Big bonuses to prevent accountants jumping ship

From The Straits Times
By Jonathan Kwok
Published 16 Aug 2010

THINGS are looking up for accountants when it comes to crunching the numbers in their own pay packet.

As the economic recovery gains pace, accountancy firms and banks are spending top dollar to attract and retain talent.

One key factor is that, in the wake of the financial crisis, there is a greater emphasis on compliance levels at financial institutions - and that means a greater role for accountants, say observers.

Accountancy firms say they are paying more bonuses this year to well-performing staff than last year, with one planning to pay out as much as 75 per cent more in bonuses to deserving staff.

This comes amid warnings by the Institute of Certified Public Accountants of Singapore that as many as 25 per cent more accountants are jumping ship to the financial sector than last year.

Accountants with several years on the job are highly sought after by banks and other financial institutions. Those with three to six years of experience can earn up to 30 per cent more by changing sectors.

Faced with this, the accounting firms are not sitting on their hands.

Three of the Big Four accounting firms - KPMG, PricewaterhouseCoopers (PwC) and Deloitte - recently paid out their bonuses for the financial year.

All three firms reported that the bonuses this year were higher than last year's.

The other big player, Ernst & Young, will pay out bonuses in October. It says the bonus pool this year is more than 75 per cent bigger than last year's.

At Deloitte, staff received an additional bonus of 0.25 month's salary in January. Very good performers got a bonus of up to 3.75 months' salary this year, including the 0.25 month payment.

Mr Loh Oun Hean, Deloitte's human resource director for Singapore and Southeast Asia, said more staff members were paid the higher range of bonuses this year, compared with last year. These bonuses ranged from one to 3.5 months.

In February, Deloitte also increased the basic salary of its professionals to pre-2008 crisis levels and, last month, it raised salaries further for most levels.

PwC human capital partner Deborah Ong said the firm had paid out a half-month bonus to all staff after economic sentiment improved last October. It also boosted the salaries of some staff in February, and again at the annual salary review in June.

The latest round of payouts adds to various other monetary carrots dangled to retain well-performing staff.

Professor Pang Yang Hoong, dean of the School of Accountancy at the Singapore Management University, said graduates she had spoken to indicated that many accounting firms had reverted to pre-crisis 2008 salaries after cutting pay last year.

KPMG managing partner-designate Tham Sai Choy said his firm actively monitors market conditions to keep pay levels competitive.

Ernst & Young paid a special bonus last September as it adjusted its bonus cycle. According to country managing partner Steven Phan, the firm will be increasing its salary scales for each grade in October by up to 6 per cent for some. This is on top of a salary rise given in February.

And RSM Chio Lim, one of the biggest accounting firms outside the Big Four, expects bonuses this year to be slightly better than those last year, which it said was a fairly challenging year. The firm usually pays its annual bonuses in December.

The firm will also be reviewing monthly salaries, which are expected to increase by 5 per cent to 10 per cent.

Among the firms, those staff with a few years of experience find it easiest to jump ship. RSM Chio Lim's senior partner and human resources partner Teo Cheow Tong said that accountants with two to four years of experience are the most likely to leave. 'They either head for commerce or banks. Some go to the Big Four firms.'

KPMG's Mr Tham had similar views. He said people at his firm 'have the most value to the marketplace' when they have built up four years or more of experience.

Deloitte's Mr Loh added that staff with a few years of experience are more likely to quit.

Demand from banks for qualified accountants is coming not just from the growth in the economy, but from a change in the regulatory landscape, HR experts say.

The post-financial crisis world has put a greater emphasis on financial institutions' compliance levels, said Mr Kevin Ong, Towers Watson's director of executive compensation for South-east Asia.

'This fuels demand for accountants by financial institutions, not just in the traditional areas, but also in the risk control and compliance functions.'

He said this explains the flow of accountants to financial institutions, which typically offer higher pay and benefits. And in a bid to retain their professionals, the accounting firms have tried to increase their base salary and bonuses, Mr Ong said.

But accounting firms are not just relying on dollars and cents to retain talent. Many interviewed by The Straits Times have comprehensive career progression and professional training paths, as well as cross-border working opportunities.

Towers Watson's Mr Ong said another area of focus could be work-life balance.

'For example, when accountants settle down with kids, they may wish to have less business travel. So accounting firms may wish to manage travel volume across the different levels in order to balance employee needs against the firm's needs,' he said.

He noted that in the corporate sector, hours are 'long, but not as long as in auditing firms', thus increasing the temptation to jump ship.

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