Retaining good people is the biggest challenge. Turnover rates at the Big Four have historically been high—roughly 15-20% leave each year, compared with as few as 5% in some other industries. The cost of this is “astronomical”, says Jim Wall, Deloitte’s managing director of human resources. Mr Wall reckons that every percentage-point drop in annual turnover rates equates to a saving of $400m-500m.
Even so, the accountant’s goals are more nuanced than simply increasing retention rates. None of the big accountancy firms wants churn rates to fall too far, if only to keep the performance bar high. Mr Wall thinks a 10-12% turnover rate would be about right; Richard Baird, PwC’s people chief, reckons that 12-15% is comfortable. Rather, the Big Four want more of their most talented people to stay.
The biggest staff exodus comes after three years, once recruits have been certified as accountants. Many never intend to stay any longer, aiming instead to parlay their qualifications into a new job and a fatter pay cheque somewhere else. That presents the Big Four with a particular problem: how to identify future stars among the mass of raw recruits. The trouble is, most talent-development programmes start at a later stage in people’s careers.
One strategy is simply to persuade people to stay longer, which provides more time for employers to spot and seduce the best performers. The Big Four can point to research conducted among leavers that many would like to return and that even more wish they had stayed longer. Leaving after six years rather than three, say, means that people tend to go into better jobs with higher pay—which can also help the effectiveness of the alumni network.
Driving talent-management practices deeper into the organisation is the bigger priority, says Tony Osude, of the Association of Chartered Certified Accountants. Talent-spotting has traditionally been left to a middle-management layer of audit supervisors until people get closer to being a partner (partly because employees tend to be invisible to many of their superiors, working as they do in small teams at the offices of the client).
The effect has been to underutilise one of the big organisational advantages that the Big Four have: a large pool of partners who can help coach less experienced staff. That is changing. Rather than seeing junior staff as expendable drones, the Big Four’s talent bosses want partners to view them as future assets. As well as tying reward schemes to the better management of people, the behaviour of partners is being changed in smaller ways. Deloitte’s British firm asks partners to spend a minute with their staff immediately after client meetings to provide feedback so that they fulfil more of a training role.
Changing the way partners behave takes time and will not solve every problem. Audit work is not the world’s most fascinating job and junior staff have limited influence over their assignments. But they can be given a clearer idea of how their career might shape up and greater control over it. Ernst & Young spent years asking partners to identify the skills needed for a gamut of roles, each of which carries a rating from one for beginner to five for a master. Using this, staff will soon be able to view not only a profile of their skills but also what capabilities they need to acquire in order to move up into more senior positions. Many of the training and development services are delivered electronically.