Salary Survey 2012 - Return of bonus culture
Almost 10,000 property professionals took part in this year’s industry-leading RICS and Macdonald & Company salary and benefits survey. Average pay was down on last year, as many relied on bonuses to boost their back pockets. Sarah Townsend reports
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Pay cuts all round
The average salary paid across the UK last year was £48,329, representing a 4% decrease from last year’s figure of £50,250. This could be a reflection of the difficult market, but another explanation for the drop is the younger demographic of this year’s respondents. For instance, the proportion of respondents with only up to four years’ experience increased from 11% to 14% this year, while the proportion of respondents with 16 years’ experience or more decreased from 55% to 52%.
More than half of respondents (54%) reported no change to their salaries at their last pay review — the same proportion as the previous year. This suggests that employers are continuing to take a cautious approach to base remuneration packages until the market picks up.
However, 39% reported a salary increase at their last pay review, up from 37% in the previous year’s survey. These respondents received on average a 7% increase. Only 7% of respondents reported a drop in salary, however, the average decrease was 20%.
Regional divide persists
The average salary dipped in every UK region apart from Scotland and Ireland last year, and the divide between the regions persists.
Property professionals in Greater London earned on average 31% more than their colleagues in the north last year, although Londoners suffered a slightly more pronounced drop in their average salary than their northern counterparts.
Overall, however, the south-east is still leading the property sector’s recovery and its employees are benefiting accordingly. Last year, they experienced the smallest average salary change of all UK regions.
Gender gap widens
The pay gap between women and men continues to widen, despite the government’s continued drive for gender equality in employment. Women earned on average 26% less than their male counterparts in 2011, the survey revealed, compared with 21% the previous year.
The widest gap between the sexes was in the more senior roles, between the ages of 31 and 45.
It is thought this is because of the number of women who leave the profession at this age to have children, and therefore miss out on entering management roles.
Bonus increase for bosses
The average bonus size increased by 11% to £13,461 in 2011, the survey shows. However, the number of respondents who received a bonus dropped slightly, from 34% in 2010 to 32% last year.
There is evidence to suggest people in senior management positions benefited from increased bonuses. Equity partners or directors received bonuses almost 18% higher than the previous year. Those in more junior roles received only a marginal increase in their bonus or, in the case of “senior” roles, a reduction in bonus size.
Meanwhile, 68% of respondents said they received no bonus at all — a rise of 2% from the previous year’s survey.
More cream for more than a third of fat cats
The average salary for chief executives and managing directors rose by 2% to £90,811 and more than a third - 37% - said their salary had risen over the past year.
However, 56% of those at the top of their game said their base salary had stayed the same and 7% reported a salary reduction, suggesting that firms are still adopting a cautious approach to remuneration packages for bosses.
Peter Moore, managing director of recruitment company and survey compiler Macdonald & Company, says: “There appears to have been
an element of rewarding bosses for base salary freezes or reductions they might have taken when the market was exceptionally tough.
“Last year, those in senior management roles were handed a bigger bonus to reward —or possibly to retain - them, while their base remuneration package stayed the same.”
What the property chiefs say
People who have been on high salaries with more established careers are in a period of relying on a performance-related bonus to push up their pay. So, even if firms are finding it practical to constrain fixed costs, a pay freeze does not necessarily mean an earnings freeze. For younger employees, we do not believe it is realistic to freeze their pay, when they are earning less anyway.
Alistair Elliott, head of commercial, Knight Frank
The gradual reduction in average salaries is not surprising, and a natural reflection of continuing weak economic conditions.
All businesses must maintain a sensible grip on costs, but good people are the most important asset in any business, and it is important that we use remuneration as a tool to motivate and reward our best people.
Rowena Burns, chief operating officer, Bruntwood
The survey confirms my suspicions that firms are keeping base salaries flat while the market remains depressed, instead rewarding employees through variable pay packages such as bonuses. We would not simply hand out bonuses to staff just because they suffered a pay freeze. Variable pay is based on the performance of a particular employee.
James Darkins, managing director of property, Henderson Global Investor
Retail and rating biggest winners
Overall, annual salaries in the property sector grew by a modest amount in the year to December 2011. But the picture varies substantially when broken down by profession. Respondents whose salary grew the most were, not surprisingly, those working within the finance sector - for example, fund managers, real estate analysts and property finance specialists, who saw salary increases of as much as 11%.
But the survey revealed marked increases among other groups, suggesting that the market started to pick up last year.
