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Pages 64-65 |
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● Bonus is the issue |
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● Interview with Jeremy Helsby of FPDSavills |
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● Salary bands |
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Pages 66-67 |
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● Interview with Robert Calnan of Jones Lang LaSalle |
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● Average salaries and pay rises by region |
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● Average salaries by sector |
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Pages 68-69 |
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● Interview with Chris Osmond at niche practice CWM |
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● Benefits |
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● Bonuses |
Bonus time is here again. And for property bosses preparing to hand out the cheques, one headache this year is to manage the difficult trick of keeping everyone on board in a tight recruitment market, when some divisions have shown storming performances and others have done almost no business at all.
The big picture shown by this year’s Estates Gazette/PSD salary and benefits survey is the contrast between the buoyancy of investment and retail agency and the weakness of the office occupier market.
The survey of over just over 2,100 industry professionals conducted late last month shows that average pay rose by 6.24% last year nearly three times the rate of inflation.
“It’s a job seekers’ market,” says Dominic Rushby of recruitment consultancy PSD. “Exceptional people are able to choose from four or five job offers.” And get good pay. The average package of those who responded was just over £49,000. Bonuses, on the other hand, have polarised. One if four get nothing but one in 10 get more than £30,000, against an average of £7,480 (see p69).
Aiming to maintain the team
For those trying to hold on to good staff, the bonus issue may cause strains. Many big firms are subsidising their office agency teams to keep them together through what they earnestly hope will be the last bad year. This is bound to be reflected in the bonuses to be paid this month and next, but somehow the blow has to be softened for non-earners.
Greg Cooke, UK chief executive of ATIS Real Weatheralls, says that, when the company pays out next month, more teams will have met their targets than in 2002 but that they will be subsidising the South East office agency team from the third of the pot that is kept back for discretionary payments.
“South East office agency did not have a good year. But we have made a conscious decision to keep our team and our key instructions and that means there has to be a subsidy.”
At Cushman & Wakefield Healey & Baker, the thinking is similar. Office agency teams did not meet targets and will therefore not get incentive bonuses but they will still receive a payout from the company’s discretionary bonus pot.
Jones Lang LaSalle highlights an extreme version: the global executive committee agreed to top up the $23m European bonus pot with an extra $3.8m in order to keep “key people” happy mainly in Germany.
In the UK, the picture was rosier. “We beat our UK plan,” says England managing director Alastair Hughes, “and this is reflected in larger bonuses.”
Many of JLL’s UK staff notably those involved in capital markets, professional services and management services will also enjoy higher bonuses this year following the firm’s decision to join CWHB and ATIS in the move away from “big pool” bonuses and some way towards the eat-what-you-kill scheme epitomised by FPDSavills. Savills’ scheme famously allows teams to keep up to 48% of profits and to have hands-on control over their own costs. The company had an exceptional year, resulting in an overall bonus pot of £54m (see left).
More transparent schemes needed
The problems that can arise if firms do not adopt more transparent schemes were starkly illustrated two months ago at premier planning firm Montagu Evans, where its entire highest-earning team London planning quit, led by equity partner Malcolm Kerr. Montagu Evans still operates as a traditional partnership and sources say Kerr could not persuade enough partners to adapt to taking out less themselves and paying it to the non-equity-owning high-earners.
Deputy senior partner at CWHB Andrew Gulliford says that higher pay will help to ease the staff shortages: “We attracted some good people last year, but it was hard work.
“However, it is encouraging to see lots of younger people with non-property backgrounds and degrees coming in many of them are extremely bright, and it should give the industry a broader base.”
