At a time of candidate scarcity in the actuarial and financial services sector, there’s a new challenge in the market: salary inflation. As candidate expectations increase, we talk to James Harrison, Director of Emerald Group’s International Actuarial team, to explore what this means for global recruitment.
The actuarial and financial services sector has always been competitive, with good candidates expecting – and receiving – financial packages that reflect their skills, qualifications and seniority. Now, more than ever, salaries are being pushed upwards beyond the bounds of general inflation. Clients looking to hire are under pressure from candidates who have clear expectations about the salary increase they want with a new job offer.
Scarcity + Transparency = Increased Incentives
There are several factors driving this trend, as James explains, “The market in general is under pressure: candidates are scarce and good candidates know that they are in a strong position to command a high salary. Candidates also have choices: they are often considering multiple new roles simultaneously, as well as the option of staying where they are. Across the market, there is now greater transparency on salary levels, for example via job ads and access to market information. It’s also easy for people to apply speculatively for roles online, to test the market – even before they’ve decided to leave their current job. Add to this that above-average salary increases are happening at all levels, from the most senior to entry level applicants, and clients are really feeling the difference.”
As well as financial service market conditions, broader economic conditions are also at play. James explains, “It’s certainly not the only factor, but the cost of living crisis is also making a difference as candidates try to future proof their income and financial security.”
Counter Offers and Competition
“We’ve recently seen a significant increase in counter-offers,” he continues. “Clients know that rehiring costs, combined with being a team member down, can really impact operational productivity. The consequence of this is that if candidates have an offer from a competitor, they can bargain with their current employer to increase their salary. If the hiring company can’t match the offer, the candidate may withdraw from an application at the final stages. It’s always frustrating when this happens, especially as our experience shows that the candidate will almost certainly still change roles within six months, as the original reasons for wanting to leave their current employer usually remain.”
What Can Clients do?
With a perfect storm of pressure on clients, James offers some guidance to help navigate today’s complex employment market, “As a starting point, it’s important to offer salaries at the right level for the candidate you want to hire, so always take advice from an experienced executive search and recruitment specialist. Clients then need to consider the whole opportunity: job satisfaction, promotion prospects, work-life balance and growth opportunities are essential to today’s candidates. Candidates also respond well to specific financial incentives that reassure them that they won’t lose out financially when changing jobs and that their salary will keep pace with market levels. This can include a salary review after six-months, a sign-on bonus or a bonus buy-out to help them change role before a pay-out date. Again, at Emerald Group we’re experienced in exploring and negotiating these details with a potential candidate, and this can make all the difference to their final decision.”
James also encourages companies to consider hiring internationally: “Clients are increasingly looking overseas for candidates. It’s now much more straightforward to hire candidates from India, Asia and other international markets. With the right incentive packages, you can create strong loyalty between a candidate and their new company. We’re helping more and more UK clients find the right hire from our network of qualified international candidates.”
Are Candidates Really in Control?
Salary inflation is definitely being driven by candidates, but there are never any guarantees that a request for a higher salary will be met, particularly late in a recruitment or executive search process. That perfect job can slip away during the final stages of salary negotiation. James offers some advice to candidates looking to maximise their salaries, “At Emerald Group, we can advise you on realistic salaries for your skills, qualification and experience levels. This is a huge advantage when you’re looking for a new role, which is often time consuming and always a major decision.” He continues, “Be clear on your salary expectations from the outset and listen to advice that will help you find your true worth in the market. And don’t lose sight of the fact that a job isn’t all about money. Yes, it’s a massive incentive, but you’re making vital decisions about your career. You need to take into account your personal goals, progression plans, work-life balance and all the factors at play in your life at the time.”
Recruitment Expertise Can Help
James explains how the Emerald Group supports both clients and candidates to foster successful – and affordable – placements. “Our market knowledge means we guide both clients and candidates on salary levels and can work within the boundaries of flexibility on both sides. We give real-time and effective guidance to clients on how to incentivise candidates to join them. We ask candidates the right questions to understand their goals and incentives and to explore how their next move can be shaped to give them what they need. Communication and negotiation are at the heart of what we do and we can balance both perspectives to reach the right conclusion for all parties.”
Is Salary Inflation Here to Stay?
James concludes with an encouraging note. “We’re experiencing a surge of growth post-Covid, but this will flatten off. A ‘new normal’ lies ahead: it’s too early to say what this will look like but this trend will undoubtedly slow down when recruitment pressure stabilises and the supply and demand for labour finds a new level. In the meantime, both clients and candidates need to focus on their goals and make decisions accordingly.”
Let’s Talk
To find out more about how we can help you navigate this period of salary inflation, send us your details and we’ll be in touch to arrange a time to talk. Or call us on +44 (0)207 283 2520.