Directors鈥 salaries at housebuilders are rising twice as fast as a year ago, with far more staff citing better remuneration as a reason for changing their job. With fears of a housebuilding downturn in abeyance, skills shortages are helping drive up salaries, especially outside London.
The jitters that hit the housebuilders in the wake of the Brexit vote just over a year ago 鈥 when share prices fell by anything up to 35% 鈥 seem a long time ago. While the London market remains somewhat depressed, much of the rest of the country has carried on regardless, despite the likelihood, increasing by the day, of the UK crashing out of the EU without a deal.
Hence, 好色先生TV鈥檚 annual salary survey of director-level jobs in the housing industry finds last year鈥檚 fear 鈥 that a Brexit-related slowdown might call a halt to quickly rising housebuilding salaries 鈥 to have been unfounded. In fact, the survey shows pay is growing at twice the rate it was last year. Nick Worrall, human resources director at listed housebuilder Countryside, says: 鈥淣ervousness about a downturn being around the corner is not a sentiment we鈥檙e picking up at all from candidates.鈥
So, with housebuilder output still rising and shortages of staff with key skills as bad as ever, how are the still-expanding major builders coping? And what are they doing to attract picky, tech-savvy millennials into their businesses amid stiff competition?
Regional average | Scotland | Yorkshire and North-east | North-west | Midlands (including East Anglia) | London | South-east (Home Counties) | South-west | Wales | Average bonus (% of salary) | 2017 salary average | 2016 salary average | % rise |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Managing director |
拢165,000 |
拢154,000 |
拢162,000 |
拢168,000 |
拢207,000 |
拢186,000 |
拢158,000 |
拢153,000 |
92% |
拢170,000 |
拢160,580 |
6 |
Finance director |
拢89,000 |
拢90,000 |
拢90,000 |
拢92,000 |
拢130,000 |
拢98,000 |
拢85,000 |
拢87,000 |
80% |
拢95,000 |
拢94,750 |
0 |
Development director |
拢96,000 |
拢90,000 |
拢94,000 |
拢99,000 |
拢162,000 |
拢114,000 |
拢98,000 |
拢88,000 |
73% |
拢105,000 |
拢99,875 |
5 |
Land and planning director |
拢91,000 |
拢98,000 |
拢95,000 |
拢98,000 |
拢132,000 |
拢117,000 |
拢98,000 |
拢86,000 |
82% |
拢102,000 |
拢96,375 |
6 |
Technical director |
拢89,000 |
拢92,000 |
拢93,000 |
拢97,000 |
拢122,000 |
拢116,000 |
拢91,000 |
拢87,000 |
71% |
拢98,000 |
拢93,625 |
5 |
Design director |
拢82,000 |
拢78,000 |
拢84,000 |
拢81,000 |
拢102,000 |
拢97,000 |
拢86,000 |
拢82,000 |
65% |
拢87,000 |
拢84,125 |
3 |
Commercial director |
拢88,000 |
拢87,000 |
拢93,000 |
拢94,000 |
拢120,000 |
拢108,000 |
拢95,000 |
拢85,000 |
70% |
拢96,000 |
拢93,625 |
3 |
Construction/build director |
拢92,000 |
拢90,000 |
拢96,000 |
拢101,000 |
拢125,000 |
拢115,000 |
拢99,000 |
拢87,000 |
85% |
拢100,000 |
拢95,500 |
5 |
Project director |
拢88,000 |
拢94,000 |
拢105,000 |
拢108,000 |
拢145,000 |
拢118,000 |
拢103,000 |
拢83,000 |
78% |
拢105,000 |
拢96,000 |
9 |
Sales and marketing director |
拢90,000 |
拢95,000 |
拢96,000 |
拢96,000 |
拢125,000 |
拢113,000 |
拢98,000 |
拢86,000 |
86% |
拢111,000 |
拢95,125 |
17 |
Skills shortages
The discussion around skills since the Brexit vote has been focused, understandably, on site-based workers 鈥 given the forecast of 20-25% decline in available labour within 10 years. But the situation regarding skilled professional staff is every bit as challenging. 好色先生TV鈥檚 annual salary survey, undertaken by recruitment firm PSD Group, found 84% of housebuilders saying skills shortages were having a negative impact on their business, up from 81% last year. So it is little surprise that director-level salaries rose significantly faster than inflation, at around 6%. This compares with a rise of just 3% in 2016.
