It’s never been a better time to be an accountant. The financial services
sector is finally coming out of the economic doldrums, and with new reporting
standards and legislation on the way, it really is an employees’ market. But for
some candidates, money alone doesn’t always talk.
The offer of a better work/life balance and more flexibility does, and these
are becoming increasingly important in the financial recruitment market as
companies wise up the value of employee benefits.
Over the past few years, business has begun to respond to the changing
demands of the labour market. Professionals in the UK, while still working the
longest hours in the EU at 44 per week, want to fit their employment around
their lives. They no longer want to live to work, they want to work to live, and
are drawn to companies offering more enlightened employment.
‘People are no longer just jumping into jobs for a base salary as they are
realising that in the medium-to-long term it could be a false economy,’ says
Charles Cotton, the Chartered Institute of Personnel and Development’s adviser
‘They want packages that reflect their individual circumstances, so an
accountant going into a company may not be getting the best financial reward,
but better career development opportunities or the ability to work more
flexibly,’ he says.
Choice and flexibility, Cotton says, are becoming the determining factors
behind employment decisions. The offer of lifestyle or monetary benefits are big
draws for today’s professionals.
Parents, for example, are opting for companies offering home working or
flexi-time, as well as private medical insurance, pension contributions or
critical illness cover. Workers living in rural areas are more likely to favour
a company car or subsidised travel.
Keith Dugdale, director of recruitment at KPMG, says that the promise of a
better work/life balance is worth thousands of pounds to some. ‘Reducing working
hours can have much more value than another £10k on an employee’s salary,’ he
Workers are also willing to move around to secure the right deal. Staff
turnover rates across the financial services sector are traditionally high –
thought to be up to 20% to 25% – but individual companies in this competitive
market keep their figures close to their chest.
Ernst & Young was the only company in the Accountancy Age 2005 Top 50
willing to reveal its turnover rate – a whopping 37%. It’s likely many others
are worse. For mid-tier firms, it is not uncommon for over a third of newly
qualified accountants to leave within a year of joining. Worsening the situation
for firms is the competition for qualified and well-skilled accountants.
The larger companies privately acknowledge that they failed to recruit or
train enough graduates during the leaner years of 2000 and 2001, particularly
now IFRS work is increasing.
Now the economic climate is picking up, around 82% of the Top 50 expect to
raise staff numbers in the coming year to match this year’s 6% growth in fee
income, but they will have to go that extra mile to attract the crème de la
crème or their growth could be constrained.
Across industry, businesses are increasingly turning to rewards and benefits
packages to recruit and retain staff. According to the CIPD, around 50% of
businesses it surveyed this year now offer benefits or rewards in addition to
base salary. One fifth of respondents intended to improve their existing
benefits in 2005, adding new policies rather than phasing any out.
A separate survey from benefits providers Jardine Lloyd Thompson, which
polled small and medium-sized firms, found that nearly half used benefits
schemes to keep up with market rates and another 37% used them purely to attract
and retain staff.
Vicky Summers, employee benefits consultant at PKF, says that with more
companies concerned about recruitment and retention, the interest in employee
benefits schemes has increased significantly. ‘More companies are undertaking
benchmarking exercises and looking at what their competitors are offering.’
For Big Four firm KPMG, its benefits package has become critical to it
remaining in the ‘top quartile’. Dugdale says: ‘We can’t compete with the big
investment banks in terms of salary. But we can in terms of work/life balance so
it’s very important to us.’
But like anything in life, the quality and variety of benefits vary
enormously. The CIPD found that in the top 10 employee benefits were still
rudimentary incentives such as sick pay or 25 days paid leave.
On-site parking, private healthcare, a party at Christmas or tea and coffee
were also listed and are very much fixed, standard benefits, although they are
valuable nonetheless. The gold standards of employee benefits are flexible
packages and, in a tight recruitment market, more companies are turning to these
to keep hold or attract new staff.
A recent survey by human resources firm Hewitt Associates found that, in
nearly half of all the companies it had surveyed, their chief executive officers
were now involved in setting up flexible benefits schemes. An indication of
their importance is that half also reported the close involvement of the finance
Flexible benefits packages provide added extras to staff and most allow them
to pick and choose between the type of benefits package they want. Some, for
example, allow staff to buy extra holidays or provide high street discounts,
childcare vouchers or a company car allowance.
