Taylor Root Australia - Compliance & Operational Risk Salary Survey 2011-12

Australian compliance & operational risk Market update & salary survey 2011/2012

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In association with Risk Management

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Australian compliance & operational risk: Market update & salary survey 2011/2012

We are delighted to present the Taylor Root Australian compliance & operational risk: Market update & salary survey for the financial year 2011-2012.

This is our sixth annual survey and we thank Risk Management magazine for their fifth year of continued support. Given our ambition to enhance and improve the survey each year, for the first time we also include data for compliance and risk roles outside of the banking and financial services sector.

Once again, this year’s data and market commentary is drawn from in-depth research and input from the Australian compliance and risk community. In excess of 1,200 key contacts of Taylor Root were invited to contribute via an online questionnaire and thanks goes to those clients and candidates who took the time to volunteer much valued information. In addition, we have been able to draw from first hand experience and involvement in hiring decisions, recruitment trends and remuneration levels throughout the last 12 months when working with clients and candidates alike.

In comparison to our previous market report, the last 12 months has seen a relatively stable employment market for compliance and risk professionals with the majority of client organisations returning to profitable performance, some even to near pre-GFC levels of return. This is in stark contrast to the uncertainty hanging over the financial services sector as we headed out of the worldwide downturn during the latter

half of 2009. Salary and recruitment data from the last 12 months is discussed later in the report.

Our survey is reflective of the quality of information that we are able to collect and once again input from our clients and from the broader compliance market was excellent from both a quantitative and qualitative perspective. Data covers both Sydney and Melbourne and the non financial services sector, otherwise known as the “corporate compliance market”. Compliance and risk roles in this corporate sector are almost exclusively in the most heavily regulated industries such as telecommunications, pharmaceuticals and energy. This is an emerging market and data, unsurprisingly, can be irregular and random.

We continue to receive very positive feedback from our clients and the broader compliance and risk community to our survey which, we understand, is used as a reference point for many salary reviews and initial salary offers during the recruitment process. The survey is the only one of its kind which is specific to the Australian compliance & operational risk market.

As always, feedback is welcome and will hopefully result in positive changes being made for future publications.

Introduction

David Buckley Partner

David Buckley PartnerTaylor Root

Amanda AthertonDirectorTaylor Root

Trends

The last 12 months, as was predicted in the previous review, has seen a steady flow of compliance and risk roles “come to market”. Unlike the past 2 years, there has been little volatility in the numbers of open job vacancies due largely to a healthier Australian economy and few obvious shocks to the labour market. Many banking and financial services companies took advantage of new headcount hiring approvals at the beginning of 2010 and recruited significantly. This, in turn, led to less frenzied hiring and more consistent and steady recruitment throughout the remainder of 2010 and into the first half of 2011. We do not see this changing over the next 12 months.

Whilst we saw very few compliance and risk roles disappear

through redundancy during the financial year, there still remains some not insignificant challenge to secure headcount approval to recruit. This is particularly so at those organisations with a parent company headquartered offshore and typified by the investment banking community. A prolonged approval process is often still required before job offers are forthcoming and fixed term contracts or temporary appointments are still being offered to circumvent this arduous process. As a related point, our survey reveals that during the last 12 months, just shy of 50% of clients experienced some form of headcount freeze at some point in time.

“...just over 50% (of clients) ended the year with the same sized team as they started.”

In comparison to previous years, approximately 40% of our client organisations reported a net increase in the size of their compliance and risk teams during financial year 2010-11. Only 8% actually decreased in size compared to 60% last year. The majority of organisations, at just over 50%, ended the year with the same sized team as they started with. These results are reflective of the strong activity in the recruitment market in early 2010 when much recruitment took place, together with a steadily improving economy resulting in consistent levels of hiring over the last 12 months.

In relation to future hiring plans (2011-12) it is interesting to review and compare last year’s results when only 28% of clients predicted they would be increasing the headcount of their team. At the time, we viewed this as a very conservative figure given the wholesale redundancies of 2008-2009 and indeed, as the figures above show, this figure was closer to 50%. For the next 12 months, approximately 25% of client organisations predict they will increase the net headcount in

their compliance and risk teams which seems a more realistic figure based on current hiring patterns. These organisations cite an equal mix of improved business activity and the obligation to comply with specific regulatory requirements, as the reasons for growth.

The balance of organisations predict “no change” in numbers.

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Market overview

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Financial services

The continued interest in ensuring strong corporate governance at Board level, particularly within the banking and financial services sector, and developments in a variety of new financial and regulatory requirements for market participants has maintained the high profile position for Chief compliance and risk officers. Senior risk and compliance “leaders” must now be professionally qualified, highly credible and commercial with the ability to contribute and “hold their own” with the most senior of internal stakeholders.

