How Do Financial Services Bonuses Compare To Last Year? I Barclay Simpson
Many people working in financial services may be wondering how the events of the pandemic will impact variable pay this year.
Several UK financial services employers revaluated their rewards priorities in 2020 in response to market uncertainty as they were not sure how long furlough schemes would last nor the long-term impact on the economy. Notably, the Big 4 banks such as HSBC had to make redundancies to trim costs and Lloyds Banking Group, the UK’s biggest high street lender, announced in December that they were cancelling bonus payments altogether due to the impact of the pandemic on its financial performance.
How have bonus payments for 2021 been impacted by the economic dip in 2020?
According to our research, bonus levels appear to vary by financial sector and depend on the business mix and financial performance. Firms with big trading operations have had a solid year due to the market volatility and are paying decent bonuses, whereas firms that are consumer and commercial lending-focused have had a much tougher year and are paying lower bonuses.
According to Sky News, NatWest’s bonus pot for last year was roughly at a third of the £304m it awarded for 2019 and HSBC’s overall bonus pool will also be substantially lower. Though both Barclays and HSBC have confirmed that they still intended to hand their chief executives their annual bonus for 2020, it remains to be seen what will happen in 2021.
What are the impacts of these changes to banker bonuses?
With bonuses being affected significantly or still subject to uncertainty, many people may be inclined to start looking for new roles and to start evaluating new, non-bonus-related compensation schemes elsewhere. Some of the main reasons financial services professionals are looking to change jobs include:
*Data taken from 16,111 financial services professionals in the UK on the 31st January 2021
It is very likely that we will see a significant amount of movement in the financial services recruitment market over the next 12 months. This means more applicants competing for positions, and hopefully more exciting positions available to them.
Attitudes towards traditional workplace structures have changed drastically over the course of the last year. More people now view a five-day week in the office as an unnecessary health risk, not to mention a waste of time and resources, as both companies and employees evaluated existing priorities. Banks such as HSBC whose profits have fallen by a third have seized the opportunity to cut costs by planning to reduce their global office space by up to 40% according to the Financial News. Barclay’s boss Jes Staley, on the other hand, comments in CityA.M that he does not think home working is sustainable and that “it will increasingly be a challenge to maintain the culture and collaboration that these large financial institutions seek to have and should have”.
According to our research in the graph above, bonuses are not a key contributor to why more junior (VP and below) employees would want to move jobs, as there appears to be a general acceptance that bonuses are going to be lower across the board in 2021. Instead, they consider the top four most important variables to be:
- Healthy work-life balance
- Stimulating work environment
- Effective management
- Excellent compensation and benefits
It is evident that the market has changed as many of us currently work from home and many are keen to retain this degree of flexibility. As the nation went into its first lockdown, we also posted a poll on LinkedIn which had over 3 million views and 338,298 people voted on how many days they’d like to return to the office when normality resumes.
As you can see, only 5% of voters wanted to revert to a 5-day week of working in the office with a staggering 32% wanting to remain at home entirely.
How can Barclay Simpson help?
If you’re looking to re-evaluate your bonus scheme to ensure you’re retaining and attracting valuable talent in this continued period of uncertainty, Barclay Simpson can help you benchmark the market average compensation schemes and market them efficiently in your talent attraction strategy.
If you’re looking to find a new role in financial services that offer better compensation packages or even bonuses in the current climate, check out our current jobs which have some of the most exciting opportunities available.