This article is from the Australian Property Journal archive
THE money is still flowing for anyone employed in the property industry, but the party may well be over, according to recruitment specialist Rita Avdiev.
“Almost everyone in property got a raise in the latest remuneration reviews,” Avdiev Group’s managing director Rita Avdiev said.
“But what will happen next?” she asks warning that the massive reduction in property share prices over the last six months may well impact upon property industry employment numbers in the future.
In her latest Avdiev Property Industry Remuneration Report 2008, remuneration increased on average 6% across the board in the 12 months to April 2008, higher than the 5% increase reported for the previous year, and much better than the ABS figure of 4.9% for the general work force and the CPI increase of 3% to December 2007.
Even though business conditions in Australia are unsettled, the majority of property companies contributing remuneration data to the Avdiev Report do not expect current business conditions to have a significant negative impact on remuneration in the next pay reviews and expect that increases will be as budgeted.
“The forecasts are for an average of 5% rise, to reward good performance and retain staff,” she said.
In addition, companies are fast tracking their young people through the ranks. Two thirds of respondents offer early promotion to their young and promising executives. Reasons given include succession planning, staff retention and rewarding superior performance. 64% of respondents paid for the academic study of their young staff, a welcome finding for an industry which has been a latecomer into academic ranks and once valued experience above qualifications.
The compensation mix for the majority of the property industry consists of total fixed remuneration and short term incentives and no LTIs. Long term incentives are rarely paid to mid level and junior staff. When paid to the senior executive ranks, LTIs can form up to 15% of total compensation. Drops in the share prices of public companies cannot be solely attributed to the recent departures and subsequent musical chairs at the capital markets end of property, as they will have some, but not a significant effect on the total reward.
Employers and employees may have to re-negotiate the compensation mix offered, to make up for loss of LTIs to the employee and to ensure superior performance to enhance the employer’s bottom line.
If the global credit crisis does destabilise the Australian property industry, skills and jobs will undergo a re-mix.
“It will be back to basics for some time,” predicts Avdiev.
“Cash flow will be king again and those people able to squeeze the last dollar out of hard working buildings or rescue distressed property will be well rewarded. The financial wizards may have to take the back seat for a while.”
Australian Property Journal
