earning curve 2017 |...

Earning Curve 2017 | Accounting

Barden - career partners to the Accounting, Finance & Tax communities in Ireland. Barden.ie

Looking at Qualified Accountant Rewardsthrough a different lens

Ed Heffernan Sarah Murphy Partner - Barden Manager - Barden(m) 086 2098701 (m) 087 7699265(e) [email protected] (e) [email protected]


Earning Curve is a bespoke salary guide created by Barden for the accounting, finance & tax community in Ireland. This issue is specifically focused on reward structures for qualified accountants.

Section 2 looks at salaries across 3 levels (0-1, 1-2 and 2-3 years' PQE), 5 keyorganisational structures and across 3 key activities (financial accounting, financial analysis and internal audit).

Section 3 looks at the more complex salary landscape beyond 3 years' PQE and aims to arm you with tools to help understand the variables at play. It stops short of offering vanilla numbers but provides you with the questions you need to answer to properly benchmark a salary with a 3rd party.

Section 4 introduces the Barden Career Model in the context of salaries.

Earning Curve offers you a different lens through which to view salaries for qualified accountants. For specific salary advice for you or your team please contact Barden.

Our experience has taught us that salaries are not just a product of years' PQE and job title, but are heavily influenced by other factors that add context. Key, in terms of context, is the nature of the organisational structure in which a role operates and the fundamental focus of the role itself. The Accountancy Ireland & Barden Career Guide 2017 goes into these facts in more detail. For a full understanding you can download the guide for free here >>>

Section 1 introduces Recruitment Economics – the Barden perspective on the employment market for accountants in Ireland.

http://barden.ie/sites/default/files/Career_Guide_2017_LR.pdf

Recruitment Economics - The Barden Perspective


DemandforTalent SupplyofTalentTransac'onal

PartQualified

RecentlyQualified

Management

Transac'onal

PartQualified

RecentlyQualified

Management

Senior ManagementSenior Management

Section 1

“The fundamentals of supply and demand apply as readily to the jobs market at it does to any other market” - Ed Heffernan

There was a definite imbalance in the jobs market for accounting professionals in 2016. This imbalance is expected to continue well into 2017.

Let the blue triangle represent the demand for accounting professionals in Ireland. At the base we have the transactional roles (AP/AR etc), moving

to part qualified roles, recently qualified roles and then management and senior management roles. Demand for talent today (as it almost always has) mirrors the structure of a typical accounting team. Less roles at the top, less demand at the top. More roles at the base, more demand at the base.

Let the grey triangle represent the supply of talent. Almost completely inverted with demand for talent. Far less supply at the base and far more supply at the top - an imbalance. Over supply and under demand at the senior end and under supply and over demand at the more junior end.

3 KEY REASONS FOR THE IMBALANCE

Recruitment Economics - The Barden Perspective


DemandforTalent

SupplyofTalent

Section 1

This translates into high competition for talent from graduate level to circa the 2/3 years PQE level – a candidate driven market resulting in an upward pressure on salaries. Conversely less demand at the senior end resulted in a company driven market and a downward pressure on salaries.

1. FDI had held up tremendously in recent years however the SME market has not even come close to recovering and still remains very inconsistent. The subsequent lack of senior finance roles in the SME space has had a significant knock on to the overall senior jobs market.

2. Lower graduate intakes to the accounting profession in 2009/10/11/12 lead to less qualified accountants in 2012/13/14/15/16. This, coupled with an increase in the volume and duration of “gap years” among recently qualified accountants, has significantly impacted the availability of talent at this level.

“The current imbalance will take time to correct – higher intakes into the profession and growth in the SME space will be critical to this correction”- Ed Heffernan

3. There has been a general pick up in employment in Ireland –that is undeniable. But more snr people typically cost more. Very senior people are almost capex for a business. In uncertain times companies hold off making significant investments. Hence companies are less likely to invest in more senior accountants.

1st Move after Training Contract

Financial Accountant

Financial Analyst

Internal Audit

1 Year PQE Industry/FS


Financial Analyst

Internal Audit

2-3 Years PQE (Industry/FS)


Financial Analyst

Internal Audit

SME Indigenous

45-48K

45-48K

n/a

48-50K

48-50K

n/a

50-55K

50-55K

n/a

Strategic Business Unit

50-52K

50-52K

n/a

53-58K

53-58K

53-58K

58-62.5K

58-62.5K

n/a

Large Indigenous

50-52K

50-52K

50-52K

53-55K

53-55K

53-57K

55-62.5K

55-62.5K

60-65K

Group Function

52-55K

52-55K

52-55K

55-60K

55-60K

55-60K

60-67K

60-67K

60-70K

Qualified Accountants | 0-3 years PQE

Shared Service Centre

50-52K

50-52K

50-55K

53-58K

53-58K

53-58K

58-62K

58-62K

60-65K


Section 2

Qualified Accountants | 0-3 years PQE


FACTORS THAT ADD A PREMIUM TO BASE SALARIES AT THIS LEVEL, INCLUDE:

