Respondents to our 2007 survey on hedge fund compensation were asked to characterize their level of seniority relative to others in their firm. Seniority in a firm may be less closely tied in the hedge fund industry, than elsewhere, to years of overall industry experience, partly because mobility is high and partly because raw talent counts for so much. (Those who responded “least senior” are a probable exception, since many are likely new to the industry, as well as new to their firm.)
Years at a firm and position within a managerial hierarchy are both quantifiables related to seniority, but they might tell different stories. Where competition for talent is fierce, the sense of seniority may be less closely tied to the number of years of employment at a firm. Responses to this question are self-characterizations, and the element of subjective ambiguity makes it an interesting datapoint.
Hedge funds often have flat-ish management structures, the more so the smaller the shop — and most hedge funds are small. That helps seniority become a matter of perception as well as fact, which may be why “somewhat senior” is by far the most common response. A hedge fund job confers a prestige of its own and funds do a good job, generally speaking, of making employees feel valued; both factors may encourage responses of “somewhat senior.”
It’s not clear to what extent this chart can be used to infer a typical distribution of seniority in funds. Standalone funds tend to be the brainchild of two or three people. (Hedge fund recruiter Charlie Panoff of Objective Solutions International: “You have the quantitative strategy guy and the trader/broker guy who comes and brings the money along with him, and the two of them build something that lasts.”) These are the “most senior,” and later additions to the team will not generally rival them.
The least frequent response surely reflects the steep barriers to entry to the industry, as well as the considerations mentioned above. Entry-level hedge fund jobs are a rarity, and new employees are expected to hit the ground running: Few consider themselves the “least senior.”
With a lot of movement in 2008, we’ll see what happens to these numbers.