So where are we now in the economic cycle, if such a thing exists? If I compare the current sentiment in the UK market to that of early 2010, I feel we are now in a very different place.
As a recruitment business, we see the markets primarily through the jobs and employment market (albeit in specialist fields), and so here are our 5 observations which point to a current bullish tax recruitment market:
1. Reed job index at all-time high – Reed produces a job index, a bit like the FTSE 100 but for advertised job levels. This was started in Dec 2009 at a base level of 100. For January 2015, this was up to 232, which is a record high. This is up 30% compared to January 2014, and up 68% compared to January 2013.
2. Professional services firms actively recruiting – firms such as the Big Four accounting firms, legal firms and other advisory practices are generally a good barometer for market activity. If they are recruiting for experienced hires in sizeable numbers, this indicates that they require additional workforce across areas such as tax, corporate finance and consulting to deal with the higher volumes of M&A / corporate transactions work that is flowing into their practices. Big Four firms are generally quite reactive on recruitment, so they will look out into the market for experienced hires when the deals are flowing in. The Big 4 advisory firms are each currently advertising between 500 – 850 experienced hire vacancies for openings in their UK practices.
3. Rising salary levels - The 2 points above clearly demonstrate that there is high demand currently in the UK for experienced professionals. The difficulty is where and how to find the candidates to fill these roles. During the credit crisis in 2008-2010 when firms had to make serious cut backs, levels of graduate recruitment were at a major low point. We are now 5-6 years on, and so there is somewhat of an acute ‘skills-gap’, where we have much lower numbers of qualified / experienced people to fill these experienced hire roles. So demand far exceeds supply, and the price economics of this results in salaries and bonuses rising. This is consistent with findings from tax salary surveys conducted, showing that Tax Manager salaries in professional services rose by on average 8% between 2013 and 2014, and Tax Senior Manager salaries rose by on average 10% over the same time frame.
4. Quicker recruitment process – one observation over the timescale of a recruitment process from start to finish is that it has significantly shortened, compared to a typical process in 2009-2010. The time taken to approve new headcount has reduced significantly – it can now be a matter of a week or so, compared to 2-3 months in the 2009-2010 period. There is generally more access to budget for hiring due to increased corporate profitability, coupled with much more urgency from hiring managers to get skilled people in place quickly. A typical recruitment process for a hire at Manager level can now be 3-4 weeks compared to 8-9 weeks back in the downturn market of 09-10.
5. Retention higher, redundancy lower – back in the 2008-2010 period, the single most common reason for leaving a job was through job roles or whole teams being made redundant. Now the story from candidates in much different. People are being better retained in their current roles through better flexible working arrangements, promotions and better training opportunities. In the current market people are much more choosy when it comes to looking at opportunities external to their current organisation, and the fear of redundancy is dramatically lower compared to 5 years ago.
The above observations tend to suggest that it is now a candidate’s market, and it is much tougher for organisations to hire the best people in the market. One other thing in clear – from the candidate’s perspective, now is possibly a great time to look in the market to look for that step up or to fulfil any career related ambitions.