Well from our point of view there was a mixture of positive and negative signs.
Let’s take a look at:
1. The Ups and Downs
2. Where Is the Next Generation?
3. Salary Trends
The Ups and Downs
Certainly, demand for staff especially at Administrator level has increased in recent months. That makes a change after years where IPs have been reluctant to recruit in case they couldn’t sustain the workflow to support an additional resource. Whilst insolvency work is still a bit flaky, there does seem to be a little more confidence around to make a tentative move into taking on resources.
The increased demand for administrators is not being met by supply! Think about it for a minute. The economy hasn’t responded in the way that we have become used to and so there has been less insolvency work around for the last 5 years at least. The reluctance to recruit and indeed the sizeable redundancies over the years, has led to virtually little appetite to train new recruits.
Everyone wants administrators with a minimum of 2 years’ experience. That’s all well and good, but we haven’t trained many candidates for years and so most administrators have 5+ years’ experience. They are, therefore, expensive and if they are any good, these are staff that IPs want to hang onto.
There’s also continued increasing demand for work winners whether at IP or manager levels. GGT has been very successful over the last year both finding and placing these types of candidates. This is quite an achievement, as tried and tested work winners are also a rare commodity and demand is extremely high. Why are there so few work winners at manager level? We will look at that in the next section.
Regrettably, the redundancy machine has continued rolling through 2017 just when we all hoped that it could be put away until well after the next recession. Big 4 and Top 10 firms have made staff redundant and, as with the trend of recent years, the cost cutting has been mainly at manager level. When we say manager, we include senior managers and directors in the hit list. Placing the unfortunate victims of redundancy is very hard as few firms are recruiting above administrator level. There are too many managers in the market and unfortunately few, if any, have any significant work winning experience. They are usually extremely good technically, very safe hands and a fountain of knowledge for developing the careers of junior staff. But demand generally, is for someone who can pay their way by bringing work in. Taking on a senior manager with a total employment cost of c£100k puts significant pressure on cashflow without new sources of income.
There is a theme here, which is exemplified by the continued interest in growing, and in some cases surviving, through mergers and acquisitions. In 2017, GGT has played a number of key roles putting buyers and sellers together and which has led to successful deals completing during the year. There are definitely a large number of firms that are keen to find IP firms to merge with and reap economies of scale or increase market presence. But remember, it is a seller’s market, with far more potential investors than opportunities to conclude a deal, so beauty parades can lead to many disappointed interested parties!
It’s GGT’s professional approach in ensuring utmost confidentiality that has meant that in 2017, we have dealt with some extremely sensitive IP and BDM appointments and mergers. Our clients place total trust in us to do the job right and protect their interests.
2017 has also seen significant rationalisation within the consumer IVA market largely as a result of FCA regulations. GGT have decided not to cover the mass IVA market as of 2018, but we will still recruit for personal insolvency within private practice.
Where Is the Next Generation?
We have already focused on the reluctance to recruit, the demand for experienced administrators and the reluctance to take on trainees. Without new blood a void is opening up. Some clients seem to think that it’s our fault the market is so depleted with 2 year experienced administrators. Quite why we don’t know as taking on trainees is a decision that only the IP can make. It can be hard to make IPs see that the void is of the professions making. After all, is it fair to expect another firm to take the risk and expense of training up staff so that you can poach them 2 years on because you won’t take the risk and cost yourself?
GGT have been banging on about the need to train up graduates and A-level leavers and we have managed to persuade a few clients to go down the trainee route but unfortunately, there are a large number of firms who still expect someone else to train their future recruits!
We have seen little sign over 2017 that managers and other staff are being equipped to meet the needs of the profession generating work for the future. IPs keep their contacts close but when those contacts aren’t able to produce the new work, the next generation of IPs should be widening the network of work referrers. But generally, that isn’t happening. Maybe that is due to the lack of natural ability in this field, but we know from personal experience that sometimes staff need to be challenged. Given support some staff will respond, especially when they realise that without new work the profession has no future and they have no job!
So where is the next generation? Well it is there, it just needs to be tapped into. Far too often it isn’t. But it’s not too late if the profession will start to look ahead and not be so preoccupied with surviving from day to day!
We published a salary trend report in 2016 and we will do so again in 2018. The only noticeable salary movement has been with insolvency administrators where a shortage means that what used to be £17-22k is now £20-25k and often towards the top of the band. Salaries above are generally being squeezed with no noticeable upward trend at the top.
If you can bring work in, then earnings can be significant, but be prepared to take a good part of your income as a commission/bonus.
So, what will 2018 bring?
We stopped trying to predict the market years ago when the economy failed to respond in its normal cyclical way. So, we will just thank all our clients for their support over the year and wish everyone success and look forward to working with you in 2018.