In the balance

Design salaries are showing a welcome improvement over last year, especially in senior positions and in those parts of the industry that are not so sensitive to market trends. By Hannah Booth and Lynda Relph-Knight, with research by Kerst

Times may still be tough for trading across most design disciplines, but the moratorium on pay rises within consultancies appears to have lifted. And while most consultancy staff are enjoying salaries up on last year, beyond the 2.5 per cent norm of many service industries, increases are substantially larger in percentage terms outside London than they are in the capital.

The best increases overall are being enjoyed by those in management and client services positions outside the capital – where the average rise is 14-16 per cent – and at in-house design teams. The tables suggest that the ‘job of the moment’ is that of project manager, especially outside London, where pay rates are up by more than 14 per cent. Consultant Stuart Newman, managing director of Network Recruitment, meanwhile points to the design manager role as one that is growing in earning power.

On the creative front, the situation is less bullish, with only those in senior jobs earning more than the 5 per cent rise overall predicted by recruitment agencies in last year’s survey. But for more experienced designers the percentage rises are huge – around 12 per cent for a London creative director and 9 per cent for their counterparts elsewhere in the country.

The reasons for these substantial changes are many. For the past couple of years, consultancies have tended to hold back on increases, heeding warnings by the likes of design-friendly accountant Willott Kingston Smith that overheads in design are too high currently compared with earnings in an unpredictable market. Some have devised other packages of benefits such as pensions or profit-sharing deals to reward staff (see over).

Others have reduced the payroll through redundancies or by not replacing staff who have left. In both instances, this has affected staff across the board, but has probably bitten those at the top and entrance levels hardest.

The upsurge in salaries over the past 12 months is consistent with a more optimistic mood across the industry. Recruitment appears to be up again, judging by the number of ads being placed in the jobs section of Design Week over the past weeks and months, reflecting a growth in workload for many groups, or at least a more stable scenario.

This being the case, salaries are likely to be hiked up as competition to attract the best people increases. This is certainly evident in groups based outside London that are rivalling consultancies in the capital in terms of client base and using ‘quality of life’ and other benefits to attract good people. In-house design teams, usually regions-based, are using this as a selling point, too. This may be particularly appealing to more senior people with young families who are keen to quit commuting from ‘affordable’ areas on the London fringes.

It is also significant that senior people on both the management and creative sides can command higher salaries. Perhaps the belt-tightening years have enabled consultancies that have survived the affray to strengthen their standing with clients and create a greater need for experienced staff to deal with their new responsibilities. The availability of good senior people that have been ‘let go’ by some of the bigger branding groups might have also helped to drive the price up.

But though the boost in pay is welcome by staff and an upturn in business is evident, recruitment agencies are urging caution for the future.

Marc Ansell, managing director of Devonshire, comments that ‘while some increases [to long-standing or key employees] were a modest thank you, this may have been linked to inflated market recovery expectations in 2004. Unfortunately, this can lead to unrealistic expectations of reward and compensation against market performance and profitability.’

With recruitment agencies predicting further growth in pay levels over the next 12 months, the upward trend looks set to continue.

Nathan Mayatt, director of recruitment agency Workstation, ventures that increases could be as much as 20 per cent for senior or specialist roles, predicting rises of between 5 and 10 per cent for other consultancy roles. Valerie Gascoyne, managing director of BDG Recruitment, is more cautious, expecting rises to be performance-related over the next 12 months. Whichever way it goes, let’s hope the workload for design grows in parallel.

Designers’ pay

The news is good for most London studio folk, with rises ranging from 4 per cent for a junior or middleweight designer to more than 12 per cent for a creative director. Only artworkers are suffering here, with pay rates down some 2 per cent on last year’s average of £25 142.

Interestingly, rates are rather similar for designers of equal experience across the range of disciplines the survey covers. The only significant variation is among creative directors, though even here the going rate appears to be around £60 000 a year.

Recruitment agencies report great consistency between print graphics and packaging this year, and between interiors and furniture (for which we received only a small response). Generally, and most noticeably at the top end, product and furniture designers earn slightly less than their counterparts in print, branding, packaging and digital design, as last year. However, because those we trawled for the survey are specialists in their various fields, we must trust their verdict.

The biggest change among London groups year-on-year is exhibition design. Pay rates for junior and middleweight designers is up 10 per cent on last year on average, with senior designers and creative directors earning a massive 14 and 18 per cent more than previously.

Outside London the movement hasn’t been quite so great for the creative team, with junior and middleweight designers seeing little if any change in pay over the past 12 months and artworkers experiencing a slight reduction. But senior designers and creative directors have seen healthy increases of 8-9 per cent.

Again there is great consistency of earnings per job title, regardless of discipline.

Management and sales salaries

It’s a great time to be a managing director of a London consultancy, with salaries up by more than 30 per cent on average. New business directors are similarly having a good time, though they are sure to be working hard to earn their additional 21 per cent in a highly competitive and uncertain climate.

Management of both projects and personnel is increasingly lucrative, perhaps reflecting greater efficiency in the way consultancy bosses run their businesses and serve their clients. Project managers are taking home almost 6 per cent more than they earned last year, the biggest increase being for those working in product design, where rates are up 22 per cent. Account handlers are netting more than 7 per cent extra across the board, while studio managers’ pay has risen 10 per cent.

But it isn’t all rosy in the capital. Account executives’ pay has fallen 5 per cent – perhaps because the function is, in some cases, now absorbed into another job title – while production managers have seen hardly any change.

Some of the highest earners are in corporate identity, communications design and branding – the backbone of the industry that links major players with small start-up independents. And there is parity between job titles here, according to our experts.

But the real growth in income has been outside London, where all rates are up significantly on last year. Managing directors have seen a 16 per cent rise in income – modest compared with their London colleagues, but setting a level that is reflected throughout the management team.

