Sage Blog

It’s been a tough few years for the accountancy industry. And the toll taken by the recession has had very direct consequences for us all.

In an effort to cope with the economic downturn, we all know that many firms have had to freeze or even cut salaries, with some asking staff to accept reduced working or conditions in a bid to increase efficiency and minimise redundancies.

Steve Porter, Sage Accountants' Division

But now, as tentative recovery begins, accountants are starting to ask when they’ll be rewarded for their loyalty – and those personnel who settled for less will soon be asking for more.

So will they be successful? And will firms face even more difficult decisions in the months to come as a result of previous cost cutting?

What will the effect of the recession have on current staff whose careers have halted during the downturn and how will the new raft of summer graduates find their way in this changing landscape? One thing is for sure, there is no shortage of young people wishing to join the profession.

Almost 10% of all UK university leavers currently pursue a career in accountancy in some shape or form. The vast majority of these still enter the ‘big four’ firms – KMPG, Ernst and Young, PriceWaterhouseCoopers and Deloitte & Touche.

Although there is a small decline – the number of qualified workers employed by the top 50 firms has fallen by about 3,000 or about 5% over the past year – this means there are still almost 57,000 accountants working in the UK.

Access to such a large talent pool has been part of the problem. Having such a large number of staff and graduates to choose from means that in recent years employers have been able to offer reduced salaries as people compete for jobs.

In turn, new joiners have found themselves having to lower their pay expectations, sacrificing financial gain in return for job security.

Those already in position when the recession began have seen salaries frozen or hours shortened. And the introduction of four-day working weeks and optional extended leave have also been seen across the sector, as part of a longer-term strategy to stave off redundancies. Other smaller firms have laid off management staff and replaced them with less experienced, cheaper graduate recruits.

While this type of cost cutting might work well in the short-term, industry experts warn it could prove costly in the long run.

Although it could be argued that having such a large pool of talent to choose from means it is possible to secure strong candidates at reasonable rates, the departure rate of staff in such an environment is likely to be high.

If firms continue to offer non-competitive salaries even when the economic climate begins to improve, personnel will move on – wasting money and time spent on training and career guidance.

With this in mind, firms are urged to resist cutting training in a push to reduce costs.  Some argue that companies who don’t train their staff are far more likely to have problems later on – that those who invest in developing the talents of their employees are much better placed to weather tough times.

In some of the larger companies employers are offering accountancy professionals salaries that will not entice people to move, and those people who do move are more likely to do so with reluctance or because they feel they have no choice.

In order for employers to find and retain the most talented candidates on the market, there needs to be some change in the way they attract talent. Going on the understanding that people will be happy just to have a job isn’t feasible for the future, and there must be more forward thinking in the market.

As soon as there is evidence of an upturn, there will be huge unrest in the market if employees do not feel suitably engaged with employers or feel that they are not gaining enough recognition for their work. And unless comprehensive succession plans are in place, companies may not be prepared for a loss of skills and people when the market moves on.

So as the economic climate continues to change, how we attract, retain and reward staff looks set to be a talking point for some time to come.

Steve Porter, Sage Accountants’ Division