The 2009 Consultants' Salary Guide

Alastair Bloore recently had the unenviable task of handing out letters to his team asking each of them to take a pay cut. Bloore, head of management consulting at Cyril Sweett, is not a man given to melodrama, but he describes his delivery round of the office, envelopes in hand, as difficult and unpleasant.

The one marginal consolation was that staff had an idea of what was coming. “It wasn’t unexpected, as cuts at other consultants had already been reported in the press. And once you think about the big picture for a second you realise it’s inevitable.” He adds: “The redundancies were much worse. This is different because we’re all in the same boat.”

Pay cuts at Cyril Sweett are about 8-10% depending on your pay grade, with the better paid taking the bigger cut. Bloore took a 10% hit, which means he will have to cut back on the luxuries he enjoyed last year. “We won’t be going for an all-inclusive two-week holiday to an exotic location this year. Instead we’ve decided to stay in the UK and do all the things that are right on our doorstep. We’re going to see attractions like the Tower of London and we might go on a cycling or camping trip.” He adds that he and his wife have got rid of one of their two cars and are checking that they have the cheapest possible gas and electricity deals.

Cyril Sweett is not alone. Most of the top QSs are being forced to cut salaries as the recession tightens, work dwindles and the clients that still have work ask for fee reductions. Little wonder, then, that in this year’s survey of consultants salaries, the QSs and project managers are among the big losers. To take one headline figure, a partner or director in central London aged at least 45 was earning an average of £70,000 according to last year’s survey; this year they’re on £60,000.

The contrast with previous years could hardly be starker. In 2008 we reported that despite the credit crunch (nobody was talking about recession back then) QSs had the fattest pay packets in construction, with most staff enjoying salary uplifts of at least 5%. But even this was not enough to attract the staff they wanted, which led to an arms race of perks: mere graduates were greeted with golden hellos, extra holiday could be bought, and one consultant, GIA, put hair straighteners in the ladies loos and pool tables and Xboxes in the office.

It was all due to a dearth of QSs and project managers. Jo Wenham is HR manager at Northcroft. She says: “As employers, we have been over a barrel. QSs have been on the list of shortage occupations and they could basically name their price.”

Bidding wars also pushed up salaries. Wenham says: “You would try to take someone on and find they’d have another three job offers, so you’d then get into frantic salary negotiations.”

Dan Taylor, regional director for Hays in London, says these scenarios are a thing of the past. “There is hardly any negotiation on salary now, apart from downwards.” The perks are disappearing too. GIA still has the gadgets but Fiona Pattinson, associate partner in charge of HR and operations, admits that the three big social events that used to be offered to staff have been reduced to none. “I’d normally have booked the Christmas party by now but this year I’m going to see how it goes.”

Most firms are not recruiting at all. Northcroft made 15 people redundant in January, leaving about 160 staff. Wenham says: “We are taking it one month at a time at the moment. If we won a huge piece of work we would take people on, but we have no plans to do that just now.”

Meanwhile, as more QSs and project managers are laid off, Wenham is getting inundated with CVs. So it’s safe to assume if she did start hiring, she would be able to do so on her own terms. When combined with the pay cuts for existing staff this adds up to a substantial downgrading of average salaries: Davis Langdon could knock up to 14% from its pay packets, Gleeds 12.5% and Gardiner & Theobald about 12% in general, and as much as 20% in some cases.

When, if ever, will the salaries of QSs and project manager return to their old levels? Nobody seems to have much of an idea...

So this year’s guide does not make for joyful reading. Central London QSs and project managers are among the worst hit over the past year. As noted, QS partner and directors are losing up to £10,000, but it does not stop there: the pay of senior surveyors with two to six years’ experience has fallen from £48,000 to £40,000, a 25-year-old newly qualified surveyor has slipped from £42,00 to £35,000 and a 35-year-old project manager with five years’ experience was earning £50,000 last year but would now earn £40,000.

The falls are less pronounced elsewhere in the country but still big. For example, QS partners and directors in the West Midlands have had £7,000 chopped off their salaries, which are down to £50,000. In north-east England the average salary for the top jobs has dropped to £55,000, compared with £60,000 a year ago.

With salaries at these levels, is there a case for doubling back and snapping up talent while it’s cheap? Taylor at Hays says that some companies are taking this approach. “There are people who see this as a chance to pick up talent. It’s not the case that the jobs market is flooded with weaker candidates who’ve been the first to be made redundant because so many companies have gone to the wall.”

He also warns that firms may be making too many redundancies. “In a recession, it’s a classic mistake to cut more staff than you need to. Then you have a spike in work and you can’t cope.”

So when, if ever, will the salaries of QSs and project manager return to their old levels? Nobody seems to have much of an idea. Taylor says: “It’s difficult to say. I tend to be positive and believe it’s going to come back. But whether I’m right remains to be seen. One thing to remember is that salaries do tend to go up over time, as a rule. Just like house prices …”

One senior QS is less hopeful. “It’s actually strange the way salaries have only ever moved upwards. I see no reason why they shouldn’t move up and down, in line with the market, and with clients’ fees.”

For those facing a lower salary right now, life is changing. Neal Kalita, research associate at Davis Langdon, says: “I bring in my own lunch now, I’m cycling to work and I have given up smoking.” He adds that he’s reverted to getting his suits from Camden market. It actually sounds like a good lifestyle. “The recession is good for us in some ways,” he says.

Bloore at Cyril Sweett says: “My team are actually fairly upbeat. There’s an element of adversity bringing us together.” He adds that, contrary to what you might think, the pay cuts may also motivate staff. This is because Cyril Sweett has promised that if it meets its targets this year, everyone will be reimbursed. “Unintentionally, we’ve introduced an element of performance-related pay,” says Bloore.

“It’s giving our people a fighting spirit.”