If there is one group of professionals that should be able to understand how a skills shortage changes the job market from a sellers’ to a buyer’s market, it is accountants.
The current skills deficit means that if you are an accountant moving into practice or industry, you are likely to be able to negotiate a ‘best ever’ package of pay and benefits.
But the skills shortfall is uneven in both practice and industry. In practice, each firm tends to have its own view of the problem. At Ernst & Young, national recruitment director John Cornish says the most acute scarcities are in risk management and computer audit.
But at Robson Rhodes, head of human resources Kathy Hart says: ‘The lack of skilled people probably isn’t as severe as people claim. On the whole, we’re trying to hang on to the staff we’ve got.’
John Selwood, head of the Charter Group Partnership of small and medium-sized practices, says the most pressing problem is that young accountants need better communication and management skills. ‘We need people who can drive a practice forward as well as produce the product,’ he says.
Most agree that the buoyant economy is the root of the ‘problem’. But newly qualifieds are increasingly choosy about the work they do, and it is that pickiness which is putting pressure on some traditional areas.
Some commercial companies note a shortage of accountants willing to move into group reporting roles. Kacey Young, manager of the commerce division at Robert Walters, explains: ‘They see the work as being too close to what they’ve been doing while they were training.’
Similarly, fewer newly qualifieds wish to move into internal auditing roles. ‘Demand for internal auditors is rising, but it isn’t seen as the most attractive area of the profession in which to start,’ adds Young.
Other shortages in segments of the industry are causing pay and benefits to be raised in a bidding war. Well qualified CIMAs are in heavy demand.
Accountancy skills allied with sound commercial acumen is a hot combination that a growing number of companies wish to obtain.
Practice seems to be fighting back, though. A few years ago, there was a lemming-like rush by newly qualifieds away from practice into commerce. Some estimates suggest around 40% of newly qualifieds quit practice. But there are signs that firms may now have stemmed the loss.
Simon Haynes, public practice manager at recruitment consultant FSS Financial, says: ‘Over the last three or four years, practices have made a concerted effort to make sure they retain a lot more of their staff. Indeed, practices are starting to attract people back from commerce, industry and banking.
‘We’re even seeing people who moved out of practice as newly qualifieds returning from commerce as senior managers. They’ve realised the grass isn’t necessarily greener on the other side,’ adds Haynes.
One of the returners is Anne Chapman, an audit manager at KPMG, who quit an international insurance broker to return to practice.
‘I missed the training opportunities and dealing with fellow professionals,’ she says. ‘The big practices are becoming global and widening their different activities. I can try different things and manage my career within a single firm without leaving it.’
So what is behind this practice fightback – and what does it mean in terms of careers? The main practices now seem to recognise the need to offer young accountants a far more attractive career path if they are to hold on to high-flyers.
Yet, although hard cash comes into it, it is not all about money. Much of it is down to the opportunity to pursue a chosen career path and gain a range of experience. ‘Graduates are looking for training, choice and early experience,’ says Cornish. ‘They will trade off money for that.
Choice means not having too rigid a career structure with the ability to choose from options.’
Keeping high-flyers depends on developing them not just through the three-year training contract, but beyond. Robson Rhodes, for example, implements personal development plans designed to help trainees in current roles and in career aspirations. Hart says the development plan approach has cut attrition rates over the last few years. ‘People have not left in the numbers we would have expected, even with the buoyant market.’
The careers fair is holding its own as a marketing vehicle for practice. Ernst & Young also makes a feature of senior career workshops designed to help high-flyers manage future progress. ‘Career management is a good retainer of people,’ Cornish points out.
When it comes to pay and benefits, all the major practices watch each other like hawks. They are keen not to slip behind the salary markers published in regular surveys (see ‘One route to the top’ panel). But there is a wide-spread admission that, in the current climate, these markers provide no more than a baseline. The really good candidates can talk up their total package beyond the marker for their age and experience.
Many of the practices are watching – and wondering – whether they should follow the flexible ‘pay and benefits’ approach that Price Waterhouse introduced in January 1997. The scheme’s devisers believe its mixed package has had a positive effect on its acceptance rate – up from around 50% to 80% for hot skills, according to insider estimates.
The approach ‘uplifts’ basic pay with an extra benefits package to provide a total reward. The uplift ranges from 2% of basic salary for a newly qualified to 17% for a senior thirtysomething manager, and even more above that.
What makes this style of remuneration so intriguing to rivals is that staff can sacrifice up to 20% of their basic pay for additional benefits. Instead of cash, they receive store shopping vouchers. Benefit: the vouchers provide #100-worth of spending for #90.
The system offers a menu of around 20 benefits that include a company car, medical, dental and life insurance, two types of pension, child care, luncheon vouchers and sports club membership.
