PracticeAccounting FirmsSalary survey – Over-worked, under-paid or over the hill

Salary survey - Over-worked, under-paid or over the hill

From the impact of IAS and Higgs/Smith to annual bonuses and the search for the perfect work/life balance, the spring 2004 Accountancy Age/Robert Half Finance & Accounting salary survey provides a unique vision of the state of the profession. We can even reveal what you spend your hard-earned cash on and name your ideal dinner guest.

Link: Analysis: Discrimination is the issue
Link: Comment: Making progress
Link: Big Four chief’s earning power

Salary parity between the sexes has long been a bone of contention – and the accountancy profession is no exception to the rule. Six months after publication of the last survey, the gaping chasm between men and women shows little sign of diminishing.

Almost a quarter (24%) of all female accountants surveyed in the latest study said that they were paid less than £25,000 per year. This is in stark contrast to their male counterparts, with 12% falling into the same pay bracket. Hardly equal, you might think, but perhaps we can take some solace that this was the only salary band showing major gender disparity.

The vast majority of respondents in this bracket (81%) have recently begun their careers and are less than 25 years old, and just under half (47%) are part-qualified.

Compared with the Accountancy Age/Robert Half Finance & Accounting salary survey six months ago, slightly fewer respondents fell into mid-echelon salary bands – 43% say they earn under £36,000 a year, compared with 44% in October 2003 and 45% in April.

Average salary of an accountant – £42k

This slight decline is insignificant compared with the balancing out of pay levels now experienced in UK firms. The number of accountants earning under £42,000 was exactly the same (57%) as last October.

A fifth of finance directors fall into the category of the highest earners, taking home £81,000 or more per year, while workers in credit control (53%) and payroll (42%) are the lowest-paid in the profession.

It also seems that the older and wiser you are within the profession, the more noughts are printed on your monthly pay cheque – that is until you reach your final years before retirement. A staggering 44% of respondents aged 65 or over say they earn less than £25,000 per year. In comparison, the highest proportion of those in the 36-55 age group (17%) earn £43,000-£50,000 per year.

Regionally speaking, the south comes up trumps, considerably and consistently outstripping the north for salaries across all roles and job sectors.

More than one in five northern accountants (22%) fall into the £31,000 to £36,000 per year salary bracket, while one of five Home Counties respondents and 17% of the capital’s workers earn on average between £43,000 and £50,000 per year.

Average gender pay difference – £8.8K

But for all the hard work that the job demands, UK accountants are rewarded with a raft of benefits. Despite the panic over the past 12 months, the main gain experienced throughout the land is inevitably pensions (63%), swiftly followed by healthcare (46%). Bonuses, meanwhile, are by no means a thing of the past with 43% of respondents on the receiving end of results-based remuneration.

This trend is matched across the majority of regions and job roles. The only position exempt from this pattern is that of partner, with one in three citing a company car as their principal perk, in contrast to pensions (20%).

One surprising statistic is that a large proportion of FDs (46%) cite life assurance as their biggest company sweetener, in contrast to just 10% of partners and credit controllers.

But whether this is because they are more valuable to their respective firms, or more paranoid due to their higher than average incomes, we couldn’t possibly say!

Despite being the third most common benefit, just under half (42%) of the 2,953 accountants surveyed say they have received no form of financial reward in addition to salary during the last fiscal year.

Even though more women receive bonuses than men in the £1,000 to £3,000 bracket (28% of women compared to 22% of their male counterparts) the number of men receiving bonuses of £10,000 or more outstrips women by a ratio of three to one. Nine per cent of male respondents hit the bonus jackpot compared with a meagre 3% of women.

Again, perhaps not surprisingly, finance directors emerge at the forefront of the bonus stakes with more than one in five – 22% – on the receiving end of large financial rewards of £10,000 or more. Partners, meanwhile, are last in the queue for this form of remuneration, with 61% receiving no bonuses whatsoever.

The largest benefactors were credit controllers. Despite average basic salaries lagging behind other job sectors (53% of credit controllers earn less than £25,000), one in three also receives additional bonuses of around £1,000.