This finding fits with the experience of Countryside鈥檚 Worrall, who says that anything between 5% and 9% is standard. 鈥淚t鈥檚 not the level of increase that our existing employees are seeing, but when you have to bring people in from outside it is absolutely that kind of number.鈥
Countryside employs 1,200 people, and the business brought in 400 new people last year as it grew by about 200 extra heads 鈥 with similar growth expected in the year ahead. 鈥淚t is a genuine challenge for us to deliver those kinds of numbers,鈥 Worrall says, 鈥渁nd we鈥檙e working extremely hard to recruit. Both we and our competitors are fishing in a pond for talent that hasn鈥檛 grown substantially.鈥
The biggest jump this year has been in the North-West, North-East and in Yorkshire. Salaries for managing directors within these three regions are now far higher than four or five years ago
Elliot Course, PSD
The stress on salary levels is indicated by the fact that bigger salaries and bigger bonuses were this year by far the most common reason cited by employees for leaving an organisation. Four out of five employers said workers left for bigger salaries, up from 53% last year, while half said they walked away for bigger bonuses 鈥 up from just 22%. Duncan Bullimore, director of the building division at recruitment firm Hays, says: 鈥淚t鈥檚 a bit of a merry-go-round at the volume builders. Demand for new people is high and supply is tight.鈥
The particular pinch points identified by PSD鈥檚 survey are for regional managing director level, as well as commercial staff and site management or construction/building directors. In 2016, the average salary for a managing director in London broke the 拢200,000 barrier for the first time, and in 2017 it advanced further, to 拢207,000. Overall, salaries for managing directors grew by 6%, for commercial directors by 3% and for construction/building directors by 5%. This year, nearly two-thirds of businesses said they foresaw skills gaps in commercial or quantity surveying arising in their organisations within the next three years, up from 28% last year. A similar rise, from 34% to 62%, is predicted for construction and building director roles.
Karen Jones, group human resources director at housebuilder Redrow, estimates that salaries overall have gone up by 3.5-4% over the past year, but with much larger increases for quantity surveyors, who fill the commercial roles. 鈥淲e鈥檙e still short of QSs generally, and they鈥檙e now very well paid,鈥 she says. 鈥淭his shortage in the surveying function means we have a real shortage with commercial directors. Those jobs take longer to fill and are harder to fill.鈥 Countryside鈥檚 Worrall agrees: 鈥淭he challenge remains on the commercial side 鈥 QSs, senior buyer, estimators, closely followed by senior site staff.鈥
London cooling
Geographically, the cooling London market has started to have an impact. While London still has the biggest employee packages by quite some distance, other parts of the UK are now growing more quickly, mirroring the much more rapid house price growth seen outside the capital over the past 18 months. Hays鈥 Bullimore says: 鈥淩egionally, it鈥檚 much more balanced than it鈥檚 been for a long time. Other areas are starting to catch up.鈥 So, while salaries increased by 5% in London over the past year, they rose fastest 鈥 by 8% 鈥 in Yorkshire and the North-east, and by 7% in the North-west.
Elliot Course, associate director at PSD, which undertook the survey, says: 鈥淭he biggest jump this year has been in the North-west, North-east and Yorkshire. Salaries for managing directors within these regions are now far higher than four or five years ago.鈥
It鈥檚 a bit of a merry-go-round at the volume builders. Demand for new people is high and supply is tight
Duncan Bullimore, Hays
Much of this growth appears to have been driven by national and regional firms opening new regional offices to take advantage of the strengthening market. Redrow鈥檚 Jones, whose business recruited 500 staff last year, says: 鈥淚f you have someone opening a new division then you get a little spike in that area, which is what we were seeing three to six months ago. The likes of us and Barratt then get targeted by headhunters and our staff are offered more money, which means you have to pay your existing staff more.鈥
Golden handcuffs
Seeing off the threat of poaching by rivals is a key task for the volume housebuilders, with staff often tempted by the greater autonomy offered by smaller rivals. PSD鈥檚 Course says: 鈥淐lients have found it increasingly difficult to recruit senior leaders, such as managing directors, that fit their specific requirements. When they manage it they make sure they hold on to them and so provide remuneration packages with strong incentives to stay put.鈥
Redrow鈥檚 Jones says this need to retain valued staff has, in part, driven the rapid growth in bonuses evidenced in the survey. The data shows the average director鈥檚 bonus now adds a whopping 78% to basic salary 鈥 up from 64% last year. At the top of the pile, managing directors command bonuses worth, on average, 92% of their salary, meaning London managing directors can easily take home upwards of 拢400,000.
