SA company spending on new executives eases
South Africa’s precarious economic outlook hit home this year for companies searching for top talent, with a significant drop in the percentage increase offered to lure and secure the best leaders compared to previous years, an expert says.
In 2017, the average increase offered to headhunted candidates was 27%, but this dropped to only 21% in 2018.
The combined average percentage premium on financial offers made to headhunted candidates for the three years from 2015-2017 was 25%.
“What we’re seeing in 2018 is the hangover of long-term economic erosion, with less cash to go around in all areas, both in government and the private sector,” said Debbie Goodman-Bhyat, CEO of search firm Jack Hammer.
She said while ‘Ramaphoria’ had a positive impact in certain respects, this change in sentiment couldn’t erase the reality of the fundamentals that had been in decline for a sustained period.
“What happened with the appointment of president Ramaphosa is that companies’ decisions regarding ‘the future’, which had been on hold for the second half of 2017 in the run-up to the ANC presidential election, were given the green light.
“Positive sentiment resulted in a ‘go’ on new projects, new initiatives, and new key appointments which had been in a holding pattern. In our industry, this was evidenced most strongly in Q4 of 2017,” Goodman-Bhyat said.
But she said the current economic realities facing the country weigh heavier than positive sentiment, and that there is, in real terms, less budget to sweeten deals to attract headhunted candidates with substantial premiums.
“As much as companies recognise the importance of bringing on board the best talent, this still needs to be in the realm of affordability.”
Goodman-Bhyat said there have been several instances where top listed corporations have not been able to proceed with candidates who were already earning salaries that exceeded the company’s package range too substantially, and that caution was now the order of the day.
“In the past, companies would have had an attitude of paying what it takes to get the right people on board. Now they’re saying if they can’t afford the premium, they won’t go ahead with an appointment.”
There has also been a significant drop from last year in both the financial services and non-financial services industries.
The average increase in the financial services industry dropped from 27% in 2017, to 20% in 2018.
The average non-financial services increase dropped from 29% in 2017, to 22% this year.
Companies will, however, still stretch to land excellent candidates who will positively impact transformation, compared to what they will offer other candidates, said Goodman-Bhyat.
“From 2015 to 2017, the premium on salaries for headhunted women exceeded premiums offered to men, and was higher than the average premium for headhunted candidates. In other words, if you’re a female candidate headhunted for a role, you’re likely to receive a higher premium on your current package than male candidates. In some cases, these increases also reflected package adjustments, where female candidates started from a lower base than men.”
Black executive level candidates also unquestionably received a significantly higher premium on packages – 10% higher than their peers – when they were headhunted, Goodman-Bhyat said.
“But compared to previous years, the average premiums offered to high demand candidates – women and black executives – still reduced significantly. There’s not much in the budget to attract even high-demand short-supply candidates, which may, unfortunately, further impact the pace of transformation.”
Read: 9 in-demand jobs that pay R1 million a year in South Africa
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