A regional breakdown once again highlights that southern counties fare better in the bonus stakes. According to the survey, 16% of employees in both Basingstoke and Swindon receive bonuses of between £5,000 and £10,000. Bournemouth boasts the highest proportion of respondents receiving £1,000 bonuses – more than one in five.

Average last salary increase 4.7%

Nottingham proves the exception to the rule with 19% stating they had received bonuses of between £1,000 and £3,000 in the past year.

Despite talk of the economy picking up, any boost in confidence has not been reflected in significant pay rises across the board. In many cases, pay rises struggle to move above inflation. One third of respondents received increases of between 3% and 5% on their last salary reviews – little more than a token gesture, it could be argued.

Faring slightly better, around 30% of respondents gained pay hikes of at least 6% on their last salary review, including the lucky 14% who hit the jackpot with a salary boost of more than 10%.

Overall, only 1% of respondents say they have been forced to take a pay cut in the last year, but respondents from both ends of the pay scale buck the trend – 5% of credit controllers and 3% of finance directors admit they were forced to take a drop in salary in the last 12 months.

Average hours worked every week – 41

Whether they’re simply keen to talk the market up, or are illustrating a sense of wishful thinking, respondents feel the economy is set to pick up in the relatively short term. Although 11% predict slow continued decline over the next six months, and only 1% forecast rapid continued decline, 71% say they expect growth. Only 15% expect the economic situation to remain as it is.

Respondents from Glasgow are the most pessimistic bunch, with 17% predicting slow continued decline, compared with 6% in the City and 7% in London.

Just as diversity hit the big time as the corporate mantra of the noughties, work/life balance is another term widely quoted in many firms’ literature.

But for most employees, a career in accountancy goes hand in hand with long hours. On average, respondents work more than 41 hours every week, although there is a wide disparity between different regions and the various age groups.

A staggering one in five accounting professionals say they work between 46 and 55 hours a week, but only 1% of those under 25 admit to burning the office candle at both ends, compared with a quarter of those between the ages of 36 and 55.

Regionally, the differences are less marked, although our colleagues in the capital are more likely to work over 55 hours a week – 6% of City employees wearily ticked the top box, three times the national average.

In contrast, respondents from Glasgow and Ireland are more likely to work between 25 and 38 hours a week, with one in three adhering to the EU working-time directive, compared with a national average of 24%.

And yet the survey highlights one reason why the long hours culture is so common in the profession. Almost half of respondents say they would not be able to get their job done in an average working week of 38 hours.

Having said that, female respondents are more optimistic about being able to cope with their workloads than their male colleagues – 55% say they can get the job done, compared with 46% of men. Read into that what you will.

Looking to move job in 6-12 months – 46%

Whether work/life balance policies are starting to kick in and have a real impact on the working culture of firms is debatable. But certainly for those starting out in their careers, finding a balance between work and non-work activities is less of an issue than for their older colleagues.

A massive 76% of those under 25 say they could get the job done in an average working week, compared with 46% of men and women between the ages of 36 and 55.

On average, respondents have been in their current job for around four years, although longevity varies dramatically according to job title.

For example, half of partners have been in their current role for at least 10 years. And few of them – just 11% – show signs of wanting to move on within the next year. This compares with an industry average of 46%.

Respondents in the Wolverhampton area are on average entering their fifth year with their current employer. But whether this is due to loyalty or a lack of job opportunities locally, the situation looks set to change dramatically with half of respondents in the region admitting they’re looking to move on in the next six to 12 months.

HR departments beware – payroll employees are the ones with the itchiest feet, with 60% expressing a desire to test the water elsewhere, closely followed by accountants (51%) and financial controllers (48%). If their responses are anything to go by, the recruitment market for accountancy professionals looks robust.

And while a desire to earn more money is well up there on the list of motivators to move, a far more common reason is the desire for better career development (60%) and increased responsibility (30%). Around a third of respondents (and 50% of respondents from the Leicester region) want an improved work/life balance.

A not insignificant number – 13% – say they have wanted to move for a while, but are put off by the state of the economy.

