The CEO of the London Stock Exchange Group Plc (LSEG), Julia Hoggett, spoke to Bloomberg recently on how the United Kingdom (UK) is losing out on a war for talent. She suggested that the UK is at risk of losing top executive talent to the United States, Europe or even Asia because of the low executive pay.
It was suggested that the median pay for the Chief Executive Officers (CEO) of the UK’s biggest companies reached £3.91 million ($4.72 Million) in 2022, which is £70,000 short of the average pay awarded in 2017. On the other hand, the median CEO pay for the largest US-listed companies reached $22.3 million in 2022. It is said that the lack of a level playing field has caused a major disadvantage in hiring and retaining top talent for UK companies, especially in the financial service industry.
The UK employment market has already suffered from the talent exodus caused by Brexit and the pandemic. Additionally, the UK is known for having a higher income tax in comparison to Asia and the US, which has deterred many expats who seek to work in the UK. With the raging interest rates, inflation and cost of living crisis, the country’s appeal to global talent is further hindered. It is anticipated that hiring top talent will become more challenging in the UK across all industries. Consequently, companies and organisations in the UK must adjust their compensation strategies to entice global talent.
This phenomenon also concerns the Family Office space. As sophisticated entities that manage the wealth of ultra-high-net-worth families, Family Offices are competing for talent on a global basis. Family Office executives are usually drawn from the financial services and professional services industries, which are facing the same problems, when it comes to talent in the UK. Family Offices in the UK may find themselves struggling to retain their top executives. To attract and retain top talent, Family Offices are having to reconsider their hiring strategies and offer creative compensation strategies. The problems are amplified with the current immigration policies in the UK in order to ship over specialist talent from overseas. In contrast, countries such as the UAE
UAE
As the race for talent intensifies, a competitive and benchmarked compensation structure is essential. However, due to the personal and private nature of Family Offices, it has been very challenging to access compensation benchmarking data in the industry. With that in mind, we worked with KPMG Private Enterprise to launch one of the biggest reports on Global Family Office compensation, primarily to educate the ecosystem on these challenges.
To win the war on attracting, hiring and retaining game-changing employees who can contribute greatly to the Family Office, they must review their compensation structure and ensure that their executives are being competitively awarded. Even if they are not looking at growing team currently, it will ensure you are rewarding your human capital at par with the market to ensure you are not losing them at a time like this. Though, some of the factors mentioned above are down the policy makers, Family Offices can ensure that they are aligned with the market in what they can control.
The 2023 Global Family Office Compensation Benchmark report covers the key trends on compensation, governance and investment practices in the Family Office space. This has proven to be an insightful read and is immensely helpful for the Family Offices that would like to review their compensation structure. We have also covered the average executive pay of Family Offices in different regions in a recent Forbes article.
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