A Cautiously Upbeat New Year
Moving into a new financial year, our phones and emails are chiming with requests from HR departments and Senior Leaders of the real estate sector looking for benchmarking insight and asking how the last 12 months has impacted salaries and bonuses.
This year - like in so many ways - has been different. The requests and discussions that are happening now carry the theme of wanting to know just how bad the impact of the pandemic has been; on sentiment, salaries, bonuses, and new attitudes to flexible working. Thanks to our latest annual Salary and Rewards Survey Report in conjunction with the RICS, we have the answers.
Salary and Bonus Post-Pandemic
Only 13% of our international respondents have been awarded a base salary raise since the pandemic with 18% seeing their pay decrease.
The median salary increase for the lucky few in the UK was £2,000 as a whole, and was predominantly obtained by a routine annual pay review.
This is a stark comparator to the figure in February in 2020 when we saw 56% of all respondents receive a pay increase within the previous year. Levels vary slightly between regions, but all paint a similar picture. 2020 saw salaries come to a standstill.
On the rewards front, a staggering two-thirds of professionals have either received less bonus than usual, or no bonus at all, as a direct result of the pandemic. With businesses hit hard early last year, companies have had to carefully balance and limit budgets for bonuses with other immediate costs.
This comes as a real blow for many, particularly for those in professions that rely on performance-based rewards a good bulk of their package.
The organisations able to offer the highest salaries and bonuses to attract talent this year is great news, but we should also evaluate packages outside of financial rewards in 2021.Nick Carman - Director
Lost New Players
I personally am most concerned for the youngest generations of our sector as we embarked on a new recession. The 18-25 year age category in the Great Financial Crash were the worst hit in terms of job losses and diminishing opportunities, and we saw graduate schemes come to an abrupt end.
We still feel the repercussions of these decisions today with salary deflation and a skills shortage in the early 30 - 35 year old age group. However, although we found 5.6% of the youngest category of our survey (18-25) lose their job as a consequence of the pandemic, it was the least affected category for salaries. These are our future leaders and I hope they remember the tough decisions made by the leaders of today in protecting the industry’s’ future talent.
Changing Outlooks in 2021
The impact of the pandemic on real estate has been well documented and discussed in closed boardrooms, webinars and national press – however the human element has seen a material impact to the earnings and the livelihoods of so many.
It has not been universal across the sector and even in the darkest days of the pandemic there were areas of growth. Judging by the sentiment of our clients in January, and 4 out of 5 of respondents still confident in the industry for the next year, there’s a reason for genuine optimism looking forward.
In January 2021 Macdonald & Company UK booked more first interviews in that 30-day period than in the previous 90 days (Oct-Dec), showing real commitment of our client base to invest and develop not only their physical assets of the real estate sector, but also the talent in the market.
Our hopes are that the UK, and countries abroad, can now see an end to the cycle of lockdowns with greater certainty than before. The ability to forecast and plan – crucial for the end of decision-making paralysis - seems to be back.
In our private discussions with real estate leaders, the tone feels confident across all sectors. The commercial sector has been the hardest hit and many proclaimed the end of the office, but the longer the imposed WFH has gone on, the more desire has been placed in having modern hubs to collaborate with colleagues. Our clients in this sector are now planning and developing, and need the innovators of the future to help shape these products to the changing preferences.
Salary, Bonus and other Reward packages
As Peter eloquently put in our annual findings summary, ‘our biggest lesson from the pandemic is that financial rewards are not the only drivers that can be used to keep professionals feeling valued and encouraged.’
Work-life out-ranked Salary to the top of the leader board as being the most valued. Then surprisingly, receiving appreciation from management, colleagues and senior leaders came after, toppling bonus and commission levels.
Leadership teams and looking at how an organisation is run had increased higher up the ‘important factors when looking for a new role’ since the pandemic, particularly for senior-level roles (Directors, Exec and C-Suite). It shows just how attitudes have changed with more and more looking closely at those in charge and management styles they’ll inherit, or be working under, before deciding to jump ship.
There is evidently a momentous shift in perceptions of what we value at work, and this is being propelled by working from home. We have allowed ourselves to revaluate what really matters to us and find more worth in making our roles more fulfilling in our daily lives - yes, a promise of a bonus next year is nice, but how about recognition for the hard work being put in today? How about being able to work flexibly and choose when/where we’re the most productive and focused?
The organisations still able to offer the highest salaries and bonuses to attract talent this year is great news, but we should also evaluate job packages outside of financial rewards to keep the cogs smoothly running as we navigate this year.