The Australian regulatory bodies recruited steadily over the last 12 months but certainly not at the same volume as previously seen during and just post-GFC. As the financial year progressed, the majority of hiring into the regulators was replacement recruitment where a compliance professional left the regulatory body typically to take a role with a commercial organisation. Regulatory experience gained with ASIC, APRA and AUSTRAC is still highly regarded, as is strong product and markets compliance experience gained with ASX.

“...“Big 4” accounting firms are also increasingly active”

Undoubtedly, we have seen growth in the numbers of compliance contract staff being employed partly for reasons mentioned above but also to perform specific project work. The advisory and consulting arms of the “Big 4” accounting firms are also increasingly active and are recruiting in anticipation of greater levels of engagement from clients with less cost constraints than in previous years.

Corporates

Although small by comparison to the financial services sector, we have recruited for a number of non-financial services organisations i.e. corporate compliance roles. Typically these roles have been newly created and either represent the company’s first dedicated risk position or is in addition to a sole risk or compliance officer. Heavily regulated industries such as pharmaceuticals and telecommunications have recruited such in-house expertise. Further, we have seen large publicly listed companies that offer financial services or financial products as an adjunct to their core business also recruit in the space to comply with licensing obligations.

Corporate compliance roles, not surprisingly, are often secured by candidates from the banking and financial services sector. This reflects the lack of specific industry compliance experience available and the expectation that sector specific “up-skilling” can be achieved quickly and relatively easily. We believe that this hiring trend will continue in the corporate compliance market.

Although there remain some organisations who still attract “negative press” for their compliance culture, this figure is falling each year. In general compliance professionals, no longer tolerate an anti or non-compliant culture and those companies who suffer from this stigma do suffer in attempts to attract the best candidates. Regulatory breaches can now be “big ticket” items and very newsworthy, with reputational risk increasingly being managed proactively.

Amanda Atherton Director

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Supply & demand

It is remarkable to think that only two years ago virtually all compliance and risk recruitment ground to a standstill. In reality the lull in demand for staff really only lasted for around nine months and since September 2009, a sense of normality has returned to the recruitment market.

As mentioned earlier, the last 12 months has seen a steady if unspectacular supply of roles in the compliance and risk space. The most obvious difference between the boom markets of 2005-2008 and the post-GFC period is the reduced number of job opportunities available to a candidate at any one point in time. Although candidates with strong compliance and risk experience are still in short supply, your “average” risk professional may only have one or two roles to consider compared previously with up to five or six client organisations all seeking the same skillset. Together with this more limited choice for candidates, this changed market has largely had a calming effect on salaries given clients have not needed to enter into a bidding war to secure their preferred candidate.

The shortage of high calibre candidates on the open market can largely still be attributed to (i) the pre-existing chronic supply-demand imbalance created over the last 7-8 years since financial services licensing commenced (ii) the relatively small number of candidates returning from global financial markets such as London, New York and Hong Kong with relevant compliance skills.

In comparison to previous years, there has been a definite lack of senior roles on the open market. This is due in part to less lateral movement at the top end and hence the limited “merry go round” effect which results, but also due to improved succession planning. Internal promotions to Head of/or equivalent positions are more common than ever before. These internal promotions simply would not have been possible seven or eight years ago given the then relatively shallow talent pool of compliance professionals and the small size of in-house teams to select from.

Respondents cited the two biggest recruitment challenges to be (i) the underlying lack of quality experience at junior and mid-levels and (ii) the retention of top talent caused by willingness of compliance staff to move for financial gain. It comes as no surprise that clients see the lack of available talent as being a constraint given the general challenge of sourcing quality candidates. Perhaps, however, the willingness to move roles for a modest increase in remuneration is a reflection of the lower salary reviews seen over the past few years.


Remuneration & benefits

With the more favourable market conditions and improved financial health of most financial services and banking organisations over the last year, salaries and bonuses improved in line accordingly. The majority of salary increases were modest, however, and we are unlikely to see the huge annual salary increases and job offers of pre-GFC days for the foreseeable future.

Headline points to note from the last 12 months can be found below:

As mentioned earlier, although there is still somewhat of a supply-demand issue for talent, it is unusual for a “bidding war” to take place to secure the preferred candidate. Equally, given the fewer number of open vacancies, significant annual pay increases are no longer used as a primary retention tool.

Investment banking compliance salaries and total remuneration packages continue to lead the market with asset and funds management compliance roles also rewarding well.

