Just A Cog In The Big 4 Machine

This column was originally published at Going Concern.com on June 9, 2010.

Attrition levels in the Big 4 are at historic lows. People are staying, if they can, because of generally weak prospects outside. Unfortunately, the Big 4 and next tier are still cutting, as evidenced by news on this site and consistent reports on re: The Auditors.

The pace in the external job market for former Big 4 audit and tax professionals is picking up slightly. There are jobs in industry, but it’s best to scout those carefully and make sure you’re “the one” before planning your good-bye party. The CFOs seem to be unable to make up their minds about hiring.

In the latest survey, nine percent of CFOs said they anticipate staff reductions. This is up from eight percent in the prior quarterly survey.

Add it up, and CFOs are more pessimistic now than they were three months ago. Not a recipe for bringing down the nation’s stubbornly high unemployment rate.

This is particularly dreary because the source of this survey, Robert Half, has a vested interest in saying everything is going to be fine. Robert Half is a publicly traded staffing company focusing on accounting and finance temporary placement. Their clients (and their recruits) are accounting and finance professionals. If they admit the market for accounting professionals is in the toilet, they admit their own business outlook is dismal.

In the meantime, the Big 4 are still reeling them in like large mouth bass via the new hire and intern programs.

So let’s get this straight…

The firms are pushing out “experienced” hires via layoffs, poor raises and bonuses, fewer partner promotions and longer hours but continue to make room for lower-cost, new hires from the universities. Unfortunately, “experienced” is not what it used to be.

The industry accounting hire model is based on receiving fully trained Big 4 “experienced ” professionals who leave the firms of their own accord after 4-8 years. They typically already have their CPA, have been through several busy seasons and have led audits. But they may not yet be managers and, therefore, not exorbitantly expensive.

Staff with less than 1 year of experience have been cut as well as terminations made at the pre-partner level. There are reports that firms have asked staff with less than three years of experience to repay CPA signing bonuses and CPA review course subsidies. These young professionals probably don’t have their CPA and they do not have enough experience to be considered “experienced” in the typical way industry had been accustomed.

Industry and government are not prepared to take over where the large public accounting firms have left off and train new graduates. Where are the jobs for someone with only 1-2 years experience in the public accounting? They can’t go to another Big 4 firm since those firms are hiring less and then only new grads or specific expertise at higher levels.

Any ideas? I get lots of mail and blog comments with that question. Do any of the optimistic professors – taking money from the Big 4 for research, endowed chairs, and new curriculum pushes such as for IFRS – want to answer my mailbag once a week?

That would be a great blog feature – Ask a Professor: What Do I Do Now?

The universities continue to allow the large audit firms to come to campus and promote job opportunities, stability, and great working environments. And the magazines still print that accounting firms are best places to work or start your career. The schools still pride themselves on excellent placement statistics. Have the universities reopened placement centers to accounting graduates who’ve been cut with less than three years experience?

During the Sarbanes-Oxley boom, universities responded to the firms need for more and more graduates by bringing in tons of international students. The firms hardly ever sponsor visas anymore. Instead they’re building centers in India and on the African continent to employ them at home. For much, much less. There are active, strong, mandated initiatives at Deloitte and PwC, for example, to use a fixed percentage of offshore staff on every audit.

Don’t be fooled by seemingly stronger hiring and recruiting trends for new graduates and interns. The Big 4 may restart the assembly line before the economy fully recovers because it takes two to three years to polish the part, from an offer of an internship to finished cog ready for full-time work. The firms would rather pull cheaper staff resources in at the new graduate level and work leaner than have an over abundance of expensive experienced staff unassigned and eating into partner payouts.

5 replies
  1. Umair
    Umair says:

    So true francine,As soon the market picks up they are going to move on.Why after completing CA/CPA exams significant amount of employees leave Big 4 because their training contract is over….It’s the Partners & money making game globally.Loyalty counts for nothing.From my experience working in different member firms.


  2. Paul
    Paul says:

    Accounting has always been up or out – just like Big law or investment banking. It has been this way for 100 years and there is a good chance this is the way it needs to be. The tough thing today is that the outside real world market is so poor.

    I am an alumnus of a Big Four, and recently got an email offering an Ipad if we referred an experienced recruit. There is always a shortage of people with hot skills.

  3. Scott
    Scott says:

    Francine: Perhaps one place a layed-off Big 4 accountant with less than 3 years experience could look for a new job would be with a mid-tier or small CPA firm. I’m not sure how the demand looks from those sectors right now, but a former Big 4 staff might have a leg up in getting hired elsewhere in the CPA industry. Of course, to get rehired in the CPA industry the layed-off staffer would need to be able to make a good case that he/she had good capabilities in accounting and that the issues at the Big 4 firm were merely “fit issues” associated with the large-firm environment.

  4. Anonymous
    Anonymous says:

    Thanks for writing this. A number of years ago, I was at a mid-tier for 2 busy seasons, as an intern and an associate, before the axe came down. I ended up at a very small place for 6 months, then went to an advisory shop for 2 years. I’m currently in industry (with both eyes on the exit door). It’s been a bumpy road, and I’ve been very lucky to have few pressing financial obligations. I’ve incorporated recently, to fold together some bookkeeping work I do for some small businesses on the side.

    I can only hope that others like me have been able to land somewhere, and soak up whatever experiences possible. I say to definitely pass the exam and get it out of the way. And do whatever small jobs that land in your direction, on the weekends or evenings, b/c there’s things you’ll learn and people you’ll meet.

    I feel like my training has consisted of a lot of self-initiated research, DIY, and just asking more experienced colleagues. It’s slow, and a rough go at times, but that’s how I get by.

    I wonder how much these partners care about client services and the detriment of inexperienced hires. I suppose for the “big fish” institutional clients where Big 4 services are expected, they just don’t. Too bad for the rest of us public stakeholders.

  5. De Minimis
    De Minimis says:

    I just saw this post and had to chime in. I’m one of those poor souls who was let go from the Big Four after one year. That was in 2009, and I have now been unemployed for the past two years. I have my CPA, but not enough experience to make that work for me. I also don’t have enough experience to consider working on my own. My work experience consisted of preparing returns for venture capital partnerships and that’s about it. Even then, work was hard to find while I was at the Big 4, and I was not chargeable the vast majority of my year there. It was pretty obvious from the beginning that there wasn’t a place for me there.

    I occasionally get an interview at a smaller firm, but the firms here where I’m at [city with virtually no Big 4 presence that I had to move to for family and financial reasons] were hit really hard by the downturn and let a lot of staff go, so I am competing with people with more solid experience than I have.

    I wonder if many in the same boat as I am may never actually get established in this profession. I have more or less resigned myself to the fact that I will probably never use my CPA, and am hoping that I can find an AP/AR or accounting clerk position. But employers see my master’s degree and my Big 4 experience and assume I will just quit them as soon as I find a public accounting job. Seems like I can’t do much to convince them otherwise.

    I’m older and have quite a few responsibilities, so I can’t just up and move, but I’m hoping to be able to do so sometime over the next year or so. Just hope that people out there will understand why I’ve been out of work for so long. I am trying to find temporary work so I can tell them I’ve been temping at various places for the last two years. You do what you have to do.

    Thanks for reading.

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