Salary Survey Autumn 2005: are you hitting the high notes?

Sex, drugs and rock and roll were once the favourite pastimes of students, with any spare time given over to left-wing political causes. Now, it seems, students prefer accountancy.

In the UK, one in five graduates believes that the accountancy profession provides the best career opportunity. In the US, it’s even more pronounced – accountancy is now the most popular major on campus.

Of course, the scandals of recent years have played no small part in this about-turn. But the buoyant recruitment market – coupled with decent starting salaries and opportunities for progression – is also driving demand.

Our survey last spring showed that salaries had remained almost static on the previous six months, and in some cases actually fallen, despite rumblings of a war for talent and predictions of double-digital salary growth.

Six months on, and the eagerly anticipated salary hikes are starting to emerge, although not at the rate predicted by those with a close eye on the skills shortages plaguing the profession. Accountants now take home an average basic salary of £46,280, an increase of 3%, or £1,430, on March.

In fact, the proportion of accountants in our sample taking home a basic salary of less than £25,000 a year is continuing its downward trend, from 11% a year ago and 10% six months ago – accountants in the lowest salary bracket now represent just 9% of respondents.

£10k - average gender pay difference

But while fewer accountants are earning less, it hasn’t followed that greater numbers are raking in the big bucks. The proportion of accountants earning a basic gross salary of £81,000 or more is down 2% on March, and now represents 7% of our sample.

A breakdown by job title paints a clearer picture of the winners and losers in the battle for salary supremacy. Partners in practice have regained their crown as top earners, knocking finance directors off their throne. On average partners take home £66,670, compared to £61,593 six months ago.

Finance directors aren’t far behind – but with average gross basic salaries now at £64,470, pay packets are actually down £1,231 on six months ago.

Overall, more job types have witnessed pay hikes than falls – indeed, only those with accounts manager or management accountant written on their business card have lost out financially in the past six months.

Admittedly, your position isn’t the only factor likely to dictate your salary. Geographic location and gender also exert an influence on the size of your pay cheque.

£46k - average salary of an accountant

Accountants in London and the Thames Valley region continue to take home the largest salaries – on average £51,240 and £52,390 respectively. Larger organisations (those with a turnover of £351m and more) are also likely to pay more to their finance staff. Average pay packets in those companies are roughly £10,000 higher than in the smallest companies.

With the verdict in on whether the ICAEW and CIPFA will merge, it’s interesting to take a peek at how the different qualifications from the two institutes compare in terms of salary.

On average, ICAEW-qualified accountants earn a gross basic salary £7,000 higher than their CIPFA counterparts – £53,731 compared to £46,731. Both institutes outperform CIMA, with management accountants taking home about £45,157.

Of course, basic salary is only part of the story. Annual bonuses are growing in popularity across the profession. Today, 16% of accountants receive a bonus as part of their remuneration package, although, for most, bonuses still represent a small proportion of their overall reward. Apart from the 2% of respondents whose annual bonus potential reaches between £51K and £100K, 43% of the sample stand to earn up to £5,000 in bonuses, 14% between £6K and £10K and another 11% whose bonus package ranges between £26K and £50K.

Overall, the other benefits that accountants are most likely to receive as part of their total remuneration package remain unchanged. Top of the pile is still pensions – around one in three of the sample receives a pension contribution from their employer. Almost one in five receives healthcare contributions, 11% opt for a car allowance, while just 7% get the keys to a company car.

As always, the blanket pay-rise figures conceal some startling disparities. Rather depressingly, the pay difference between the sexes continues to plague the profession. A comparison with figures published both in March 2005 and October 2004 show that no headway has been made in bridging the gaping chasm that exists between the average salaries earned by men and women working in accountancy.

Women continue to take home almost £10K less than males doing the same job – £9,770 to be precise – an increase of £100 on six months ago. Women also account for a much larger proportion of accountants taking home less than £25K a year – 14% of female respondents fall into this pay bracket, compared with just 6% of men. At the top end of the scale, those in the highest £81K plus gross basic salary bracket are three times more likely to be male than female.

88 months - average time accountants spend in a job

However, external data indicates that the gender balance of new recruits entering the accountancy profession is shifting heavily towards women. Our sample, which is weighted towards the higher end of the profession, paints a slightly different, and admittedly less encouraging, picture.

Men represent 57% of respondents under 25, compared with 42% of women (1% declined to give an answer). But using the proportion of women at the highest echelons of the profession as a gauge of equality, things look a little bleak. Just 16% of finance directors in the sample are female.