• People management 10-20%

• Second European Language (in use) 5-10%

• Travel 0-5%

• Higher level academics & performance ratings

BASIC SALARY IS ONLY THE BEGINNING – IT IS ALL ABOUT TOTAL COMPENSATION:

Section 2

“To learn more about organisational structures, job titles and context click here >>> to download your free copy of the Accountancy Ireland & Barden Career Guide 2017 - it is packed full of great advice and insights that will help you in salary negotiationsand much much more!”

Total compensation = Base + Other Peripherals (“the package”). Basic salary is only a starting point. Other peripherals can include a bonus, healthcare, defined contribution pension %, share options/RSU’s and less obvious elements such as subsidised canteen, gym membership, annual leave, subs and health checks. Salary negotiations should always look at total compensation rather than at base salary in isolation. In general, larger more structured companies will have a more peripherals in place than smaller companies.

EXTRINSIC V’S INTRINSIC REWARD: Extrinsic reward refers to total compensation – monetary reward. Intrinsic reward is a little more complex and does not have a monetary value. Examples of intrinsic rewards include 1) A feeling of purpose 2) Satisfaction at a job well done 3) Feeling valued in your role 4) Feeling you are part of something 5) A feeling of work/life balance 6) Opportunity for progression.

Today, for many, extrinsic reward is viewed as a hygiene factor – expected to be in place, absence demotivates, presence does not motivate (for long). Intrinsic reward is where companies are differentiating themselves – attracting better people and retaining better people.

“Intrinsic reward is where the war for talent will be waged in 2017.”- Ed Heffernan


Qualified Accountants | 4 years PQE and beyond


Section 3

“Salary benchmarking should be done in terms of the needs/value of the role, not on the years of experience the person currently performing the role” - Sarah Murphy

1. How big is my business in terms of people, revenue and geographical reach?2. Am I involved in cost centre or revenue generating activity?3. How big is my team and how many are qualifed accountants?4. What type organisational structure do I sit in?

Most salary guides will attempt a catch all – values on basic salaries for accountants at all levels and locations. Not Barden. Why? Because we know that after 3 years PQE things become a little more complicated. People’s priorities change, some people advance while others are content to stay at the same level. The organisational structure you sit in, the industry, the activity in your role, level of travel, profitability of company and a whole myriad of other factors come into play. To understand if you are being compensated correctly for the value of your time, the first step is to define the context of

your role by asking yourself the following questions:

The answers to the above questions will differentiate one financial controller from another, one CFO from the next and help you to understand where your role sits in the context of the wider environment. Armed with the answers to these questions you then need to ask a specialist accounting recruiter the following question: “How much would I have to pay if I were to recruit for my role externally?” This approach will ensure that you get an accurate, objective opinion on the value of your role and will arm you with the right language for your annual review. You can also use this approach to benchmark salaries for people on your team.


Section 4The Barden Career Model

Step 2: Your near environment contains companies and roles that have something in common with your centre. For example if you audited a lot of food companies then the food industry would be in your near environment. Likewise with the audit of group functions or restructuring of property companies, with US GAAP or IFRS exposure, with small vs large companies and so on. Tis is not a purely linear process and you need to use your imagination to populate your near environment. Your far environment contains companies and roles that have less in common with your centre.Step 3: You model has two lines – your access curve and your learning curve. Your access curve represents the “perception” of your ability to do a job compared to the other person (which is pretty much the same as your chances of getting that job). Your access curve begins to dip as you move away from your centre. Your learning curve represents the “perception” of the amount of learning there will be for you in a given job (how much a company will need to invest in your to geta return). Your learning curve begins to ascend as you move away from your centre.

By properly using the Barden Career Model you will be able to look your salary (and the salary of your team) though a very different lens. For more on this and other strategic tools to assess your accounting career click here >>>> to download your free copy of the Accountancy Ireland & Barden Career Guide 2017.

The Barden Career Model is a robust, strategic career tool designed specifically for accountants. The model can be used to understand the context of your experience, how this reflects on the external market and, critically how you should be compensated for the value of your time. The following, basic steps/principles apply in the Barden Career Model:Step 1: Let the centre of your circle represent the company and role in which you will be “perceived”to add the most value and hence you will be compensated most for the value of your time (paid more!). “Perceived” is key – this is not just about you. It is about how a hiring manager will look at your experience compared to the “other guy”.

Your salary and the Barden Career Model: The closer to your centre a role is the more you should be paid and the less you will learn. The further from your centre a role is the less you should be paid andthe more you will learn.


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