According to research by the Chartered Institute of Personnel and Development (CIPD), the human resources body, around 56 percent of firms surveyed planned to hire in the first quarter of 2021. We are certainly seeing evidence of that.
In January, we saw a significant pickup in phone calls, from both candidates and firms, as the stagnation in the market towards the end of last year came to an abrupt end. After the slowdown in the second half of last year, when unemployment hit 5 percent, this flurry of activity is certainly welcome news.
Strong performers, active recruiters
As the Covid-19 pandemic unfolded last year, businesses had to act fast to adapt to the new home-working environment.
But after only a brief dip in profitability, many firms recovered, and employees swiftly adjusted to their new working environment.
This meant that productivity levels often rose, and many firms are just as profitable, if not more so than before Covid. UBS reported a 54 percent increase in net profits over the year, and Goldman Sachs’ annual gross profit for 2020 was 21 percent higher than 2019 and Rothschild’s profits in 2020 were up 5 percent compared to 2019.
Hiring requirements have been boosted by this strong performance and those businesses with the strongest balance sheets tended to be the most active recruiters.
Almost all firms reached the peak of their hiring activity in September 2020 but then recruitment slowed down. Between August 2020 and January 2021, hiring fell 66 percent and departures were down 62 percent amongst the top 40
investment managers by AUM according to PAM Insight (compared with August 19 – January 20). So, firms didn’t grow or shrink, they simply stood still.
New year, new job
This stagnation lifted as we welcomed the new year and the start of 2021 saw a flurry of hiring activity.
Enquiries from candidates looking for roles rose by 73 percent and enquires from clients looking to hire rose by 54 percent (compared with December 2020). This movement has been supported by changes brought about by the lockdowns as firms now have greater confidence in hiring without meeting candidates and remote interviews and onboarding now go ahead seamlessly.
We also noticed that those firms now hiring tend to be those with new leadership who are keen to access candidates that may previously have been unavailable.
For example, Brewin Dolphin has appointed a new chief executive, Quilter Cheviot has a new head of financial planning, and Rathbones a new chairman. All three have been strong hirers this year.
So how can we explain the stagnation over the second half of last year, followed by the flurry of activity in January?
Profitability remained robust throughout and investment returns were strong, so the stagnation is not connected to performance. We think it’s more to do with the part resolution of the Covid crisis.
Before the news of the vaccine, there was greater uncertainty, and our lives were effectively put on hold as we had no clear way out of the pandemic.
Now our futures are clearer which has given us the confidence to explore new professional opportunities again. The domino effect is now underway.
Stephenson Executive Search is a family-owned headhunting firm focusing on the legal and financial services sectors in the UK and international markets. It has a particular specialism in private banking and wealth management.