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Accounting for Talent

Though CFOs are taking increasingly varied routes to the top, accounting firms remain a key developing ground for the finance chiefs of tomorrow.

June 2008
by Eila Rana/CFO Magazine

David Davies has an impressive pedigree. When CFO Europe recently scoured the CVs of finance chiefs in Europe's top 200 companies, Davies emerged as having worked for two important "academy companies," or firms that produce disproportionately more CFOs than others. (See "Finance factories.") Before his current role as finance chief of OMV, a €20 billion Austrian oil group, Davies spent time at UK industrial gases specialist BOC (now part of Germany's Linde) and Grand Metropolitan, now part of UK drinks group Diageo. But he claims to owe as much of his current success to the two companies where he started his career — accountancy firms Deloitte and PricewaterhouseCoopers. As well as being "an excellent segue from university into the harsh realities of industrial life," for anyone who wants to go into finance — or any other part of business — "the training you receive as a chartered accountant is second to none," Davies says.

More than one-quarter of CFOs at Europe's largest 200 companies spent time at the Big Four (or the Big Five prior to Arthur Andersen's demise). During his three years at Touche Ross — a predecessor to Deloitte, which he joined after graduating from Liverpool University with an economics degree — Davies audited the accounts of large and small companies in a range of sectors, including construction, banking and publishing. This window to the "intricacies and idiosyncrasies" of different corporate environments is something that few companies can offer its employees, Davies says.

Ian Krieger, a senior partner at Deloitte, reckons that the varied work experience also gives trainees a firm grounding in more personal aspects of business, like managing teams and making presentations. "You have to be fairly flexible in terms of what you have to deal with week to week," says Krieger. "That positions you, when you leave, as not just the person who's preparing the monthly management accounts."

Ernst & Young's three-year "Accelerated Leadership Programme" is typical of the development programmes that the Big Four have in place. It was set up in 2005 to put the top 5 percent of recently qualified employees on a fast-track to senior positions and, ultimately, partnership. Participants are selected using psychometric tests. The programme works on a 70:20:10 ratio, with 70 percent of a participant's time spent gaining on-the-job experience, 20 percent on coaching and mentoring and 10 percent on formal training.

Participants' "day job" responsibilities are crafted to challenge them more than would be expected for other employees at a similar stage in their careers. According to Alison Baker, the programme's head, these challenges might include moving a participant up a level ahead of time; sending them on secondment to a client company; or giving them "out of the box experiences," such as "allowing them to use their skills to go and work in emerging markets to help set up a new business in India, for example, or write a business plan for an NGO," says Baker.

On coaching and mentoring, each participant has one-to-one support from a partner or someone on the partnership track. Even UK chairman Mark Otty — a founding sponsor of the programme — mentors one or two participants. They also support each other, typically through "learning groups" which involve around six people getting together to learn a skill — such as coaching, to share their own experiences, and to help each other through problems they might be facing in their day job.

The formal training element includes six modules, each covering different aspects of leadership such as building relationships and developing strategy, all delivered by external experts.

How to justify investing so much in talent when so many see a stint at an accounting firm as a stepping stone to other jobs? If leavers end up working in industry, they're likely to be a future source of new business, notes Charles Macleod, head of resourcing and people management at PricewaterhouseCoopers in the UK. And anyway, it's not necessarily goodbye forever. "By treating them well and staying in touch, we always hope they will come back," says Macleod. After all, that's what he did. After joining PwC straight after graduation, Macleod left for ten years to work with Michael Page, a recruitment company, before returning to the Big Four firm. He says that his time at Michael Page gave him a much better idea of how a medium-sized business works, which has been great intelligence for PwC, where mid-cap firms form a large part of the client base. In fact, representatives from all of the Big Four say "boomerangs" — as people who leave to later return are known — are invaluable resources.

Deloitte's Krieger says boomerang employees are becoming more common. A recent high profile example is Margaret Ewing, who left her role as CFO of BAA, a UK-based airports operator, to return to Deloitte as vice chairman and head of a new advisory unit for finance chiefs in February last year. In E&Y's US practice, around 40 percent of qualified accountants who join the firm from industry originally trained with E&Y, says Baker. PwC's US practice actively encourages partners to recruit boomerangs. "Twenty per cent of experienced hires are supposed to come from alumni," says Macleod. "We haven't gone that far [in the UK] but it might come to it."

Recruiting former employees relies on the strength of corporate alumni programmes. Most Big Four alumni efforts offer members updates on technical and legislative developments via a series of events, presentations and dedicated websites. Alumni are also encouraged to network with each other via the web and also at annual social gatherings. According to E&Y's Baker, "Our partners are still in contact with people that have trained with us and continue to be a sounding board [for them] and provide coaching." For the partners who invest their time, if the leavers eventually return, the payback can be significant. "We're an organisation that a lot of people join relatively early from university. They look at life outside the firm and think that it’s always better," PwC's Macleod explains "Having people go outside, get some experience and come back is a positive message for staff that are still here. It shows that life outside has its challenges."

Eila Rana is a reporter at CFO.

© CFO Publishing Corporation 2008. All rights reserved.