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Broader career paths attract accountancy talent

Author: ICAEW Insights

Published: 01 Nov 2023

With the lure of partner status waning, firms need to think more creatively about recognising individuals with other skills that they rely on for success – particularly if they want to retain them for the long run.

A disproportionate focus in accountancy firms on the ability to generate new business as a route to partner fails to take into consideration the wide range of skills that come together to create a successful firm, an expert is warning.

As the lure of partnership wanes, accountancy firms should develop alternative career paths that recognise the invaluable role of technical experts, relationship builders and those responsible for executing the work. So says Michael Smets, a Professor of Management at University of Oxford’s Saïd Business School, who has spent the past 20 years studying and advising professional service firms and developing partner acceleration programmes.

Smets says corporate models for competitive advantage are often unhelpful in the context of accountancy firms and the dynamics at play in the accountancy sector also mean that success in the context of individuals needs to be framed differently. 

“The assumption is, you get better at being a technical expert and therefore, by implication, you must be able to lead this work as well. But this completely ignores the fact that they are very different skill sets requiring very different personalities and inclinations,” Smets says. 

“There are some technical experts who are world-leading in their field of expertise who simply have no ambition to take on managerial, let alone leadership, responsibilities. And they get quite frustrated by the expectation that they should step into leadership roles.”

Smets says recent job cuts across the Big Four and other global advisory businesses have typically focused on junior or back-office staff. “They should therefore not obscure our view on those who remain in these organisations and take a closer look at their internal career options. This is especially so as outside career options, which are critical to the functioning of the traditional ‘up-or-out’ system, are starting to dwindle.” 

In short, as large accounting firms are letting go of many, how do they make sure they retain the right people – and offer them the right sort of career options to keep them in the long term?

As the accountancy sector grapples with skills shortages and concerns about the attractiveness of the profession, thinking more creatively about career options and firm structure in a way that values these individuals is a consideration of growing importance, Smets says. “Hanging on to the right people requires firms to offer them the right kinds of career perspectives and pathways to retain them for the long run.”

“One of the key problems for professional service firms is that many associates simply no longer want to make partner. And if the major carrot you’re dangling in front of everybody’s nose suddenly doesn’t seem so appetising any more, you need to think very hard about what motivates people to deliver the kind of work that is expected of them. 

“That career typically means very long hours, lots of personal sacrifices, typically a poor work/life balance. I hear time and again from senior associates: ‘Why should I work so hard only to get permission to work even harder?’. Does everyone have to become a partner? Does everyone have to become a leader? Or is there a place for technical experts to remain in the firm even if they don’t step into a revenue-generation business development-type role?”

This is by no means a recent issue, but early attempts to introduce alternative career paths to the partner track have in many cases only served to sharpen the profile of the partner. “What that has implicitly done is relegated all other contributions to the firm to inferior or second rank. In the words of one research participant who had just been promoted to director level, ‘my business card might as well say, not partner’.”

The bitter irony was that associates and mid-career professionals had for a long time been clamouring for these new positions to make space for different kinds of contributions. But when firms created them, few people wanted them. 

Smets says forward-thinking firms have become much more astute and conscientious in giving these roles more recognition and similar value to that of a partner. “What we’re now seeing is that as a technical expert, in some firms you can become partner. And that has elevated all the different contributions much more.” 

There are leadership partners and origination partners, who love being in the market and starting new client relationships and finding new business that they don’t necessarily have to deliver on. And then there are what are sometimes called execution partners. The point is that the firm won’t survive or thrive without the contribution of each of them. 

The symbiotic relationship between the different roles is the key to success, Smets explains. “You can have a business that wins a lot of business but if no one is there to deliver the projects, you won’t have any client retention. If you have great leadership and great execution but nobody wins new business, you’re going to be very profitable for a very short period of time, and then you’re likely to go under or be acquired. And if you have partners who deliver very well or generate business very well but there is no leadership, you will degenerate into a mercenary set of personal siloed fiefdoms.” 

Remuneration is where the rubber hits the road, Smets accepts. Typically, the huge differentials in pay between the business-generating partners have served to undervalue the contributions of those who deliver the work. “This hero worship of the rainmaker ignores the fact that they couldn’t be doing what they are doing if there wasn’t a group of execution partners. I’m not suggesting that they all need to be paid the same, but their contribution and their effort need to be rewarded fairly.”

At a time when employee diversity is a business imperative, recognising the talents of a more diverse group of people will also help with retention, Smets believes. “Fundamentally, if firms say you can only make partner if you’re very sociable, extrovert and always on, that limits the kinds of people who want and are able to become partner.

At the same time, as employees seek more purpose from their work, the notion of primarily celebrating individuals for the amount of money they bring in is increasingly falling flat with younger staff, for whom there is often the stiffest competition. “I’ve had conversations recently where junior staff have said, ‘We don’t want to do this work. And if that means we forego a certain share of revenue, then we’re happy to make that choice.’ That’s something that wouldn’t have happened five or 10 years ago.”

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