The incumbents of the financial controller role are also more likely to be men, with just 28% women holding that position. In fact, the only area where women are more likely to exceed men in numbers is in payroll, which for many is still an extension of human resources, where women are a very familiar sight.

Among partners, the proportion of females drops still further to a shocking 11%, reiterating the findings of the Accountancy Age Top 50 survey published in June, which found that 91% of partners across the UK’s 50 biggest firms were male.

Geographically, the Midlands and London are the most male-dominated places to work in the country – women in those areas represent on average 31% and 32% respectively of working accountants. Ireland, meanwhile, is the clear capital of female accountancy, and the only place where women in the profession seem to be in the majority.

While the profession is still struggling to find a good gender balance, the situation is definitely looking up on other fronts, if the combined fee of the Top 50 in 2005 is anything to go by. The move to international financial reporting standards, combined with Sarbox-style compliance work and increased demand for consultancy work, has helped propel the sector out of the doldrums. At £6.72bn, total fee income across the UK’s biggest firms witnessed a 6% jump on 2004.

But sustaining that growth relies on a good pipeline of qualified staff. As firms and corporates continue to plough vast sums of money into their recruitment machines, attracting the right calibre of people is only part of the story. It’s a sad reflection on accountancy that so little headway has been made in promoting the profession as one where diversity and equality reign.

Until that time, recruiting and retaining the brightest and best to support growth will continue to be a struggle.

74% would recommend their company

Fortunately, the vast sums of money being spent by the biggest names in the industry on trawling university campuses appear to be paying off.

Growth in the profession has exploded in the last six months, with the Big Four, in particular, hiring a record number of graduates. With starting salari es in audit hitting the £25,000 mark, and fresh-faced consultants taking home £31,000, it’s little wonder that a survey of 16,000 graduates who left UK universities this summer found that accountancy (followed by management consultancy) offers the best career opportunities.

But how happy are accountants once the reality of the job kicks in? When asked about their current salary and benefits package, 55% of respondents are satisfied with their lot, with men slightly happier than women about their remuneration package. But, as we all know, the size of your pay cheque is not enough to make coming to work a pleasure and joy. Finance directors may not earn as much as partners on average, but they are more contented in their position.

If tenure is a sign of job satisfaction, then accountants are a pretty happy bunch. On average, respondents have been in their job for more than four and a half years, although tenure varies enormously according to job title. On average, the partners in practice in our sample have been in their current position for over eight years. Whether they’re having more fun, or simply feel the size of their pay packet gives them less cause to complain, they’re certainly less likely to cruise the job pages.

Another way to gauge employee satisfaction is to ask the question: ‘Would you recommend friends or former colleagues to work at your organisation?’ Of course, many companies offer hefty bounties to staff who do just that, but almost three quarters of our respondents say ‘yes’, they would recommend their company to close acquaintances, rising to 96% of partners and 80% of those working in payroll.

44% are looking for a new job

Before senior management rushes to give itself a pat on the back, there’s no room for complacency. You may be relatively happy, but that isn’t stopping 44% of you from looking, or thinking about looking, for a new job.

Admittedly, only 12% of respondents say their job search is active – but once again, figures vary dramatically according to job title. Only 4% of partners and 6% of those in tax are actively jobseeking, compared to 15% of employees in audit and a whopping 20% in payroll.

The survey results also quash the belief that younger employers are more fickle and less committed to their jobs. There is no evidence so suggest that more accountants under 25 are looking to move on than their older and hopefully wiser colleagues.

There are other reasons to suggest that accountants’ job satisfaction is in a pretty healthy state. Generally speaking, employers seem to be doing a good job of engaging staff and making them feel part of the bigger picture. Overall, 67% of respondents feel personally involved in their company’s future development.

That said, passive job seeking is rife in today’s employment market – a good reason why employers can’t afford to take their eye off the ball. You may have managed to reel in some great candidates, but retaining them is an ongoing battle. As Albert Ellis, chief executive of recruitment company Harvey Nash, is fond of saying: ‘Brand is king. A company that looks after its people, rewards staff well and has a good reputation will succeed.’

4 - average number of companies worked for so far

But among those respondents either actively or passively seeking a new job, the reasons motivating them are surprisingly consistent. Top of the wish list is better career development potential (32%), followed by a pay increase (24%), improved work-life balance (22%) and increased responsibility (12%). The under 25s are more likely to cite ‘pay increase’ as their top reason for looking elsewhere.