2016 | 2017 | |
---|---|---|
Technical |
40% |
44% |
Commercial |
28% |
63% |
Land and planning |
19% |
12% |
Sales and marketing |
19% |
18% |
Specialist (such as environmental) |
6% |
0% |
好色先生TV/construction |
34% |
62% |
Managing directors |
6% |
6% |
Finance |
8% |
18% |
No gap |
3% |
5% |
2016 | 2017 | |
---|---|---|
Basic salary |
53% |
78% |
Car allowance |
6% |
14% |
Bonuses |
22% |
50% |
Long-term incentive plans |
13% |
14% |
Holiday allowance |
9% |
11% |
Flexitime |
12% |
7% |
Share options |
6% |
8% |
Home working |
9% |
14% |
Promotion |
47% |
50% |
Location |
41% |
42% |
鈥淎 big attraction of the sector is the bonus,鈥 says Jones. 鈥淒irectors and managing directors set a lot of store by it.鈥 But by bonuses not being paid until after they are accrued, and with payment dependent on staff staying with the business, they act as 鈥済olden handcuffs鈥 to stop people jumping ship. Jones says: 鈥淚f you walk away, you鈥檙e walking away from a lot of accrued bonus. It鈥檚 a big retention tool.鈥
As well as improving the financial rewards, housebuilders are also having to look at how to reshape their business practices to make them more attractive to new recruits. This applies particularly to the millennials, who are increasingly reaching senior positions but may have different expectations from employers.
Countryside鈥檚 Worrall says that beyond salary, factors such as proximity to home and work-life balance are rapidly rising up the priority list of the people Countryside is looking to recruit. 鈥淎ll the things that people say are important to millennials are becoming more important to our candidates 鈥 locations, work-life balance, and options around flexible working. 鈥淭his is a challenge not just because housebuilding is quite a conservative sector, but also because the reality is we do have standard hours for sites to be open and we need to be able to support that.鈥
Hays鈥 Bullimore agrees with this assessment, saying that its own research shows money is less important to employees the younger they are. 鈥淭he younger generation are willing to exchange money for other things like training and professional development, health and wellbeing and flexibility.鈥
He says: 鈥淲hile there鈥檚 no getting away from the fact these businesses have some immovable demands, candidates want to see there鈥檚 a degree of flexibility from an employer. Any employer that just says a flat 鈥榥o鈥 to flexibility will not be attractive.鈥
Meanwhile, both Jones and Worrall say their businesses are investing more in training up employees internally, a claim that is backed up again by Hays鈥 own research. Bullimore says housebuilders are spending more money on training and development than in previous years, as a tool to attract new staff and retain existing ones.
Worrall says that so far his firm has managed to retain the right quality of staff, despite the huge competition for talent. But whether the industry as a whole manages to keep doing so in the year ahead remains to be seen.
Postscript
Methodology
The survey was undertaken in September by PSD Group, which specialises in senior-level search and selection across the residential and property sector. There were two elements to the research: an attitudinal survey that targeted approximately 7,000 individuals at senior management to director level across the residential sector and data from placements made by PSD in 2017.
For further information on the survey please contact Elliot Course, associate director at PSD Group, on either 0207 970 9792 or elliot.course@psdgroup.com
Formerly deputy editor at 好色先生TV magazine, Joey has worked as a journalist in the sector for nearly two decades.
He currently has a special focus on the Housing Today publication, helping it deliver razor sharp news, analysis and insight.View full Profile
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