Why has it become so difficult to hire directors in house building?

Blog - Why has it become so difficult

Post recession I have noticed how much harder it has become to move directors in house building. This is assuming that the recruiting company insists on hiring someone who is already a functional director at a competitor. Here’s why:

In recent times many of the larger house builders have increased the barriers to leaving for their senior managers. Specifically, they use two key tools to retain these people and make it harder for competition to poach them away.

Firstly, there is the wider use of long term incentive plans (LTIPs). These take a variety of forms but the common theme is the award of company shares for service and performance. Usually these tranches of stock can take several years to vest meaning that the individual would have to walk away from five or six figure sums to leave the business.

Naturally, the longer they stay the the more shares accrue and the bigger the sacrifice for the individual should they wish to move on to a new employer.

Second is the use of staged bonus payments. Traditionally, annual bonus payments would be paid in one lump sum not long after year end leaving the individual free to resign having collected all that they had earned.

In some cases house builders now split bonuses payments in to two, making the first installment payable after year end but a second payment delayed until half way through the following year.

By the time the second installment is received the employee knows that they are less than six months away from another payment and so a form of golden handcuffs begins to take hold.

So if you want to retain your top team and you don’t have these measures in place then maybe there is some food for thought.

However, if you want to hire at director level, it makes sense to give serious consideration to candidates at manager level who are ready to step up. Rarely are candidates at this level subject to the retention strategies described above.

Naturally, there is a lot more detail to discuss about how best to recruit for director level positions. If you would like to explore further then please call me on 0161 924 2384.