ACCOUNTANCY IN THE NORTH: The careers gambit

Demand for recently qualified accountants is booming. Supply, thanks to severe cutbacks in graduate recruitment throughout the long recession, is strictly limited. The inevitable result is that salaries are soaring.

That’s the good news. But what of the prospects for the longer term? What sort of job market will today’s qualifieds have to face when they get to mid-career in five-to-ten years’ time?

The bad news is that graduate recruitment has not been the only victim of the post-boom bust. Delayering has ravaged middle management in virtually every business organisation and, in some sectors, the process is still happening. Having streamlined their structures, companies are in no hurry to increase overheads again, even though the outlook may be brighter and talk is now turning to expansion. More and more organisations are cutting back to a small core of professional managers, relying on a combination of outsourcing and the use of temps and interim managers to enable them to cope.

Increased competition for jobs

If, as it seems, many management jobs have gone forever, it points to a tough time for today’s young accountants when they get into their thirties.

Or perhaps one should say an even tougher time since the pyramid structure of most organisations has always meant that the further up you go, the more people there are competing for each job. It is just that, now there are even fewer jobs at the higher levels, the competition is going to be fiercer than it has ever been before.

What is more, the current salary explosion at newly qualified level may well exacerbate the problem. As Alan Dickinson, managing director of Michael Page Finance, explains, if competition for mid to senior management posts continues to be intense, remuneration at those levels will be held down.

So bigger rewards for newly qualifieds will result in increasingly severe salary compression. Young accountants who exploit the current supply and demand situation to grab lucrative remuneration packages may consequently run into problems a move or two on. They will find it difficult not only to get onto the next rung of the ladder but also to gain any significant financial advantage even if they do succeed in achieving a leg up.

A further factor pushing in the same direction is the fact that, during the recession, many people who would in better times have been expecting promotion simply sat tight, relieved to have a job at all. This has inevitably created a bottleneck of aspirants for career progression which – given the level of oversupply – will take a long time to work itself through.

Job security under threat

But it is not just promotion prospects which have been affected by the events of the last few years. It is the whole question of job security.

While the main victims of delayering have been older accountants – many have been forced into early retirement, careers in interim management or other forms of self-employment – younger accountants have by no means been immune. John Seear, who runs the English ICA’s career counselling and recruitment consultancy arm, Chartac, quotes the case of a young ACA who had been made redundant for the third time in his career – at the tender age of 25.

Jeff Grout, UK managing director of Robert Half International, sees still wider ramifications of recent events. ‘The umbilical cord of trust between employers and employees has been severed irrevocably.’ Grout goes on to explain that prior to the recession larger organisations used the long-term career prospects they could offer as a powerful magnet to attract and retain young accountants. There may not actually have been jobs for life but if you did move on it was likely to be of your own volition and because prospects were better somewhere else.

Redundancy was simply not something that happened to professional people.

You could even expect your employer to share with you the task of planning your career development, helping you both to identify long-term goals and acquire the skills and experience required to achieve them.

One area where this still appears to be true is professional practice where clear milestones mark the path to the top and those with promotion potential are provided with relevant training and experience to help them on their way. In the current situation, it may therefore seem that staying in the profession is an attractive proposition for the young ACA. The reduced numbers coming through as a result of the cutbacks in graduate recruitment, the competition for their services from industry and commerce, and the poaching from other professional partnerships ought surely to guarantee rapid career progression.

Nigel Llewellyn, national director of human resources at Deloitte & Touche, agrees, describing life in the Big Six as a hothouse environment in which young ACAs can develop all the way up to partner at an ever younger age.

However, he warns, the criteria for achieving partnership have become so complex that getting there has never been more difficult.

That, of course, is the problem. If you succeed in becoming a partner, at least in one of the larger firms, you can expect to earn more than all but the top few finance directors in industry and commerce. But, given that the competition is becoming tougher all the time, what if you fail?

The much-discussed career manager role, trumpeted as replacing the old up-or-out mentality, seems to have little substance in reality. Bruce Page, managing director of Douglas Llambias Associates, bluntly confirms ‘the profession hasn’t changed – nor will it’. Seear agrees and explains that senior managers who are not going to make partner simply ‘gum up the works’, blocking the progress of those on the fast track.

If you are not going to make partner, the only alternative may be to move out of professional practice – but the longer you leave that decision, the more difficult it becomes. Two or three years on from passing your finals, you’ll already find the options becoming distinctly limited.

Nor is it necessarily all roses even if you are one of the chosen few.

In the good old days, you could at least assume that, once you achieved partner status, you were made for life. Not any longer though. As the recession reduced both the number of clients and the amount they were willing to pay for their audits, partnership profits took a caning. In many cases, the answer to having a smaller pot was to reduce the number of partners who shared it. The unthinkable suddenly became all too real.

So, although they may come home to roost a little later in your career, the problems in professional partnerships are, in fact, very similar to those in industry and commerce.

Strategy for success

What then can the far-sighted young accountant do to overcome these problems?

To begin with, Page cautions, beware of the dangers of grabbing the job with the highest possible salary right now, without regard for the quality of the experience gained and future prospects.

Advising on what kind of experience you should aim for, Dickinson stresses the vital importance of keeping bang up-to-date with changes in technology.

He also identifies those factors which sort the sheep from the goats at two key steps on the career ladder. First, in order to become a manager you must acquire a high level of interpersonal skills. Then, to achieve the next step – up to director or partner – you must possess the ability to think strategically and participate actively in business development.

Grout follows a similar line. He stresses it is no longer enough just to get the figures out accurately and on time. These days you need to become more of a business manager than an accountant and you will be expected to show how you have added value to the organisations you have been employed in. He also suggests accountants should sometimes consider making lateral career moves, not simply to avoid blockages to progression but also as a way of gaining broader experience which may well pay off in the long run.

It sounds obvious but ambitious accountants have to aim for those companies where prospects are likely to be brightest. Organisations which have been delayering and cutting back to a small core of professional managers may not offer much scope for progression. However, for every action there is a reaction: those to whom they outsource various aspects of their business will need strong financial management and will actually create new posts as they expand to meet the increased demand for their services.

If there’s one thing you have to do above all, that’s take a proactive approach. It is no longer enough to rely on your employer for help in planning your future. Everyone must now take complete responsibility for managing their own career.

The Accountancy Age Guide to Career Development 1997, published on 25 September, is the essential independent guide to opportunities for newly and recently qualified accountants across all major institutes. Topics covered include: a general market overview; a forecast of forthcoming opportunities; and a survey of salaries and job opportunities. The guide will also have sections on practice, business, staying in control, personal finance, and training and MBAs.