Salaries for new business directors and account executives are up by more than 15 per cent, with project managers and production managers enjoying 14 per cent extra on last year’s salary. Account handlers and production managers are meanwhile earning 10 and 8 per cent more respectively.

It pays to be a manager in interiors, architecture and furniture design outside London – though our furniture sample is again very small so may not be wholly representative of what is itself a tiny sector. Corporate identity, communications design – manifested in print and digital media – and branding are as healthy as their London counterparts, indicating where some of the most lucrative work in the business lies.

Incentives and perks

After lean times, incentives and perks go a long way in rewarding staff. Given the choice, explains Lucy Cooper, head of design management at recruitment agency Major Players, employees would rather have salary increases or ‘some kind of bonus scheme’. ‘Benefits are never a substitute for the right company or salary, but they do demonstrate loyalty to staff,’ she says. ‘Extended holiday, gym membership and health insurance are all popular.’

Kim Crawford, managing director at Periscope, agrees that consultancies that want to attract and retain their most talented staff – particularly following the ‘stagnant’ salary rises of the past 12 months – need to consider more than just pay packets.

‘People need a feel-good factor. Things as simple as offering Summertime Fridays (get in at 7am, leave at 1pm) go a long way in keeping good people happy,’ she says. ‘Many in the design business are beginning to get frustrated with low wage levels. Offering soft benefits can help keep them happy and overheads steady.’

Another system proving popular is a flexible benefit package, adds Cooper. This allows staff to choose a mix of benefits, from mobile phone payments to free dental insurance.

Of the perks and incentives highlighted by recruitment groups and consultancies, those listed below appeared with most frequency:

Christmas bonus/ annual performance-related bonus; social events; private medical insurance; unpaid sabbaticals; gym membership; annual performance-based bonuses; profit share scheme; trips abroad/ team away-days; shares; extended holidays; day off on birthday.

A tiny percentage mentioned flexible hours, perhaps demonstrating how, particularly in consultancies, being flexible for the client appears to be what really matters. JuniorMiddleSeniorCReative DirectorArtworker

Freelance

Consultancies’ freelance rates are hard to pin down, according to almost all those we questioned, as they are so subjective. As Simon Marshall, marketing manager at Devonshire, says, ‘There’s a wide gap when considering freelance rates, due to factors such as individual experience, industry knowledge, software skills and length of assignment.’

This year’s figures, from both consultancies and recruitment specialists, suggest a levelling off. The lowest hourly and daily rates have risen dramatically since last year, but the highest rates have fallen. As a result, the average remains almost unchanged, at £25 an hour and £258 a day. But ‘talented freelances’, as BDG Recruitment’s Gascoyne notes, will always be ’employed on a regular basis’.

A ‘glut’ of senior designers in the market, who have been made redundant because of cost-cutting, has had a knock-on effect on freelance rates, believes Network Recruitment’s Newman.

‘[Freelance] remains buoyant, and though hourly rates have improved on last year, the market has become more competitive. In certain niche areas, the supply of freelances is actually outstripping demand, and we have noticed clients now offering day rates that are more pro-rata to an annual salary,’ he says.

Even more optimistic is Bernadette Sturley, director of Mac People. ‘Freelances will have had the best year for some time, and candidates seeking permanent jobs will often get two or three offers to choose from,’ she says.

In-house design

Based on the (relatively few) figures and comments we received on in-house salaries, they appear to be between £2000 and £10 000 higher, depending on the seniority of the role, than consultancy wages. A junior designer, for example, can expect to earn between £22 000 to £25 000. In-house salaries generally increase more than in design consultancies, too.

Workstation’s Mayatt believes in-house design teams benefit from being tied to a larger, potentially more secure company, particularly during tough economic periods.

‘In-house studios are often part of large organisations, which tend to be financially better off, and they may operate in fields that have not been affected to the same degree by the slower market,’ he says.

‘For this reason, when you look at the package at in-house studios, the benefits are much better. And the hours tend to not be as anti-social either. Over the past few years, during the slower market, we’ve seen a constant flow of work from in-house studios, whereas consultancies were in decline. As a result, salaries did not drop to the same degree as in consultancies,’ Mayatt notes.

Percentage change in average salaries 2003-04

Design consultancies

What perks do you offer your staff? (In decreasing order of frequency) 1Medical, healthcare 2Gym membership =3Subsidised travel; Sabbaticals (unpaid); Social events 6Overtime 7Duvet days

Bonus, shares and pension schemes? •Pension scheme 77% •Performance bonus 54% •Profit share 23%

How often do you review salary levels? •On an annual basis 100% Average percentage salary increase expected over the next 12 months: 4.42% Recruitment agencies

What perks would you advise consultancies to offer their staff? 1Medical, healthcare 2Subsidised travel 3Gym membership =4Overtime; social events 6Sabbaticals (unpaid) 7Duvet days

Are bonus, shares and pension schemes advisory? •Performance bonus 77% •Pension scheme 38% •Profit share 8%

How often do you recommend consultancies to review salary levels? •On an annual basis 77% •Every six months 15% Average percentage salary increase expected over the next 12 months: 6.3%

Hourly rate

Average£25.83

Lowest£22.50

Highest£30.00

Day rate

Average£258.33

Lowest£225.00

Highest£300.00

What we did

In an attempt to gain a fair perspective on the state of salaries in the business, we sent a questionnaire to consultancies in our most recent Top 100 and Creative Survey databases, and to recruitment agencies in London and elsewhere in the country.

The level of response from design groups was again poor, so we based our tables exclusively on figures from recruitment agencies, which deal day-to-day with staff across disciplines and positions, both in-house and at consultancies. We used findings and comments from designers as a check and have included them in our analysis.

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