With all the pressures of work, it’s a wonder that many respondents have a chance to think about spending their hard-earned cash. But when they’re not tied to their desks, the bulk of their spare cash goes into the holiday kitty. Almost half of respondents (and a staggering 83% in Ireland) use money left over from monthly bills to go travelling.

And contrary to some of the (rather unkind) stereotypes surrounding accountants, they come across as a rather outgiong bunch, with eating out and socialising close to the top of the list of purchases (41% and 37% respectively).

Savings and hand-in-hand investments also feature highly.

Believe that IAS will benefit UK PLC – 55%

The compulsory introduction of international accounting standards for listed companies across the EU is less than nine months away, but this survey mirrors recent Accountancy Age research showing there is a startling lack of preparedness from accountants and employers.

More than half of those asked say they have had no training to get ready for 2005, compared with fewer than one in five who had received some instruction. Worryingly, it seems that some do not see this as a problem. In fact, 20% of financial directors and the same proportion of auditors believe IAS will not affect their business, despite UK GAAP’s convergence with the standards.

This train of thought is not widespread. Of those who have not yet received training, 64% feel that some form of preparation is needed before next year. This desire is felt most in the areas of audit and tax, while financial directors and partners feel more comfortable with receiving no training.

In general, the older the respondent, the less worried they are. Scottish accountants, in particular, do not hanker after further education.

Companies also seem highly unconcerned with the impending IAS deadline.

Only 8% say their companies are taking on more people to deal with the conversion process. The highest numbers for employing extra staff are in London (11%) and in audit (17%).

Perhaps this lack of concern is unsurprising. When asked what effect the introduction of IAS will have on their organisation, 51% say there will be no effect whatsoever.

Once again financial directors are the most complacent group, with 71% anticipating no impact on them from IAS.

But a quarter of those asked do feel IAS will have a beneficial impact on their business, with the youngest respondents the most optimistic about its benefits. The older the accountant, the less likely they are to see good coming from the new regime. Perhaps past experiences of similar circumstances have somewhat dulled their enthusiasm.

The outlook is much more positive when people are asked about the overall impact of IAS on UK plc, with 55% expecting the changes to bring benefits.

Only 8% think IAS will be harmful. The most hopeful work in audit, and the most pessimistic are partners, and those that work in tax.

Once again, the under 25s are the most optimistic, although those over 56 are also slightly more hopeful of the benefits of IAS.

Would sit next to Jordan at a dinner party – 6%

In the week after the Financial Reporting Council officially assumed new powers, feelings towards the US’s more prescriptive Sarbanes Oxley Act are ambivalent.

The bulk of respondents – 37% – feel the act will have no effect on their organisation, although a slightly higher proportion say they didn’t know.

Only 5% expressed concern that the effect has been detrimental.

But a breakdown by job title highlights some interesting variations, with almost one in five tax professionals expressing concern that Sarbanes-Oxley has harmed their organisation.

Similarly, reactions to the Higgs and Smith governance reforms are generally either positive or pretty neutral. Although 17% of respondents say they will have a positive impact on their business, 42% are unclear as to the true business implications. Few respondents say Higgs and Smith will have a detrimental effect on their operations.

All in all, it’s been a tough old year for the profession – corporate scandals have continued to place accountancy departments under the spotlight, and the move toward international accounting standards has put accountants under yet more pressure.

Perhaps that’s why, given an opportunity to let their hair down at a dinner party, 22% would rather sit next to Nelson Mandela than talk shop with Marta Andreasen, the least popular name on our fantasy party guest list.

What the Big Four chiefs earn:

Kieran poynter
Firm: PricewaterhouseCoopers
Position: Senior partner
Born: 20 AUGUST 1950
Earnings: £1.4m
Appointed: 2000

Nick Land
Firm: Ernst & Young
Position: Chairman
Born: 6 February 1948
Earnings: £1.3m
Appointed: 1995

John Connolly
Firm: Deloitte
Position: Chief Executive
Born: 29 August 1950
Earnings: Unknown – expect c. £2m
Appointed: 2002

Mike Rake
Firm: KPMG
Position: International Chairman
Born: 17 January 1948
Earnings: £2.4m
Appointed: 1999

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