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Brian Rollo Manager

Base salary changes

Increase up to 4%Increase between 5-9%Increase more than 10%No increase

• 45% of respondents increased base salary levels by up to 4%• 25% of respondents increased base salary levels between 5-9%• Just over 15% of clients increased base salaries by more than 10%• Circa 15% of respondents did not increase base salaries at all• In comparison to last years review when in excess of 65% of clients noted a

“zero” increase, almost all salary freezes have been lifted and the ability to reward has improved

• Specialist roles e.g. AML and sanctions officers have attracted a small premium• Little evidence of sign-on bonuses or guaranteed bonuses• No real obvious pattern of bonus payments to report other than almost all clients

now offer bonus potential to their team

Base salary changes

Increase up to 4%

Increase between 5-9%

Increase more than 10%

No increase

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Bonuses

Almost every client (just over 90%) now at least offer a discretionary bonus or capped value bonus depending on specific performance criteria. The actual monetary value of bonuses is very difficult to accurately report on as wide fluctuations do exist between subsectors and even within each team. Clients did report, however, that any bonus payment is equally dependent on company and individual performance.

Traditionally, senior compliance staff at the 10+ year level expect to receive at least 50% of their base salary as bonus in investment banking, institutional funds management and some consumer/retail finance organisations. In recent years, on average we believe this figure has likely dropped to something around 30-40% level. Some organisations, typically those larger multinational banking and finance groups, have moved away from providing this as “all cash” and have introduced cash and equity payments which vest across a number of years to encourage less perceived risk taking, greater accountability and retention.

Due to significantly less demand and few senior roles on the open market, sign-on and guaranteed bonuses have become extremely rare.

Our expectation is that future salary reviews will be similar to this years review.

Other points to note on additional benefits:

• More than 50% offer health or life insurance• Circa 70% of clients offer either free or discounted gym membership• Almost 50% of respondents offer part time or flexible working arrangements for

current team members

Additional points to note

• Although across the broader compliance market salaries continue to increase, generally there continues to be significant discrepancies between sub-sectors and even between companies within the same specialist market. For this reason, and due to differing interpretation or definition of the same role between organisations, the salary bands can appear very wide. For example, the most senior compliance role at a large international fund manager with 10 reports, plus some regional responsibility, will be remunerated higher than the same role title in a small, domestic, single asset class manager

• We assume that financial services organisations will fall into one of three categories based on size and range of operations in Australia. Large organisations will typically remunerate at the top end of the range, medium sized at the mid-point and smaller at the bottom end of the scale. However, with the growth in the “boutiques” this typical pattern can be reversed

• Figures refer to salary packages inclusive of superannuation but exclude bonus and other benefits

• AML roles are generally remunerated at the same levels as the equivalent compliance and risk professionals by years of experience

For specific advice on salary levels and benefits or for a discussion around any of the points and figures in the survey, please contact one of our compliance teams (details at the end of this document).

Investment BankingTitle Oganisational type Experience (typical) Salary range (AU$)

Head of compliance/risk Tier 1 10+ years 315,000 - 490,000 +

Tier 2 10+ years 250,000 - 325,000

Deputy head of compliance/risk or equivalent Tier 1 10+ years 260,000 - 310,000

Tier 2 10+ years 190,000 - 280,000

Senior manager Tier 1 6+ years 175,000 - 230,000

Tier 2 6+ years 135,000 - 200,000

Manager Tier 1 4+ years 125,000 - 165,000

Tier 2 4+ years 115,000 - 155,000

Analyst 0 - 4 years 75,000 - 125,000

The salaries - Sydney

Retail Banking/Consumer Finance Title Experience (typical) Salary range (AU$)

Head of compliance/risk 10+ years 290,000 - 445,000

Deputy head of compliance/risk or equivalent 10+ years 145,000 - 295,000

Senior manager 6+ years 140,000 - 195,000

Manager 4+ years 105,000 - 135,000

Analyst 0 - 4 years 65,000 - 110,000

Insurance Title Experience (typical) Salary range (AU$)




Manager 4+ years 90,000 - 130,000

Analyst 0 - 4 years 60,000 - 95,000


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Funds Management Title Oganisational type Experience (typical) Salary range (AU$)

Head of compliance/risk Large, international 10+ years 275,000 - 390,000

Smaller, domestic 10+ years 195,000 - 255,000

Deputy head of compliance/risk or equivalent

Large, international 10+ years 175,000 - 230,000


Senior manager Large, international 6+ years 145,000 - 185,000


Manager Large, international 4+ years 110,000 - 135,000


Analyst 0 - 4 years 65,000 - 115,000

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Distribution/Financial PlanningTitle Experience (typical) Salary range (AU$)




Manager 4+ years 100,000 - 125,000

Analyst 0 - 4 years 60,000 - 90,000

Corporate Compliance Title Experience (typical) Salary range (AU$)

