It will come as no surprise that the trend in salaries for researchers and fee earners in executive search and interim management firms has continued to turn south or at best remain static, according to Heywood Search’s Salary Survey 2010.

There are very few examples of basic salaries having increased and there are many examples where these have been cut and bonuses and commissions scrapped due to falling revenues. In fact, salaries, OTEs (on target earnings) and fee income are similar to levels attained back in 2004.

Encouragingly, during Q2 and Q3 of 2009, there has been improved positivity in the market and a meaningful number of firms starting to look for researchers and fee earners, clearly indicating the start of an improvement. There was also a significant appetite for financial services fee earners in Q3, 2009.

The worse performing sector has been financial services, although while some firms have had to cut back, others have bucked the trend and continued to hire. The exception to the cutbacks has been within the not-for-profit (NFP) and interim management sectors, where demand has remained consistent, and above average income and bonuses are being achieved.

Salaries for researchers and junior fee earners have remained static, although basic salaries for more experienced fee earners have fallen marginally. NFP and interim management fee earners have enjoyed a better year, even though in most cases revenue has not increased.

With financial packages reduced and firms focusing on the survival of their businesses, salaries are not expected to increase until Q3 next year

Successful search consultants remain open to hearing about new roles, although given the economic climate, they are considerably more cautious than in previous years. There are also a number of experienced researchers seeking roles but at the moment, some firms are considering these to be a luxury. Opportunities have to be exceptional to persuade a successful candidate to move. Interestingly, the trend highlighted in last year’s survey regarding an increase in overseas moves, in particular to the Middle East and the Far East, has all but disappeared. It is unlikely that this will be an attractive option to experienced fee earners and researchers until Q3 2010.

Historically, those firms that did not review their staff packages upwards were in danger of losing their biggest generators. Today, with financial packages reduced and firms focusing on the survival of their businesses, salaries are not expected to increase significantly until Q3 2010.
From a search-to-search perspective and as a result of the financial climate, the search sector has become more client-driven, although this position is not expected to continue after Q2 2010. Stiff competition continues to attract the best fee earners and researchers.

The timescales for interviewing have in general increased, although the number of interviews in most sectors preoffer has remained the same. This indicates a more cautious approach by hiring clients. At all levels recruiters have remained with their current employers for an increased length of time against those surveyed last year.

Commission structures have remained competitive to accommodate good fee earners and bonuses of up to 40% based on a tiered system of personal fee income are not unheard of. Fee income overall has fallen significantly against that of 2008 and 2009, and fee earners have suffered from significant lower take-home pay and bonuses than last year.

Putting all this aside and ignoring the large falls in revenue and bonuses, executive search as a career remains financially lucrative.

key indicators

General trends

• increased maturity in the interim management sector
• demand for financial markets search, which was the first sector to be affected in the downturn, has been the first to recover
• take-home pay has fallen for executive search recruiters and researchers
• redundancies and pay cuts were commonplace in 2008 and this is continuing this year. A cautious approach to hiring is expected in 2010
• confidence in the market is lower in certain sectors but opportunistic growth continues for some established firms
• one to three job opportunities exist for experienced recruiters
• financial guarantees and golden hellos are rare
• fewer salary cuts and reduced bonuses are expected in 2010