Among agents, those working within the retail sector benefited from the greatest salary increase — 13.7% — from the previous year, almost double the average 7% rise for all survey respondents who reported a salary increase. Retail agents also benefited from a higher average bonus.
Industrial agents reported an average salary increase of 12.2% from 2010. This was offset, however, by a much smaller average bonus than other agents.
Agents in the residential sector, however, reported an overall salary reduction — of 2.7% — in part explained by the slowdown in new residential development last year.
Despite this, there is evidence to suggest that property development in general started to recover last year. Those working at the front end of the development cycle reported salary increases for the first time in at least two years.
Planners, for example, received an overall salary increase of 3.4%, compared with an overall reduction of 2.8% the previous year. And commercial developers pocketed an overall pay increase of 4% compared with 2.4% in 2010. Almost half of commercial developers — 41% — benefited from a salary increase last year.
Meanwhile, the rating and valuation professions performed well, experiencing overall salary increases of 9.1% and 4.2% respectively. It is thought that business rates specialists have been in demand as the industry approaches a rating review this year. Demand for surveyors might have increased as portfolio managers seek to value their properties more regularly during a turbulent economic period.
The average bonus for commercial developers was more than double that of planners, whose average bonus was just £7,348.
Jones Lang LaSalle’s Ulbrich is top dogs’ top earner
There was a huge disparity in pay between the highest earners at the largest property services firms in 2010 and 2011, according to analysis by Property Week of the latest accounts of 15 of the largest 20 property services firms in the UK, writes executive editor James Whitmore.
Remuneration received by the CEOs and top earners at the 15 firms in their latest financial years ranged from the $3.2m earned by Jones Lang LaSalle’s European head Christian Ulbrich to the £221,246 paid to Cluttons’ top earner (table, right). But the comparison is very crude, since Ulbrich runs the large European division of a listed company, while Cluttons is a limited liability partnership, focused on the UK.
Ulbrich picked up a lot more in 2010 than his counterpart at CBRE, Mike Strong, who took home $1.82m. And the top-earning partner at Knight Frank earned more than Savills’ CEO Jeremy Helsby, although Helsby was not necessarily the highest-paid employee of Savills.
Helsby’s pay was also less than the top earner at Cushman & Wakefield, which takes into account the firm’s UK, Germany, Italy, Spain and Sweden operations.
DTZ’s pay looks the most excessive, given that it was close to going bust last year. Although CEO Paul Idzik gave up his bonus and “only” earned £332,000, chief financial officer Bob Rickert and Asia-Pacific chairman CY Leung were handsomely rewarded with £1.48m and £1.76m respectively.
|Senior management remuneration at the largest property services firms - 2010/11|
|Savills||Jeremy Helsby, CEO||£210,000||£909,000*||£10,675||£1.13m|
|Simon Shaw, CFO||£175,000||£756,000**||£9,000||£940,000|
|CBRE||Mike Strong, EMEA CEO||$472,115||$1.35||-||$1.82m|
|Jones Lang LaSalle||Christian Ulbrich, EMEA CEO||$350,000||$2.79m***||$79,501||$3.22m|
|Knight Frank||Unnamed highest-paid member||-||-||-||£1.48m|
|DTZ||Paul Idzik, CEO||£300,000||-||£32,000||£332,000|
|Bob Rickert, CFO||£325,000||£790,000||£368,000||£1.48m|
|CY Leung, Asia-Pacific chairman||£371,000||£1.29m||£107,000||£1.76m|
|GVA||Unnamed highest-paid member||-||-||-||£304,000|
|Cushman & Wakefield||Unnamed highest-paid member||-||-||-||£1.24m|
|Strutt & Parker||Unnamed highest-paid member||-||-||-||£444,000|
|BNP Paribas Real Estate||Unnamed highest-paid member||-||-||-||£317,000|
|Lambert Smith Hampton||Unnamed highest-paid member||-||-||-||£626,000|
|Cluttons||Unnamed highest-paid member||-||-||-||£221,246|
|Gerald Eve||Unnamed highest-paid member||-||-||-||£598,000|
|Bidwells||Unnamed highest-paid member||-||-||-||£371,835|
|Allsop||Unnamed highest-paid member||-||-||-||£1.02m|
|Montagu Evans||Unnamed highest-paid member||-||-||-||£635,627|
|Source for table: Annual Reports/Property Week|
* Comprised £632,100 of cash and £276,900 of shares; ** Comprised £523,600 of cash and £232,400 of shares; *** Comprised $1.91m of cash and $882,500 of shares; † from the accounts of BNP Paribas Real Estate Advisory & Property Management UK Ltd
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