Meagre pickings

Despite optimistic predictions, design salaries have taken a downturn over the past year, particularly at the higher end of the scale. But the picture for juniors and freelances is looking far more rosy, says John Stones, with research by Michelle Reeve

Volatile is probably an accurate word to describe the design economy of the past year. This is reflected in our survey of design salaries, which suggests that predictions made earlier this year were optimistic. Instead, there is a broad trend downwards, with salaries for the top roles under particular pressure, but some improvement for more junior roles in London.

Despite talk of a reasonably buoyant market and a high demand for good design staff, there doesn’t seem to be upwards pressure on pay. However, the picture for freelances is much rosier.

Valerie Gascoyne, chief executive of recruitment consultancy BDG Xchangeteam, suggests disappointing salary levels are a domino reaction to clients cutting project budgets. And as Network managing director Stuart Newman notes, competition between consultancies for projects ‘is still incredibly tight’.

Top end salaries

Despite Sir Martin Sorrell’s widely publicised £17m pay package for 2004, it is at the higher end where our salary survey shows the most movement, and it – unlike the WPP chief executive’s rocketing remuneration – is downward.

Criticism of the design industry as being top heavy, by groups such as specialist accountancy firm Willott Kingston Smith, seems to be hitting home. Esther Carder, a partner at WKS, says design salaries are way too high and second only to advertising within the marketing services sector. The ratio of employment costs to gross income, in WKS’s recently published annual survey, has improved slightly, but Carder says design groups are still paying themselves too much.

Improving this ratio, Carder points out, need not mean cutting top end salaries. It can also be changed by simply getting the mix right, by having more people in junior and middleweight roles, or by improving productivity.

Our survey would suggest this mix is changing, with very little activity in recruitment at senior levels. Kim Crawford, managing director of Periscope, is far from alone in her view that ‘there are very few roles for candidates at senior level’ and that ‘movement at the very top of the creative tree is still very slow’.

This trend seems to be leading to a significant drop in salaries. Our survey suggests a drop of nearly 11 per cent for the role of managing director in London, compared with last year. The role of creative director in London now attracts a salary that is down 6.1 per cent from last year. Outside of London, where our sample was admittedly smaller, the results were mixed, with remuneration at managing director level up by 10 per cent, compared with hefty falls elsewhere on the payroll.

As a note of caution, however, the lower rates could reflect the fact that some of the plum jobs were not currently on the market. For the really significant roles, BDG Xchangeteam’s Gascoyne says people are still willing to pay well above the average. •

Junior and Middleweight roles

While designers at the top end may be finding there is nowhere for them to go, the situation lower down the ranks is different. In common with other recruitment agencies, Bernadette Sturley, managing director of Macpeople, notes there is ‘a shortage of good, well-trained staff at the middleweight level’, attributing this to the downturn of the past few years, which has restricted the intake of juniors to the industry. Another common argument is that the dotcom bubble of the late 1990s sucked a whole generation out of design.

Stephen Bell, creative director at Coley Porter Bell, says it took his consultancy five months to recruit two middleweight designers into its specialism of packaging and corporate identity. ‘There just aren’t that many people out there with experience,’ he says. ‘It’s not about money – more about finding them in the first place.’

Nevertheless, middleweight design is one of the only areas to show a real improvement in salary over the past year, with pay up 5.5 per cent in London, almost regardless of discipline. Artworkers saw an even stronger improvement, with their average new salaries up by just over 8 per cent in London. Last year artworker salaries were 2 per cent down – and one of the only areas to show a decline.

While our survey suggests an improvement – at least in London – in salaries for junior and middleweight designers, some recruitment agencies are finding the going pretty tough at the lower end of the spectrum. ‘With business confidence volatile, we have noticed a drop in roles for junior designers,’ says Network’s Newman.

Freelance

From an accountancy perspective, Carder sees the increasing reliance on freelances as inevitable in maintaining flexibility in the current climate. Nathan Myatt of recruitment agency Workstation suggests the use of freelances is a response to skills shortages and says that freelance rates have been pushed up steadily over the year by rising demand. Newman suggests rates may have risen by as much as 50 per cent for designers in corporate branding or certain interiors roles.

Freelance rates only make sense in the context of the exact nature of the job in hand, but our respondents suggest a very wide spread of hourly rates – between £15 and £45 – and daily rates ranging from £110 to £400. We will cover this in greater detail in the new year.

