Employment (How much are you worth?)

 

It’s not what you think you’re worth, it’s what the market thinks you’re worth.

Going out and getting your first job is an exciting opportunity; you hope to impress your boss and prove that you’re a valuable asset to the team.  You want to do your best to hit the ground running and make sure the person paying your salary sees that you are worth what you’re being paid.

This isn’t designed to teach you about salary negotiation and how best to convince your boss that you need a pay rise, but rather to convince you that in order to make sure you’re being paid appropriately – if not above average – you need to keep your eyes open.

For better or worse, some job types pay better than others.  This isn’t necessarily tied to your level of intelligence, the cost of your education or how many years worth of study you have completed.  It’s as simple as accepting the fact that society deems it appropriate that certain roles can command a higher salary than others.

Each year, large recruitment companies around the world will often publish salary brackets for different roles in a range of organisations and industries.  For example, the 2016 Robert Walters Salary Survey, lists the average AVP/Manager annual salary range in an Operational Risk role within the Singapore banking industry as being ~US$50 – US$100K.  The same role type in London pays US$75 – US$100K per year; while in the New York, you’ll be looking at US$80 – US$125K.

Without factoring in cost of living and tax expenses, it would appear that being employed in a middle management Operational Risk role in the banking industry would result in the healthiest bank balance if you took the job in New York.  Suffice to say, tax and living expenses should always be factored into decision making; Singapore as an example has considerably lower income tax requirements than both the UK and USA.

It’s worth noting that market demands for certain roles and skillsets change over time. What’s hot one year, might drop off the radar the following.  This can due to customer demands, industry innovation or regulatory changes amongst other things.  As an example, it wasn’t until the 2007-2008 Financial Crisis, that global banks were seriously put under the microscope.  Operations were examined, a spotlight was cast on lending practises, the allowable risk levels and products that traders could trade were reviewed; regulators increased their scrutiny across the industry.  

Since the Financial Crisis, the value of fines issues by regulators to financial institutions has continued to increase, with some individuals fines exceeding US$1 billion.  The sheer size of these fines, has forced banks to re-think their approach to risk and ensuring they stay on the right side of the law when it comes to their practises.  In a move ensure banks are acting appropriately, the internal Compliance function has become increasingly important in recent years, indicated by the rise in headcount numbers; Citibank has seen a 33% increase in Compliance headcount since 2011.  This isn’t surprising when a bank can either limit internal Compliance oversight (reduce headcount costs) and face an increased risk of breaching regulatory requirements, which would then potentially lead to hefty fines.  Alternatively, increase the headcount, increase oversight, reduce risk and hopefully avoid any show-stopping fines.

The point being that due to fines being levied against a large number of industry players, combined with increased regulatory oversight, the Complinace function has moved up the ranks.  Those with the associated skillsets or who have been able to re-skill have found themselves in higher demand than would likely have been the case pre the 2007-2008 Financial Crisis. 

Keeping your eyes open to the variety of factors impacting your the market place can help to keep your ahead of the curve. It’s not only about the easy-to-quantify differences in take-home pay across countries, based on tax and living costs, it’s also about keeping in perspective industry impacts and both the challenges and opportunities that these often present. 

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