Poaching for personalities

Poaching for personalities

Finding new and talented staff is never easy, so why wait for them tocome to you? Sarah Perrin looks at the trend among firms for poaching eachother's key personnel

Accountancy might once have been called a gentlemanly profession. But times have changed. Competition drives the market and firms are employing all the tricks of the trade to stay ahead. Poaching staff from rivals, though still comparatively rare and even more rarely acknowledged, has become one route to an easy score in the fee-winning game.

That individuals move from one firm to another is not particularly surprising.

Staff looking for a fresh environment, a chance in a new specialism or a faster promotion have always been prepared to switch. But what has started to happen now is the more damaging scenario of an entire team packing up its pencils and heading across the street to join the competition.

Accountants are not leading the way in this cut-throat trend. Poaching has long been the way of life in the world of the investment banker. Deutsche Morgan Grenfell has triggered cries of outrage in the City with its aggressive hiring policy.

Deutsche recently picked off two senior members of the UK equities and research teams at Swiss banking group UBS. In June, Deutsche hired around 50 former analysts, sales staff and traders from New York and Latin America formerly working for ING Baring. In the middle of that month a Dutch financial services firm swiped six members of the London equity desk of MeesPierson, the merchant bank arm of ABN AMRO.

Vulnerable firms

Now, even senior partners in the larger accountancy firms are feeling the tremors of fear rippling down their spines. While everyone knows that merchant bankers are a different breed from accountants, how different are they really?

Not very, is the answer. In the last nine months, two cases of mass defections of staff leaping from one firm to another have hit the accountancy headlines.

In November 1995, six consulting partners and over 90 staff switched from Coopers & Lybrand’s Spanish firm to rival Ernst & Young. Coopers was so incensed at the loss of around 40% of its consulting staff that it won an injunction in a Madrid court preventing the partners from working for their new firm for six months. It is also seeking compensation.

Back in the UK, Arthur Andersen scored over Robson Rhodes when it lured away the smaller firm’s national tax investigation head Bill Docherty.

So strong was the sense of team spirit between Docherty and his former staff that almost all moved along with him. Those that stayed were not directly part of the Docherty team anyway, but worked in a subsidiary area of PAYE. Robson Rhodes was left to rebuild its investigation unit from scratch.

Now settled in his new office as a partner and head of Andersen’s tax investigation practice and looking to recruit more staff, Docherty speaks candidly of how he came to move firms. Andersens approached him directly, he says. After some months of ‘gentle discussion’, terms were agreed and he gave Robson Rhodes the necessary six months’ notice.

Events moved rapidly. Within around 48 hours of learning of Docherty’s impending departure, the Robson Rhodes team had contacted Andersens to ask if the firm was hiring. Docherty stresses he played no part in tempting his former colleagues away with him. He says: ‘Andersens made no approach to them. They approached Andersens.’

Such mass moves rarely hit the headlines. But they are likely to become more common, partly because of the increase in dynamic personalities in the profession. Docherty says he senses the emergence of more ‘characters’, challenging the ‘boring accountant’ image and more readily acknowledged as ‘leaders’. He says: ‘In the past, the main thing was to be grey, be anonymous. That’s changing. And the fact that the accountancy profession is becoming much more commercial means we will see leaders moving and their teams following just naturally.’

Group risks

Team-building carries with it the risk of a mass wipe-out of a unit. But it’s a risk that must be taken. As Docherty puts it: ‘If you have a strong team, you will make superb profits.’

A recent example of a team move, though not strictly between competing firms, occurred when Isobel Sharp, technical guru at Binder Hamlyn, moved over to become a technical partner at Arthur Andersen after the two firms merged. Andersens recognised the quality Sharp had to offer. And when she uprooted to set up camp in Surrey Street, the rest of her team, built up over many years, went with her.

The relocation was apparently friendly. Poaching from a competitor clearly is not. Docherty says: ‘In specialist areas we are likely to see more of this. Accountancy firms will be looking for teams to build their growth.’ Many areas are susceptible to mass moves, whether it’s tax, corporate finance or insolvency. Firms that are weak in any area or seeking to build a specialist unit from scratch can look at established teams in other firms and, simply, as Docherty says, ‘take them out’. He himself admits: ‘As a team leader in Andersens I am alive to that as a threat.’

And belonging to a large firm is no guarantee of security. ‘All firms, medium and large, are vulnerable,’ warns Docherty who, naturally enough, asserts forcibly that he is now ‘rock solid’ at his new home.

A novel form of the group move came to light at the end of June when Coopers & Lybrand announced it had picked up the audit of FTSE-100 company Williams Holdings from Pannell Kerr Forster, and along with it around 30 Pannells staff . It seems they essentially formed a specialist unit largely dedicated to servicing that particular audit. The two firms are still keeping details of the move firmly under wraps, but it is rumoured that Williams insisted it would only switch to Coopers if it could retain the same audit personnel with whom it had developed a relationship.