Senior 8+ years 125,000 - 200,000 +

Mid 4 - 8 years 130,000 - 165,000

Junior 0 - 4 years 70,000 - 125,000



Investment BankingTitle Oganisational type Experience (typical) Salary range (AU$)

Head of compliance/risk Tier 1 10+ years 290,000 - 300,000 +

Tier 2 10+ years 200,000 - 250,000

Deputy head of compliance/risk or equivalent Tier 1 10+ years 205,000 - 245,000

Tier 2 10+ years 175,000 - 210,000

Senior manager Tier 1 6+ years 145,000 - 195,000

Tier 2 6+ years 120,000 - 155,000

Manager Tier 1 4+ years 115,000 - 140,000

Tier 2 4+ years 95,000 - 135,000

Analyst 0 - 4 years 70,000 - 110,000

The salaries - Melbourne

Retail Banking/Consumer Finance Title Experience (typical) Salary range (AU$)

Head of compliance/risk 10+ years 220,000 - 305,000+



Manager 4+ years 105,000 - 125,000

Analyst 0 - 4 years 60,000 - 85,000

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Insurance Title Experience (typical) Salary range (AU$)




Manager 4+ years 95,000 - 105,000

Analyst 0 - 4 years 55,000 - 90,000

Funds Management Title Oganisational type Experience (typical) Salary range (AU$)

Head of compliance/risk Large, international 10+ years 195,000 - 240,000


Deputy head of compliance/risk or equivalent

Large, international 10+ years 155,000 - 190,000


Senior manager Large, international 6+ years 130,000 - 150,000


Manager Large, international 4+ years 105,000 - 135,000


Analyst 0 - 4 years 55,000 - 85,000

Distribution/Financial PlanningTitle Experience (typical) Salary range (AU$)




Manager 4+ years 95,000 - 115,000

Analyst 0 - 4 years 50,000 - 85,000

Corporate Compliance Title Experience (typical) Salary range (AU$)

Senior 8+ years 130,000 - 215,000

Mid 4 - 8 years 100,000 - 180,000

Junior 0 - 4 years 55,000 - 90,000

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London 95 Queen Victoria StreetLondon EC4V 4HN T: +44 (0)20 7415 2828

Dubai Suite 614, Liberty House DIFC PO Box 506739 T: +9714 448 7770

Hong Kong 1918 Hutchinson House 10 Harcourt Road , Central, Hong Kong T: +852 2973 6333

Singapore 30 Cecil Street#21-03/04 Prudential TowerSingapore 049712T: +65 6420 0500

Melbourne Level 2, Rialto North Tower525 Collins StreetMelbourne, VIC 3000T: +61 (0)3 8610 8400

Sydney Level 12, 25 Bligh Street SydneyNSW 2000T: +61 (0)2 9236 9000

Taylor Root is a member of The SR Group

For more information on the compliance & operational risk recruitment market please contact a member of our team on: + 612 9236 9000 (Sydney) or + 613 8610 8400 (Melbourne):

David Buckley [email protected]

Amanda Atherton [email protected]

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Established in the 1980s, Taylor Root is now widely recognised as being one of the world’s leading legal & compliance recruiters. Operating out of offices in the UK, Dubai, Singapore, Hong Kong, Sydney and Melbourne, we are ideally placed to assist legal & compliance recruitment on an international basis. Taylor Root has a strong track record in the recruitment of: Heads of legal and Legal advisers; law firm associates and partners; contract/locum lawyers; paralegals; company secretaries and compliance and risk professionals.

Taylor Root is a member of The SR Group. The SR Group is a specialist recruitment consultancy dedicated to raising standards in the business environments that we serve. The sectors we cover include tax, legal, human resources, marketing, professional support and executive search, dealing with a substantial number of the world’s leading professional partnerships, multi-national corporations and international banking groups as well as small to medium sized developing organisations.

Risk Management Magazine has established itself as the most authoritative source of news, analysis, opinion and practical advice for business leaders and risk professionals in Australia. Published monthly in a news magazine format, Risk Management magazine is succinct and easy to read. It provides readers with independent, timely and practical advice that enables senior and executive management and boards of directors to make informed business decisions. Risk Management Magazine has an audited monthly circulation exceeding 6,220 copies. It is delivered by name to key C-level business decision makers, directors, senior executive management and senior risk professionals in the fields of financial services, banking, regulation, internal audit, information technology, compliance, health and safety, business continuity and corporate governance.

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Taylor Root Australia - Compliance & Operational Risk Salary Survey 2011-12

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Transcript of Taylor Root Australia - Compliance & Operational Risk Salary Survey 2011-12