Just as companies operating in the commercial world rely on visionary leadership to keep them competitive, so accountancy firms fish from the same pool when trying to recruit at partner level.
But much of that spring of available talent is slowing to a trickle as companies spread their global reach and it seems that the mid-tier firms are increasingly losing out to the Big Five in their battle to hire the best people.
According to a recent survey by the Confederation of British Industry and Deloitte & Touche, business confidence is on the increase and accountancy firms are expected to recruit more people over the coming year.
Competition to hire the cream of the leadership talent pool has always been stiff but now mid-tier firms are finding themselves struggling to recruit as a result of the spate of recent mergers and rumours of more to come.
Although insiders agree that there is nothing new in these firms’ having a harder time than the more extreme ends of the spectrum, they say that it is now reaching a critical point. ‘It is something that has crept up on us over the last few years but we are finding it really difficult to recruit because nobody is sure who will merge next,’ says a recruitment specialist at a Group A firm.
This year has already seen four firms attempt marriage – BDO Stoy Hayward and Moores Rowland, and Pannell Kerr Forster and Robson Rhodes, though the latter’s wedding plans hit the rocks at the weekend. With audit fees remaining stagnant and the growing importance of specialist expertise and national coverage, it can only be a matter of time before more firms announce their engagements.
Firms may well point to the added benefits that enlarged status brings to their clients, but it seems that the opposite message is being sent out to potential partners, even when joining would be a natural step up the career ladder.
Small accountancy firms have traditionally provided a good feeding ground for recruitment but despite the incentives of money and recognition, there seems to be a growing reluctance among staff to give up their security to become a bigger fish.
Westbury Shotness partner Keith Graham says: ‘I have colleagues in similar firms to ours who have received approaches from larger firms but the price is never right because of what they would give up. They would feel less secure because there have been so many mergers and so many people kicked out.’
He adds that there tends to be much less movement in and out of smaller accountancy firms because of the autonomy afforded to partners who effectively own the business through equity. The sense of security is worth a great deal to them.
The other major source of senior staff is direct from business, and finance directors are a prime target for headhunters. But even this source is proving increasingly problematic.
A Group A search and selection source agrees. ‘It is very hard to get people back into professional practice from commerce,’ he says. ‘Years ago they felt under pressure to do it but you can’t get a finance director accepting unlimited liability today.’
In many ways this trend in the mid-tier market is indicative of a wider industry problem. The skills required of today’s finance directors means that they are much more in tune with market consolidations and how they affect their careers.
Individuals increasingly have to combine an eye for detail with a strong strategic awareness which makes them far more cautious about their next move – whether within the same sector or elsewhere.
‘We see the same issues in commerce, for example in insurance where people are going through the same types of thought processes. They cannot predict what will happen and that will inhibit them from moving. It is not peculiar to Group A firms,’ says KPMG search and selection managing director Colin Grant-Wilson.
Baker Tilly chairman Clive Parritt says finding top-level people has always been difficult simply because of the limited choice of suitable people available.
He denies, however, that his firm is having any specific problems.
He says that it is all about the way the firms present themselves to potential candidates which can avoid the negative image of a sector undergoing major upheavals.
‘You have to ask the question, what is driving a merger? Is it opportunism, weakness or is it that you have identified the direction of the business and need to add on extra units to meet that goal? If it is the latter, you should have less trouble in recruiting,’ Parritt argues.
Robson Rhodes offers a similar view, saying that it has attracted new staff through being able to offer a wider range of opportunities since announcing its merger with Pannell Kerr Forster.
But Group A firms could face an uphill struggle in the near future as the Big Five, which are able to offer a relatively secure environment and more money, look to take on more people.
‘We grew by 50% over the last two years in turnover and we are now in a two-speed economy where professional services firms are growing very fast. So I can well see that Group A are finding it tough,’ says Deloitte & Touche partner George Westropp.
The point is not lost on the professional recruiters. Reed Accountancy Personnel agrees that the middle-tier firms are finding it hard to compete against the Big Five, and director David Callaghan says this extends from trainees to the partners.
‘They are unable to meet the demand for increasingly high salaries and also cannot offer the prestigious experience that comes with working for a Big Five firm. Additionally, there is an air of uncertainty in the profession at the moment due to the number of mergers taking place,’ he says.
Perhaps Group A may have to swallow a bitter pill and start taking the advice of the small firms which are so frequently dismissed in the power chain.
Westbury Shotness says it rarely takes on new people at partner level, preferring to develop expertise and promote from within the firm. That way the firm can foster the loyalty and stability that appear to be so lacking in parts of the sector.
The mid-tier firms are going to have to raid their piggy banks to attract the best as the perceived uncertainties of Group A and a dwindling talent pool increasingly make them, at best, an uncertain bet for any job hunter.
ROOM AT THE TOP OF THE ENGLISH ICA
The English ICA is understood to be suffering its own recruitment problems as it struggles to find someone to take on the role of executive director of its member services division, writes Chris Quick.
Whoever is appointed will become one of three executive directors and will report to secretary general John Collier. Two have already been appointed. Peter Owen, former director-general for schools at the employment department, is heading professional standards, and Brian Chiplin, former director of the Nottingham Business School, is heading education and training.
But the third member of this triumvirate is proving harder to find. It is thought the institute has sacked at least one recruitment agency after it failed to find a suitable candidate.
The new executive director will take charge of ‘member-facing’ activities, including the General Practitioner Board, the Board of Chartered Accountants in Business and technical and communications departments.
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