2018 Analyst to VP Compensation Report

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2018 has started at a real gallop, with few signs of momentum stalling. We’re now 10 years into nearly the longest bull market run on record. Whilst it is worth trying to enjoy things while they last, many of us have a cautious eye on a softening.

How has this translated across compensation? Our bonus data suggests that bonuses are up between 5-10% on last year, which represents what we are hearing about the overall size of the bonus pool. Interestingly, the disparity between bonuses of top and bottom paid individuals has widened across the mid to senior levels. Top performers are receiving a disproportionate amount, with the lion’s share going to outperformers. Total comp for Analysts is fairly tightly banded, but as you head towards Senior Associate and VP, there is a widening gap in total compensation between top and bottom rated.

Increasingly, we’re finding that communication is actually more important than the raw numbers. Through our research, we’ve observed a rise in employee dissatisfaction at Morgan Stanley and UBS, whereas their peers at BAML, Goldman and J.P. Morgan are all generally happy. Regardless of pay, we’re seeing a lot of attrition at the junior end to the buyside and to careers outside of investment banking. This is backed by our recently released Millennial report, which found that 43% of graduates listed career progression as the most important consideration when deciding on a new opportunity, with only 8% listing salary as the most important.

The “War for Talent” still has its hooks firmly embedded in the City, meaning recruitment can no longer be a one-trick pony; we have to adapt. We’re working with many clients on attraction and retention strategies, and off the back of our recent research into Gen Z, our Graduate team have worked hard to evolve their attraction offering, ensuring that the candidate experience is as rich and interactive as possible. Graduate hiring is almost the only sure-fire way of guaranteeing you have a steady supply of high potential talent coming into your business.

Internally, the Dartmouth Partners team have started the year with record buoyancy. From a personal perspective, the recruitment market feels a little heated, and for those of us who were around back then, the hiring patterns resemble the 2005/06 boom: we all know what happens next.

Since the start of 2018 we’ve taken on more new mandates and won more clients than ever in previous years. Our hiring partners are broadly optimistic and find themselves in need of additional horsepower. Much of this has been focused at Analyst and Associate level, although we are seeing increasing appetite to hire at more senior levels, with a number of mandates at VP and Director level. There has been an uptick in MD hiring which has trickled down into teams needing to be built out beneath them.

Having raised record amounts of capital, Private Equity continues to be in search of good juniors and this has created “flow” from the banks to the buy-side. In recent years, we’ve seen largely replacement hiring but in 2018 people are very much back into growth mode. The shortage of talented and hard-working juniors remains, and we’ve seen and heard of plenty of buy-backs, counter offers, and in one instance (the first I’ve heard in the last decade) a candidate was offered a double promotion in response to their resignation – though in this case the candidate still chose to leave.

In this hotter and fiercer market candidates have more options than ever. More emphasis should be placed on a positive candidate experience and employee satisfaction in order to attract and retain the best talent. Failure to get this right will not only affect your current hiring, but your future talent pipeline at the senior level.

 

Logan Naidu, CEO
Dartmouth Partners