private sectors feeling the squeeze, while the media continue to rage against the bonuses paid out to bankers, particularly those who were part of the government’s bail out scheme.

The recession has understandably had a huge impact on the priorities of both employers and employees. While we had been experiencing more affluent times, there was less to quibble with pay rises in accordance with the cost of living, and bonuses being paid and not just to bankers. In times of recession though, employers are forced to focus on retaining jobs whilst trying to remain competitive.  Unfortunately in such an environment this translates to either freezes in pay or in some cases pay cuts, or minimal pay increases as opposed to the more drastic option of losing employees.

HR salary survey - key findings

At Alexander Lloyd, we work closely with the HR profession and has been witness to the ebb and flow of recent years. We felt compelled to undertake a trend based analysis of HR Salaries in 2010 to examine in more depth the different industry sectors and HR specialisations with these industries.

Results have shown that jobseekers are more at the mercy of employers as budgets are tightened and the salaries on offer are less generous and up for negotiation that prior to the recession. Generalist salaries, particularly at senior level, received on average a 2.2% increase in 2010 at management level.

The financial services industry continues to pay consistently higher in the private sector than other industries. The public sector in comparison is trailing the private in remuneration levels. This is a position that is very likely to continue with the pay freezer implemented by the government for the coming year. The private sector in comparison is likely to continue to receive small incremental increases, but unfortunately not in line with the levels of inflation that have maintained a steady rise in the last few months. 

The Consumer Price Index has reached 4.4%, an increase of 0.4% since January and is forecast to continue rising into 2011. Much of this latest increase has been attributed to clothing and footwear costs which rose steeply by 3.6% after the January sales in addition to  what seem to be the ever increasing costs of crude oil which impact so strongly on the costs of transport.

Reluctance to hire permanent staff

Permanent positions continue to be scarcer in the market than their temporary counterparts. The market has become very candidate rich in the generalist sector specifically, although according to a recent CIPD barometer report, 68% of organisations reported difficulties in recruiting senior or specialist professionals to fill niche roles.

The perception of the buyers' market combined with the necessary budget winnowing felt by the HR team, the salaries on offer particularly at senior level are not as generous as prior to the recession. Also they are less negotiable, with the emphasis on the HR team to provide a justifiable business case for an increased offer or additional benefits to secure an exceptional candidate. The flip side of this situation has been the growing view that the skill sets available in the marketplace are dwindling. This situation in compounded by the fact that there are senior level candidates that have entered the marketplace due to cuts and are facing a survival situation. 

Simon Geere, head of HR team, Alexander Lloyd:

“Many are forced to apply for positions that are offering considerably lower salaries than they previously earned simply to bring money in.  This “any job” approach to applying for positions is not attractive to potential employers as there is little focus on career and the perception that the position will be used as a “stop gap” until the market becomes more active.  A better approach would be to offer their skills particularly if they are niche specialists on a consultancy or interim basis which offer better remuneration and will appear more attractive on a CV moving forwards.”

L&D skills in demand

The niche skills that recently are in demand are those particularly located in the learning and development field. Salaries in this discipline are reasonably consistent at junior level across the private sector.

When one reaches senior levels, salary bandings begin to differ from £60k to £100+k in the technology and finance industries to £50k to £60k in professional services. It's at this level that good quality candidates are scarce and consequently expect salaries that re reflective of their skill set.

Reward specialists - highest salaries

Of the HR profession, reward professionals continue the trend in receiving the highest levels of remuneration out of any specialism. This trend is prevalent through all levels from junior to senior, with the lower roles on average expecting to receive a starting salary 33% higher than their generalist counterparts. Reward professionals do not see a large fluctuation across the private sector, with the industries tending to offer bandings roughly on a par. Not quite so for the public sector however, particularly at senior level, with considerably lower salaries on offer.

Simon Geere notes, “Reward has traditionally offered a higher salary level than the other specialities, in part due to the specific analytical skill set that is demanded to carry out the needs of the role and is less prevalent in other HR disciplines.”

Salaries slowly creeping up

For HR professionals, the most apparent trend across the board has been the minimal rises in salary through 09 to present day. The increases have been slowly creeping up, with 2010 seeing on average an increase of 2.2% in basic pay. This is positive, albeit small step when contextualised against the 1.1% received in 2009. However, the low inflation rates in 2009 cushioned the blow of a smaller increment to a greater extent, whilst in comparison, the rising RPI rate of inflation in 2010 of above 4% and pay increases of 2.2% mean that employees are feeling the squeeze much more in real terms.

With the budget out recently, Chancellor George Osborne claims that it will play a key role in the government’s vision for encouraging growth, which he described as “a war on all the barriers that stop your business expanding, investing and taking on people”. If the government’s plans for economic growth whilst attacking the deficit come to fruition, will we begin to see an tangible impact on the remuneration of any employee, and specifically our colleagues in the HR profession? Well, on that one we will have to wait and see.

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