With freelancing proving lucrative, at the same time as salaries are stagnating for full-time roles, Gascoyne points out there may be little reason for freelances to reconsider how they work.

Rewarding staff

With little positive movement on the salary front, there are signs that general approaches to recruitment are being reconsidered.

Recruitment agencies criticise design groups’ attitude to staff retention and development. Jon Alport, managing director of recruitment agency Alport, claims, ‘Too many people, too much of the time, are trying to take short cuts to recruitment.’

Paula Carrahar at Major Players suggests work/life balance, staff retention and training should be taken more seriously by design groups. ‘Short-term gain is not proving [to be] a sensible option for get-rich-quick companies,’ she says.

Periscope’s Crawford is particularly critical of short-termism in the big globally-owned groups, whose staff ‘feel very over-worked, under-valued and under-paid’. This, she suggests, could impact on their reputation in the industry. ‘Certain consultancies are recognised by potential recruits as “sweatshops” and they will not consider that company as a result,’ she says.

Nottingham-based consultancy Kelso Jones says it looks for potential in candidates, rather than what they can do on day one. Managing director Corinne Kelso adds, ‘A big no-no is to recruit someone for the contacts they bring. Not only is it poor practice ethically, but they are likely to move on to a competitor with all your contacts, too.’

Apart from this shift in attitude, the normal array of staff benefits are mentioned, such as bonuses, healthcare, cars, contributory pensions, extra holiday, gym membership and life assurance, as well as unusual ones, such as a monthly massage, free fruit, group days out or internal award schemes. But, only bonuses are mentioned consistently, and many groups that responded offer them in some form.

Regional differences

It would seem that the downward pressure on salaries is particularly strong outside London, with falls across the board, except, paradoxically, for the very top level. This could be a statistical blip, but it could also suggest a regional time lag, similar to the housing market.

Specialisms

Areas mentioned by recruitment consultants as being in demand are packaging, corporate identity, interiors and digital media. However, this isn’t translating into higher pay at the moment, at least for junior, middleweight or senior designers, where salary levels are broadly consistent on the creative side.

At the level of creative director, there are much wider variations. Exhibitions and furniture are the lowest, with interiors appearing the most lucrative, though this could reflect the more limited representation of these three areas in our sample.

On the management side, there is wider variation. There is little consistency across disciplines, perhaps understandably, given the oscillations in business confidence over the year. Workstation’s Myatt is not alone in saying new business and account management roles have ‘fluctuated dramatically throughout the year’.

Outlook

If salaries are falling for new recruits, it would seem unlikely that existing staff can expect increases. But our survey threw up a wide variety of responses to the question of pay increases over the coming year, again, perhaps, a sign of the uncertainty in the recruitment market for design. Of the recruitment agencies, all but two suggest increases in design salaries over the next 12 months. A couple suggest increases of up to 10 per cent, with the rest all suggesting increases matching, or above, inflation. Whether this optimism is well-founded, or reflects the understandable wish of recruitment agencies to talk up their business, remains to be seen. However, a few notes of concern are sounded. Myatt, for instance, expects to see recruitment activity, at the most senior level, happening only ‘when absolutely necessary’, and Newman is worried that some people ‘may be pricing themselves out of the market’.

A divergence of opinion about the salary increases is also apparent in the responses from design consultancies. Predictions are evenly split between those who believe there will be no increase at all, those who think pay will keep pace with inflation, and those who think there will be hefty hikes of up to 10 per cent or more.

Similarly, when it comes to recruiting extra staff over the next few years, while some don’t envisage any increase in head count, the majority believe they will be recruiting a small amount of extra staff. Design consultancies also suggested higher levels of pay than recruitment agencies, but this probably indicates that it was the more economically robust that felt confident enough to respond to our survey.

Our figures show an industry in flux, but whether this reflects a continuing – and perhaps painful – restructuring of the design industry or a temporary buffeting from the wider economy outside, remains to be seen. Whichever, it seems the upturn anticipated earlier this year, in terms of salaries at least, is on hold. •

What we did

To get a fair perspective on the state of salaries in design, we sent a detailed questionnaire to design consultancies in our most recent Top 100 and Creative Survey, and to specialist recruitment agencies both in London and in the rest of the UK.

Our charts are based on detailed responses from recruitment agencies, who deal, day-to-day, with staff across disciplines and positions, both in-house and at consultancies. The response from designers was limited, but was used as a check and comparison.