‘In some cases, an annual bonus of £3,000 can be used to buy added benefits
rather than just taking the cash,’ says Cotton.
These pick-and-choose options also allow business to provide more
‘Five or 10 years ago it was all or nothing,’ says Summers. ‘Flexible
benefits schemes offered everything and took tens of thousands of pounds to
implement, meaning that only the larger companies offered them. Now with step
packages and a very computer literate audience, you can tailor it more to
By targeting their schemes, companies can also save on national insurance,
income tax and VAT through efficient payment structures to staff.
Firms are also saving cash by using IT-based schemes to allow staff to tailor
their own reward and benefits packages.
Such ‘total reward statements’ add up the potential financial value of
benefits and also allow staff, once a year, to choose and top up packages. This
could mean extra pension contributions or even high street retail vouchers or
free car insurance. It could also be flexi-time arrangements or homeworking.
As Dugdale explains, flexible benefits packages now form a core part of most
employment negotiations for the Big Four firms. ‘We don’t have a take it or
leave it approach anymore. We get to the offer stage and then start negotiations
and engage with staff on their benefits.’
This year alone, the demands for benefits have already begun to change,
mirroring the types of concerns or lifestyle choices people are taking. The
CIPD’s Cotton says pensions have moved higher up the list, given the recent
publicity about the viability of state pensions, along with childcare vouchers.
‘Eighteen months ago, our pension contribution package was hardly mentioned. Now
it’s a big issue and we promote it and value it,’ adds Dugdale.
But while companies are investing thousands in their benefits schemes, in
some cases they may not be getting the return on investment they had hoped.
Companies are, it appears, rather good at setting up schemes, but less active
when it comes to communicating them to staff or monitoring their success. ‘Many
organisations build business cases for benefits packages and then neglect to put
them within their aims and objectives,’ says Cotton.
The Jardine Lloyd Thompson survey found that over half of respondents did not
even know how much they were spending on their benefits as a percentage of their
overall wage bill, so were unable to convey to staff the true financial worth of
their packages. In fact, most companies appear to depend on their retention
figures for evidence as to whether their flexible benefits or standard benefits
are having the desired effect.
The CIPD, however, urges companies to take a micro and macro view of
monitoring their benefits. Cotton admits it can be difficult to pinpoint the
positive impact of new schemes, but when companies introduce new initiatives
they ‘must have the appropriate bundle of policies and procedures to go with
But, as Dugdale says, a modern employer needs a modern package. ‘I think its
vital in the marketplace to have a flexible benefits package. Whether they
provide an immediate return is hard to quantify. If they didn’t, I think we
would still be doing it.’
Perfecting the package
It takes about 12 months to set up a benefits scheme, according to the
Chartered Institute of Personnel and Development. Most are computerised,
including the stop-based scheme offered by PKF, which is currently working on
introducing its own internal benefits package for staff.
There are three styles of benefits: standard, which include pensions and
holiday entitlement; flexible, which cover a multitude of offers; and voluntary
benefits, often used in partnership with the latter and involve third-party
providers offering services such as health care schemes.
Standard benefits can also include employee share plans, and despite fears
over the impact of IFRS, companies are still offering them with up to 40% of
those surveyed by the CIPD still providing such schemes.
Significantly, 39% of companies still offer final salary pensions, despite
the trend to switch to defined contribution to save cash. Only 23% provide
stakeholder pensions with significant employer contributions.
The type of benefits that appear in existing flexible schemes include
bicycles, cars, dental insurance, discounted services, financial planning,
give-as-you-earn charitable contributions, home phone packages, pensions, life,
assurance and concierge benefits.
RSM Robson Rhodes, ranked number 11 in the Accountancy Age Top 50, offers its
staff private health care insurance. Permanent staff also benefit from personal
accident and business travel insurance providing dependents with three times the
There is also a death in service benefit scheme. Employees also have access
to a 24-hour helpline for support and counselling and a pension scheme in which
the company will also make contributions.
It also offers childcare vouchers and the opportunity to buy extra holidays
and a formal buddy scheme for workers and mentors for new starters.