1m of new revenues to justify a 250k hire?

By various accounts, front office hiring is slowing down. This may have something to do with the time of year. It may also be related to uncertainty regarding the future.

The latter is particularly the case given that our (back of the envelope) calculations suggest the necessity of making a 1m revenue stream in year one to justify a recruit costing a mere 250k.

The process of deduction is as follows:

· 100k in salary

· 150k in bonus

· 31.3k in employer's National Insurance (according WSJ)

· 62.5k in headhunters' fees (based on 25% of first year guaranteed earnings)

· 50k in 'seat cost' to cover compliance, IT and other operational costs, according to various bank HRs.

= a total cost of 393.8k in year one.

If the hiring bank is aiming to maintain a new-era compensation ratio of 40%, this implies that the recruit in question will need to generate 984k of revenues in the first year.

In the circumstances, this may look like a bit of a big ask.