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A gap in the ranks of new accountants early this decade is helping drive bidding wars for financial risk managers today, according to research by GRS Group, a London executive search firm.
Monday's Financial Times reports that in the past three months, 44 percent of investment bank risk managers who were recruited away to another bank received a counter-offer from their current employer. That's more than twice the usual proportion, according to GRS. The average counter-offer included a 10 – 12 percent bump in base salary, often sweetened with a guaranteed bonus.
The mortgage and credit meltdown is shining a spotlight on risk management practices of both investment banks and commercial banks. So it's no surprise that risk management professionals – who often begin their careers in accounting and finance departments - are heavily in demand at the moment. However, the current scramble for talent also has a supply dimension, the GRS report points out.
A "recruitment freeze" by the accounting industry in 2001 led to a shortage of accountants now in their late twenties with four to five years’ experience who were suitable for risk management roles, the FT story says. In turn, that has enabled a small pool of talent to "call the shots."
The newspaper presents some eye-opening examples. In one case, a U.S. bank "bought back" a risk manager set to defect to a European bank by raising his total compensation from about £100,000 to a guaranteed £160,000 ($318,000 at the Dec. 31 exchange rate). "U.S. investment banks were twice as likely to make counter-offers than others, with European and Japanese banks taking a laissez-faire attitude to candidates who said they would jump ship," the FT says.
However, the story also paints counter-offers as a poor retention tool. It says that about 70 per cent of employees who accepted a counter-offer to stay were back on the market within six months.
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