The smaller audit firm essentially sold the unit containing the staff which it is understood managed some other business apart from the Williams audit. Though the specific circumstances seem highly unusual and therefore unlikely to be repeated, the event shows that large transfers of staff and their fee-earning capacity from one firm to another is possible in any discipline.

In more typical circumstances, bringing in a new team can be done in a variety of ways. Firms can either talk to their desired target directly or act through a headhunter. Direct approaches are easier in specialist worlds such as corporate finance which tend to breed familiarity with the competition. ‘It is a close-knit community. If people go they are likely to go to competitors. I don’t sleep easily at night for fear of knowing my staff get approached periodically. But on the whole we have a happy crew,’ claims John Griffith-Jones, head of corporate finance at KPMG in London.

Bill Morgan, corporate finance partner at Coopers & Lybrand, who is just handing over responsibility for staff in London, says: ‘There is some inter-firm movement. Among our people in London we have at least one person from each of the other big firms. They tend to move because an opportunity hasn’t worked out and they see better pastures in another firm. We recruit in lots of different ways. Some of it is opportunistic, some of it is planned. We are always interested in quality people.’

The head of Chartac recruitment services at the English ICA, John Seear, says that around 50% of job moves happen as a result of direct approaches.

He believes that inter-firm moves are likely to increase as competitors struggle to differentiate themselves.

‘In the past, there has been so much similarity between firms. But now there is so much more specialisation and competitiveness, for example, in the charity sector and forensic accounting, that moves are likely to occur more often in the future.’

The personal touch

Personal relationships are vital in recruiting groups of staff. Mass moves tend to happen when people have built up business relations with each other. They go to conferences together, collaborate on projects, and one day someone offers them more pay to switch sides.

‘I don’t think you’ll find recruiters involved in mass defections,’ says Jonathan Farn of headhunting firm Farn Williams. No one forces staff to switch, he says.’It is not possible for a headhunter or recruitment consultant to poach a candidate from a company. All the headhunter does is to offer an opportunity. It’s up to the candidate to decide whether to take that opportunity.’

Peter Wilson, director of rival headhunters Stanton Chase International, agrees: ‘People use the word poach because they are starting from an attitude of fundamental

prejudice, or lack of understanding. But what we do, if it’s done well, is both effective and legal. If it is done sensitively and professionally, I don’t think you can greet that as a negative process,’ he says.

Recruitment specialists give little away about the requests made of them.

And most are employed to recruit individuals rather than teams. But the latter does happen. One recruiter admitted knowing that some of the Big Six are interested in teams of people. And it is rumoured that another specialist was asked to search out high flyers in the insurance area to man a new team.

Jeff Grout, managing director of recruiters Robert Half International, is candid about the phenomenon: ‘Poaching does go on, in as much as demand for young chartered accountants has probably never been stronger this decade. They are asking us to be much more aggressive in terms of what we do. We have been contacted by Big Six firms who have encouraged us to poach from other Big Six firms, particularly in specialist areas.’

The profession must take much of the blame for the current staff wars.

Firms are paying the price for staff redundancies and cutbacks in graduate recruitment in the early 1990s.

Incentives to stay

So is there anything the firms can do to hold onto their key personnel?

Partners will be tied in to a certain extent by their partnership agreement which will prevent them simply moving to a rival with clients intact.

And notice periods do tend to lengthen with seniority. But enforcing extended gardening leave is not likely to become widespread. BDO Stoy Hayward partner Rupert Merson says: ‘As far as gardening leave is concerned, what goes on in international banking is not necessarily to be taken as an indication of what goes on in a professional accountancy firm.’ And as far as standard staff contracts are concerned, Merson says: ‘We have no such clauses restricting who people go on to work for.’

But the threat of staff losses is prompting firms to look again at how they treat their greatest resource – people. Although high demand pushes up salaries, techniques to keep the troops happy do not centre on pay alone. Secondments into industry or overseas, moves into other departments and even sabbaticals are now on offer.

Andersens’ Docherty stresses the importance of taking care of staff, not just financially. He says: ‘You look after your people as major assets who you treat well. I spend a lot of time making sure people are happy.’ KPMG’s Griffith-Jones agrees: ‘By far the most powerful inducement for people to stay is if they have a career path and interesting work. The moment they are hacked off, it doesn’t matter what you pay them because they will go.’

The right package

But firms hungry for growth and inspired to pick up a team or two from rivals should remember that many things are not as simple as they look.

Firms must be realistic about the packages they offer – only a higher price will cause a professional in a familiar environment to make a leap of faith and switch loyalties. Chartac’s Seear says: ‘It is very, very difficult to lift teams.’ And he adds: ‘People have to be confident and consider how long it will take to build an established function.’

It’s a tough world, not only in the bear pit of investment banking. Recent evidence shows that accountancy is no different. Staff are attracted on a gloves-off basis, there are no non-poaching agreements. There isn’t even a code of honour. So if you start feeling twinges of scruple over dangling bait in front of members of the opposition’s top team, don’t.

Who knows what options your own staff are mulling over as you sleep?

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource