Back to the old school? – Recent trends in professional services tax recruitment
With the market for experienced tax professionals becoming ever more competitive a number of interesting trends are developing across professional service firms.
Ten years ago professional service firms paid their tax professionals significantly less than their in-house counterparts. Benefits were often non-existent or limited to basic car allowances and private health cover. In a desire to be more competitive and to retain key talent, not only are basic salaries becoming more competitive, but benefits packages too are now much more attractive. Today they will often include bonuses, more generous allowances, insurances and even “flexible” benefits options that give the employee a greater degree of choice on how they shape their remuneration. Family friendly options and other work-life balance choices such as flexible working patterns, sabbaticals, extended leave and childcare vouchers are now all becoming increasingly available and are seen by a lot of firms as a inexpensive way to encourage employee loyalty.
In the war for talent many firms are seeking to further differentiate themselves from their competition by taking this one stage further and developing or enhancing their existing employee “value proposition”. This is where a firm defines what it believes are it’s core employee values and tries to formalise how it will value, support, promote and develop it’s people resource. With the proliferation and increased popularity of employee satisfaction surveys and leagues such as the Sunday Times Best Companies to work for, this is clearly not a “touchy feely” HR initiative but a serious strategy on behalf of firms to develop greater engagement with it’s employees and therefore promote greater loyalty and staff retention as a result.
Many firms take this strategy to the next level and actively seek to make their employees “ambassadors” of the firm and utilise them as a key part of their recruitment strategy. This makes a lot of sense. After all, if a friend or associate seems very happy and recommends their employer to you, you are much more likely to give their firm serious consideration if you are looking to move. Unfortunately with most firms incentivising such employee “referrals” with bounty payments ranging from £5,000 to £20,000 the prospective employee should maybe question the objectivity of such recommendations! This is particularly true if the recommending employee works in different area of the firm. As in all things, it is almost certainly better to seek the advice of an impartial recruitment professional who will be able to talk you through the whole range of options in the market, rather than just one employer. A professional recruiter will also be able to offer unrivalled guidance in all aspects of the process including the tricky area of your offer management. In addition, some of the Big Four firms are even trying to create their own database of candidates developed through recruitment agency submissions and other alumni networks. Clearly this removes the element of candidate choice over what areas and roles they wish to be considered for.
There is also a much greater emphasis by large firms to pro-actively re-deploy their staff around their worldwide offices. This process used to typically take up to 2 years to effect but the current market and the establishment of internal dedicated international mobility teams has now rapidly sped this internal option up to avoid losing talent to external competitors. Increasingly, this “buy back” of candidates who have been offered UK options with competitor firms has meant that the previous 2 year transfer window is often reduced to a couple of months.
There is also an equally interesting trend emerging in terms of which types of candidates are being attracted by these types of professional service firm career propositions. It very much used to be the case that once you had left the profession, that you had pretty much relinquished the prospect of ever being in a client facing role again. However the lure of losing time sheets and the potential for greater commercial involvement seems to be losing some of it’s appeal in the face of the enhanced proposition that many professional service firms now have to offer.
The market has seen a number of senior in-house professionals moving back into practice recently. Initially this appeared to be restricted to selected FS specialists with Ernst & Young being a key protagonist in this for their FS tax practices. However Deloitte have also strengthened their Insurance teams with similar industry expertise as have a number of other Big Four and Top 20 firms particularly in the areas of International Tax and Transfer Pricing. All of these firms sight the “buy side” mindset and industry expertise as well as the obvious transferable skills as their key reasons for targeting in house talent.
Even more specific market sectors eg Telco network providers are in demand from firms looking to strengthen their offering or even develop a new offering to clients in related sectors.
The movement of in-house professionals moving back into practice has also filtered down to lower level tax professionals. So what is prompting this exodus apart from professional service firms’ more aggressive recruitment strategies? Well let’s look at some key facts. Firstly, most in-house tax teams are relatively small and therefore ambitious individuals often have to move organisation every 2-3 years to gain fresh challenges and/or promotion. Hence the benefits of moving back into a practice environment with its’ more structured career progression route become apparent. This coupled with greater technical challenge, working with an enlarged, bright peer group to bounce ideas with and a far greater variety of work all mean that a return to professional services is now often seen as a potentially more attractive proposition amongst those that have sampled in-house life.
Those that go back into practice are typically those that are viewed very much as potential partners and have the confidence and capability to get there.
It is also worth acknowledging that the remuneration of a Senior Director /Partner within professional services often greatly outweighs that of a similarly experienced person within an in-house team. By way of example, a Head of Tax within a lower FTSE 250 business is likely to be on £150-200k package and even major plc’s often will only pay their Head of Tax a package of c£500K By comparison, the average Big Four partner will take home between £500k and £1M
So what of future trends in the market? At Michael Page Taxation, we think these trends are set to continue in the medium term.
The Big Four firms remain keen to recruit in specific areas of marketable need rather than across the board as we have seen in previous boom economic cycles
Wealth management tax specialists are in demand with private banks and those with strong personal tax and trust/estates experience are still highly sought after by the professional services firms. This has been fuelled by the large city bonuses in the investment banks and the current market conditions.
Transfer Pricing remains another key area. Most in-house teams do not have dedicated TP professionals. However outside of the Big four a number of boutique and Group A firms are now actively seeking to take market share from the large players and even undercut the charge out rates of the Big Four to secure this lucrative work.
Despite the shortage of candidates and the changes in remuneration above, most professional services firms are not offering “desperate” salaries. It seems that firms are typically paying salaries commensurate with experience and have probably learned their lessons from the late 90’s to early 00’s where there were massive hikes in financial reward. Also the big firms/teams are often bound by internal salary benchmarking and it is very difficult for them to pay individuals with a certain skill set more than the set banding. Naturally, within some of the smaller firms new directors / partners are paid a premium if they can bring a client base with them. Some of the specialist areas will pay a premium but it isn’t as marked as it could be. There are instances where if the individual is well know by a firm (typically where the firm will be dealing with a client and there is a particularly good individual in the in-house team) that firm will do all they can to secure that individual, This may even include a one off bonus “golden hello” payment.
Whatever your field of tax expertise, it is clear that in the current market, there has never been a better time to re-evaluate your career options with a professional recruitment advisor and potentially re-consider the merits of a career in practice.
Alex Stirling (alexstirling@michaelpage.com) is a manager in Michael Page Taxation and manages the professional services tax team. He has 8 years of tax recruitment experience.