This flexibility has also gone some way to keeping women with families in the profession. They can sacrifice pay for extra holidays – useful when the kids are home from school. But Paul Sheffrin, the senior manager who brought in PW’s flexible pay and benefits system, says: ‘Overall, we have as many people trading down as trading up for holidays.’
Sheffrin believes the flexible approach sends a signal to potential recruits about the culture of the firm. ‘We also believe that fixed benefits are not appropriate for the very wide variety of people that we employ. We feel that flexible benefits reflect our strategic human resources policies.’
Following its merger with Coopers & Lybrand on 1 July, PW staff will retain existing benefits, and the merged firm aims to harmonise the benefits system by early next year.
With top accounting practices enhancing both career paths and pay and benefits packages, commerce is suddenly finding it more difficult to attract high-flyers. Certainly, there are still plenty of young accountants who want to work in commerce, attracted by a broader range of work and the opportunity to develop commercial experience. With much of industry experiencing a skills shortage, they know they can afford to be choosy.
‘Job candidates are far more particular about what they will consider as career moves,’ says Malcolm Kelly, who specialises in industry and commerce appointments in central London for recruitment consultant Michael Page International.
‘I think accountants coming into industry and commerce want to know they will be challenged,’ he says. ‘They don’t favour jobs which emphasise the traditional role of the accountant. Instead, they see the accountant as more of a commercial manager, liaising with other areas of the business, particularly non-finance areas, in order to have an impact on the growth and profitability of the organisation,’ he adds.
The problem with this is that a high proportion of accountants want to work in sexy businesses such as media and hi-tech, including tele-communications.
These sectors are growing but there are fewer jobs than applicants.
The businesses that experience the greatest shortage of applicants are those with a lower profile or dowdy image, such as traditional metal-bashing manufacturing. With so many jobs around, candidates increasingly hold out for what they want.
Howard Langer is one such accountant, with a clear idea of what he wants out of a career in commerce. He trained in the audit department of the retailing division of PW – with an eye on posts in retailing. He now works as a strategic marketing analysis manager at Superdrug.
The work involves analysing the impact of TV, radio and instore advertising campaigns and looking at issues such as voucher redemption and local marketing initiatives. It is just the kind of job more accountants are looking for, because it is strongly project-based and involves working closely with managers in other disciplines.
Langer says: ‘I am enjoying the work I do here because it is so fast moving, and decisions on which you have an influence today will be rolled out in a short space of time.’
In accountancy, as in the rest of business, what goes around comes around. Those with long memories can still remember the lay-offs in the profession in the early 1990s.
Nobody wants to go back to that, but there are plenty of Big Five partners and finance directors of major corporates who would welcome an easing of the skills shortage – if only to stabilise the upward spiral in salaries.
In the meantime, young accountants climbing the career ladder are spoilt for choice.
ONE ROUTE TO THE TOP
You want to head for the top – so what are the career ingredients that make employers sit up and take notice? How about working for blue-chip companies on big number projects and having a wide range of experience?
Paul Maltby is a high flyer, but he has risen by a less than conventional route. Now a partner in the products and industry group at PwC, Maltby started his career in industry.
Still only 28, he plans to garner global experience in areas such as best practices before moving back into industry, with his eye ultimately on a financial director’s chair.
Maltby had planned the conventional route of university followed by in-practice training into the profession. But instead he joined Rolls Royce Aero Engines in Derby on a three-year Association of Accounting Technicians’ apprenticeship, intending to head for university after a year.
But one year lengthened into two, and then it seemed worth staying on for a third (and the AAT finals) – especially as Rolls Royce offered to pay for a subsequent CIMA day-release course if he passed AAT first time. Which he did.
While he gained experience at Rolls Royce in treasury, asset management and financial planning, he sailed through his CIMA exams. Promotion to an analyst role followed, working on Rolls Royce’s Trent aero project.
One of Maltby’s early tasks was to analyse the financial implications of a #1.5bn contract with Singapore Airlines. ‘I had to put together a 25-year financial plan, based on the number of engines we were selling, the price and discount and other factors. Management looked at the plan assessing it for profit, short-term cash flow and other factors,’ he says.
His time at Rolls Royce made him blase about dealing with big numbers.
When he later landed a job as an engineering accountant, controlling a budget of #65m on a four-weekly reporting cycle, he decided it was time to move on. The repetitive job had become a treadmill.
He believes his consultancy role at PwC – he advises on re-engineering financial processes to adopt best practices – will further his career.
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
In our latest managing partner Q&A looking towards 2017, CVR Global's Richard Toone talks about recruitment, and the potential threat of competition from the legal sector, as key issues for the firm in the coming year
Deloitte to avoid tendering for government contracts over the next six months, to appease Theresa May following consultant's report that painted a less-than-flattering picture of Brexit plans
In our first Q&A looking towards 2017, Menzies senior partner Julie Adams flags up increasing digitisation, aligned with more hands-on consultative services, as the key mix for her practice