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Jeremy Helsby has good reason to be pleased. As chairman of FPDSavills Commercial, he has presided over a record year in which even his City letting agents had little to complain about and the division’s 244 fee-earners split £20m between them in bonuses an average of £82,000 each. “People are attracted by our entrepreneurial culture and the bonus system is part of that. We keep costs to a minimum by reducing corporate overheads, and fee-earners manage their own teams. It’s a work hard, play hard culture. But our staff turnover is very low people know what to expect before they arrive,” says Helsby, himself one of just two non-fee-earners. |
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“We’ve had compound growth of 15% in turnover and 18% in profits over the past five years. We’ve achieved this by being lean and mean, and I intend to keep it that way.” |
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However much Savills stresses other aspects of its employment package, rivals always come back to the bonuses. “Some of its top agents end up taking home almost twice as much as the chief executives of big property companies,” says one rival. Investment agency hard-hitters John Rigg and James Crawford are said to have earned more than £1m each this year making Ian Henderson’s £625,000 package at Land Securities look rather miserable by comparison. |
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“I hope this year will be as good as last year,” says Helsby, “but it will be a challenge.” |
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“This was one of the toughest years I can remember,” says Robert Calnan, Jones Lang LaSalle’s head of office agency for England, based in the City the most unenviable market of 2003. The office agency teams were one of the few not to reap the full benefit of JLL’s decision to convert this year to what they call a “line-of-sight” bonus system. “Everyone got a bonus,” says Calnan carefully. “Were they as high as 2001? Not by a long shot. But we also reward people for retaining market share and for their work on long-term instructions. You have to take a longer-term view.” Calnan is surprised by the findings that office agents’ average pay of £38,720 pa (see chart p67) is so far down the sector pay scale. “You expect agents involved in transactional work to earn a higher proportion of their salary in the form of a bonus. But that’s awfully low.” |
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Calnan took over JLL’s City agency team in 1990 “a very quiet year to start” and points out that whereas the average amount of space let in the Square Mile each year hovers around 5m sq ft rising to nearly 10m in 2000 space let last year totalled just 3m sq ft. “City agents were scrabbling over a handful of relatively small deals,” he says. |
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But he believes that the larger agents are well positioned to take advantage of the upturn in the market. “It’s still the large firms which are instructed on the larger deals,” he says. |
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“A lot of City instructions come from US firms which have used the big agents in New York and want to go with a name they know when they make a move on London.” |
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“I didn’t move for the money. But as one of three equity partners here my pay is directly linked to the firm’s profits.” Chris Osmond joined niche retail agency practice CWM in January last year after 22 years with the then CB Hillier Parker. Osmond is coy about his salary, saying only that the company “pays well” to attract the right people and that he expects to earn “significantly more” at CWM in a good year than he would have done at what is now CB Richard Ellis. |
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A former equity partner and head of professional retail work at Hillier Parker before its takeover by US firm CB Richard Ellis in 1998, Osmond was tied into a four-year lock-in period at CBHP. But he decided to jump ship to regain a more hands-on role when CWM founders Scott Murdoch and Richard Wassell offered him a share in their business. |
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“I found myself in a paradox at CBHP, where I seemed to be spending a quarter of my time on management admin yet no longer had any control over the business,” he explains. “Here it’s the reverse.” |
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Osmond believes that clients are now just as willing to deal with niche practices as with the big agents and says this was a deciding factor in his leap into a smaller pond. Clients including British Land, Marks & Spencer and Boots followed him to CWM. |
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“I wouldn’t have moved to a small practice if I couldn’t keep big clients,” he says. “Fortunately, a lot of them like to stay with someone they trust rather than the big brand. Also at a small firm you can reassure clients that you’ll be handling their work personally this isn’t always possible at a large firm.” |
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● The research took the form of an online self-completion questionnaire |
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● This was e-mailed to 27,915 contacts, compiled from EGi subscribers, sales contacts and clients and candidates of PSD |
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● The survey was also made available on three websites (EGi, EGPropertyLink and Propertyjobs) via buttons and/or banner ads, as well as through a dedicated URL advertised in Estates Gazette |
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● A charitable donation of £1 was offered for the first 1,500 completed forms. A donation will go to Macmillan. |
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● 2,113 people responded over the two-week period (24 January-6 February) |
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● The survey results were analysed by an independent research company |
