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Public Practice Accounting Firms Face Skills Time Bomb

Public Practice Accounting Firms Face Skills Time Bomb

82% of senior employees could move on within one year unless they are given pay and bonus assurances

Research released today has identified the full extent to which the people and cost strategies adopted by Public Practice firms during the recession have damaged employee satisfaction, confidence and loyalty.  The study, conducted by specialist City recruitment consultancy, Definitive Consulting, polled senior executives across the spectrum of firms and found a clear distinction between firms’ strategies at the height of the recession, and those in play today.

Employees are generally positive when it comes to the strategies firms employed at the height of the recession:

65% felt their employer had been successful in retaining key staff

Firms learned the lessons of 2001 and the subsequent skills shortage. They used a mix of tactics - including pay (62%) and bonus freezes (34%), secondments (38%) and long term leave on reduced pay (14%) - to cut costs, rather than relying solely on redundancy.

However, now that the damping effects of recession and job insecurity are greatly diminished, patience is wearing thin:

Just 9% of those polled felt their employer had been & lsquo;very successful’ at keeping staff happy and engaged post recession

Only 8% were & lsquo;very confident’ that in their employers ability to make the right people decisions during a recovery

63% feel that their employers are reacting to circumstances (e.g. huge counter-offers to encourage the withdrawal of resignations) rather than following a clear plan when it comes to retaining people post-recession

82% said they would move on to a new employer within a year, without the assurance of a pay rise and bonus (of them, 43% will leave within six months, and 22% will leave & lsquo;immediately’)

Overall, employee satisfaction has fallen by 28%, from a high of 7/10 prior to the recession, to 5/10 today.

Commenting on the findings, Darren James, managing director at Definitive Consulting, said: “On the positive side, it is clear that firms have learned the lessons of 2001-2003, when mass redundancies during the post-911 slowdown eventually precipitated a serious skills shortage and, as a result, massive wage inflation. 

“However, it is also clear there are still lessons to learn.   The more strategic approach appears to have been limited to the recessionary period, rather than extending through to the recovery, when managing employee expectation was always going to be a key concern.  The fact that so many people appear ready to jump ship should be a cause for real concern, and is a situation that employers need to take seriously if they are to stabilise the situation without adding millions to their staff costs overnight.”

This risk is compounded by an apparent need to recruit new skills, if firms are to take advantage of growth opportunities:

90% said bringing in new skills was very/quite important

According to the research a failure to do so would:

Limit a firm’s ability to grow (66%)

Affect competitiveness (60%)

Further damage staff morale (56%)

James concluded: “Some recruiters will see an opportunity to make a quick buck, moving dis-satisfied people around to help firms plug short terms gaps.  But I would caution anyone tempted to move purely for the sake of a huge pay rise to think twice.  At the executive level, every move has to be part of a long-term career strategy.  Using circumstances rather than merit to gain an unsustainable package now would be akin to drinking from a poison chalice when it comes to future career opportunities.

“I would urge anyone thinking about moving purely for financial reasons to seek proper advice, even if that advice is to stay where they are for the sake of their long term career.”

The full findings from this research are detail in a report entitled Public practice accounting, recession and people strategies.  Unintended consequences and lessons learnt.

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