And I’ll begin by resolving the tricky question: which Big Four firm is the
best remunerating for partners and for employees? The results, buried in each of
the firm’s 2006 annual reviews, surprised me.
Let’s go in reverse Top 50 order. Ernst &Young’s average profit per
partner was £686,000 up 27% on 2005. Average staff remuneration rose 6% to
£49,101. At KPMG, average partner profits for the year were £556,000, up 14%.
Employee salaries and bonuses rose 1% to £56,647.
Deloitte has, for a long time, been the most lucrative firm in which to hold
a partnership. And this year’s performance was again impressive. Average partner
profits were £785,000, up 8%. Employees saw their remuneration rise to £50,688,
up 5%. At PricewaterhouseCoopers average profit per partner reached £870,000, up
a staggering 42% on 2005. Its £50,482 average salary was up 2.2%.
So Deloitte partners lose their top spot. And as PwC is fond of pointing out,
it is harder for a number one to grow faster, so those rocketing partner profits
are all the more impressive.
Meanwhile salaries at Deloitte, E&Y and PwC are much of a muchness,
KPMG’s staff are way out in front. No wonder the firm has been boasting how it
paid £80m in bonuses to staff in 2006.
Rather than an interesting but insignificant navel gazing exercise all this
struck me as significant on two fronts. One, it mirrors wider economic trends.
Late last year The Work Foundation revealed well-paying managerial and
professional jobs have grown faster than any other sort of work in the UK over
the last decade so you would expect remuneration to rise accordingly.
And let’s not beat around the bush, it also reflects the widening gap between
executive and staff pay elsewhere. A survey by The Guardian and the Reward
Technology Forum last year showed that directors’ pay in the 2005 financial year
rose 28% across the FTSE 100, in contrast to a rise in average earnings of 3.7%,
which means clients are unlikely to object to the firms’ remuneration
More than that though all this gives is an answer to that perennial question:
What on earth could persuade the next generation of accountants to take on the
risks and responsibilities of partnership?
Damian Wild is editor in chief of Accountancy Age
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