Every month we host a Managing Partners’ Forum with Foulger Underwood, and in our recent forum, discussed the latest trends in the recruitment market.
We started the call by asking the managing partners one simple question: how are you?
Some of the responses were not a surprise:
Stressful seemed to be a trend.
Stress in the workplace and mental health issues have been in the spotlight more than ever over the last couple of years due to the pandemic and off the back of May’s Mental Health Awareness Week, we wanted to focus on one issue that is causing stress and putting a great deal of pressure on firms and their employees and is certainly keeping both managing partners and partners across the board, up at night.
Our guest speaker was Scott Lavery, Director and recruitment specialist at Austin Rose Associates (ARA). Scott gave the managing partners an update on the recruitment market and the trends and patterns both he and his firm have seen recently. Overall, Scott highlighted the need for firms to drive a more focused strategy that includes recruitment, the need to create a sense of purpose among staff and finding ways to manage an increasingly hybrid workforce who are looking to balance their time between the office and remote locations.
Here are a few of the trends Scott identified that his firm has seen over the past few months:
The market has seen so much recruitment, there is often little time to integrate staff properly. Scott said firms have seen so many people leave and have recruited so many people, they just cannot keep recruiting without giving people time to settle. This is paramount for firms if they wish to keep staff and ease the constant recruitment cycle so have an excellent onboarding strategy.
Firms have moved on from just filling vacancies, Scott said Austin Rose and their competitors have seen an increase in investment in senior people, a greater focus on succession planning, the creation of new service lines, etc. So, ARA is seeing more firms saying they need to recruit a new partner to address succession planning, or that they have a new service line they need a new partner for, who will come in to drive the strategy and growth of this new division. Both of these are really good news as it shows forward planning rather than reactive recruitment.
Scott said it has been difficult to identify an overall trend with salaries over the past few months and said: “We are seeing bigger firms struggle more with the evolving salary situation than others. In larger firms that have annual salary reviews, we are seeing, from a recruitment perspective, both people leaving because salaries have dropped below the market rate and the 6-month differential between when firms are doing the salary review. At that point, firms are ahead of the market and recruiting well, but then they fall behind the market 6-months later when other firms do their salary reviews. This means that firms then struggle to recruit, and they start to lose staff. To counter this, some firms have moved to quarterly reviews, or at least 6-month reviews with a minor quarterly review, just to keep on top of the market.”
Scott and his colleagues at ARA have also seen a real step-up in sign-on bonuses. Scott says: “We are seeing it across the senior market in the top firms who are paying anything between £4k or £7k where firms are behind the market salary for newly qualified joiners, so they say for example, that in September they will be back up at market rate, and in the meantime, the sign-on bonus will fill the gap.”
Firms are looking to use data and automation to improve their audits, which is creating opportunities for new service lines in this area. Scott is seeing this across the larger firms, and across some medium firms as well. Firms are encouraging clients to use data and automation more effectively and this is leading to an increase and external activity, where they are helping clients to identify opportunities to automate or use data more effectively. Scott is sourcing a greater number of project roles that were not seen previously. In the past firms have recruited audit, tech, and data teams separately. Now there is a real drive for auditors that also understand tech, so the audit role then sits between the two. There has also been a drive to recruit for roles in green energy, ESG finance, sustainability finance, etc.
Financial reporting advisory, GAAP conversion, or complex consolidations provide an increased need for more technical accounting staff. This means there is a much broader field that auditors can get qualified into, so it is a completely different sell to an auditor, compared with what it used to be.
Advisory teams in the top firms are taking auditors with a good mix of accounts and audits, who have done some consolidation work, and some IFRS, and are bringing them in to do project work. To avoid the conflicts, some of the work that used to be done alongside audits is now moving elsewhere, and certain firms are building up their experience, so they can say to clients every year – we can do your consolidation, if you are a particularly acquisitive firm we can restructure your group accounts, if you are about to list, we can do your GAAP conversion, we can help you with your corporate finance, or your acquisition finance accounting. This has become so popular that some firms have had to limit their salaries otherwise auditors would be flocking to do that type of work.
This is clearly one trend that is here to stay. Recent headlines of firms offering staff to “work from home on 80% of their pay”, or those looking to implement permanent summer hours or move towards a 4-day week for the same pay are likely to mean that recruiting and retaining talent, particularly for smaller firms, is going to become more of a challenge.
Firms are having to put more effort into recruitment and marketing their firms as a great place to work. They also need to have a clearly defined hybrid working policy.
Since restrictions were lifted, firms have been facing an exodus of employees who are exhausted and overwhelmed, questioning what work means, and thinking through their options. Firms that can offer an excellent employee experience (EX) and can take their employee’s needs and feelings seriously at such a crucial time are likely to fare better in the talent war.
Scott reported that many of his professional services clients are still recruiting heavily. Recruitment is a time and labour-intensive endeavour, even if you have an agency supporting your efforts. Once the staff are on board, integrating them into the team is becoming more of a challenge, particularly if the new recruits are remote. Recruitment takes time and so does inducting staff, and both have a direct impact on time and resources which recruitment is trying to solve.
Staff do want to have a purpose, and they expect the firms they work for to want the same. They want their personal purpose to align, or at the very least they want to be invested in their firms’ purpose.
Therefore, it is more important now than ever before, for firms to define their vision and their purpose and to involve their staff in this process, so they are fully on board. Having a clear and meaningful purpose will help a firm define who they are and help shape future decisions.