In contrast, respondents aged between 46 and 55 are more likely to rank improved work-life balance as the biggest driver for contacting recruiters. And partners in practice seem to be feeling the strain of the long-hours culture. A staggering 43% cited work-life balance as the main reason why they are looking to move on.

Fortunately, two-thirds of accountants have access to their personal email account at work, so sending a discreet email to your friendly headhunter shouldn’t prove too difficult.

A word of warning before hitting the ‘send’ button from your work email address – one in five respondents to the survey are worried that their email communications are being monitored by their company. Only 3% are very worried about the trend towards email monitoring, which admittedly leaves 47% who couldn’t care less about any potential digital surveillance by their employer.

Accounting scandals à la Enron may have succeeded in changing the perception of the role of accountants – for some they have made it more glamourous, with visions of offshore bank accounts and second homes in the Caribbean, for others they have merely highlighted the fact that accountants are just as likely as any other employees to commit fraud or break the business rules.

60% say accountancy discriminates against over 50s

Just over half of respondents say they would not report a colleague for misusing email, compared with the 47% who would. But finance directors are much more likely to have a moral conscience about any misuse of company systems – three quarters of them would report a colleague for inappropriate use of email.

Entering a different league of bad behaviour, only 1% of respondents admit to deliberately emailing intellectual property or commercially sensitive information outside the organisation without authorisation, rising to 2% among those scallywags in audit.

Guaranteeing that a UK Enron won’t happen is impossible, but at least if the UK’s accountants are maliciously scheming to plot a massive fraud, perhaps we should take some consolation in the fact that, at least they’re doing it discretely and not telling us.

With the UK, and London in particular, still basking in the glory of the 2012 Olympic bid win, respondents to the survey don’t appear overly excited about the implications for business of the event. That said, almost one in 10 respondents think the financial impact of the games will be very favourable to their business, and a further 21% say it will benefit them financially.

Perhaps not surprisingly, respondents in London are noticeably more optimistic about the financial rewards their business will see as a result.

Meanwhile, accountants are understandably less upbeat about the threat of terrorism, with 27% agreeing that it has had a significant impact on London’s attractiveness as a business hub. Overall, just 1% of respondents go as far as to describing the impact as ‘devastating’ although among partners, that figure rises to 6%.

6% of accountants have taken part in a bungee jump

To wind down from the pressures of daily life, accountants are actually quite adventurous – distancing themselves from their stuffy, risk-averse image. There’s certainly more to the humble beancounter than meets the eye, with 6% of accountants having already done a bungee jump and a further 11% saying they would like to in the future.

Fewer may have done a sky dive, but 17% have it on their list of things to do. And almost one in five has already been mountaineering, with a further 16% aspiring to don crampons and see what all the fuss is about.

Today’s accountants certainly don’t appear to be inspired by politicians, particularly those currently at the helm of government.

The number of accountants who admire Margaret Thatcher – 14% – is more than the combined total for those who pick Tony Blair or Gordon Brown.

At least Blair should take some comfort from that fact that the iron lady doesn’t come close to either Lance Armstrong (28%) or Richard Branson in the popularity stakes. Perhaps the scandals of the last few years have succeeded in making our accountants recognise the benefits of a well-rounded personality. After all, all work and no play…

For more, see www.accountancyage.com/careers

Who earns what...

The highest paid partner
Name: John Connolly
Title: Chief executive
Organisation: Deloitte
Appointed: 2003
Total pay packet: £3.6m

The highest paid FD
Name: Peter Clarke
Title: Finance director and company secretary
Company: Man Group
Appointed: 1993
Salary: £310,000
Benefits: £49,000
Bonus: £2m
Total: £2.6m

The watchdog
Name: Steve Bundred
Title: Chief executive
Company: Audit Commission
Appointed: 1 September, 2003
Salary: £182,000
Performance related pay: £13,000
Total: £195,000

The Institute man
Name: Eric Anstee
Title: Chief executive
Organisation: ICAEW
Appointed: September 2003
Salary: £300,000
Bonus: £53,000
Total: £353,000

The public sector FD
Name: Zarin Patel
Title: Finance director
Organisation: BBC
Appointed: 1 January, 2005
Salary: £59,000
Benefits: £3,000
Bonus: £10,000
Total: £72,000 (based on year to 31 March 2005)