My Thoughts on the Big 4 Trend to Hire School Leavers
What Changes to Academic Entry to the Big 4 in the UK Have Taken Place?
Having worked as Head of Recruitment at Deloitte and KPMG I like to keep track of the movements and trends in the Big 4 firms. If you have been following the Big 4 hiring methods in the UK in recent years, you will be aware of the changing development towards lowering the academic entry requirements into these prestigious professional services firms. This has been in tandem with the British Governemt Apprenticeship intitative and these firms are receiving some compensation for hiring school leavers, under the initative.
PwC, in 2012, decided to use new methods to hire their trainees. They became focussed on assessing the school 'A level' results and instead used criteria to assess if the actual school was a high performing school or not. They determined that an 'A' grade from an elite school was easier to achieve than a ‘B’ grade from an under-performing school. Most of the poor performing schools are state schools in economically challenged areas. This was a massive shout out to underprivileged students to rethink their career aspirations and dream big!
Deloitte, also has their Bright Start programme running in the UK since 2015, which hires school leavers. KPMG have a school leavers apprenticeship too of 5 years duration that started in 2105. Now, EY have been actively promoting their take on a school leaver entry option. They have reduced their entry criteria minimum to 3 A levels at ‘B’ grade. This is all a giant leap forward by the Big 4 firms. It effectively, makes them all equal opportunities employers, for those who can’t afford a college education. All apprentices train for the respective professional qualifications that their division requires. For example, if they are in the Audit division, they get to take the Chartered Accountancy professional exams during their 5 year apprenticeship. Which, on the face of it, is great.
Many companies and international offices of the Big 4 will be watching this development with avid curiosity. But I think there may be a few surprises in store, as the first big wave of apprenticeships finishes the first tenure, across more of the firms next year.
Let’s take their clients, and the employees of their clients. When preparing for a meeting with your external advisors, it is the norm to have a look at the attendees Linked In profiles to try and establish credibility of the person they are meeting and to find common ground. Put yourself in the Clients shoes. You are paying to substantial fee to the Big 4 to do your audit or tax work not to mention consulting fees – Ouch! That fee is based on the understanding that they are going to send in the brightest team to you, whatever the job.
Unfortunately, if their client’s employees are University educated, and for most Plc’s this is often the case in non-admin roles, they are going to make certain assumptions about someone who didn’t go to University and endure the pain that a degree takes to obtain. I don’t think in the immediate short term this is going to sit easy with clients. Change like this is going to take a decade of proven positive results. Even if some of those recruited after leaving school are brighter than their degree educated peers. If the fees are reduced, and the work is of a high standard, this may be easier for a client to accept . I would love to be a fly on the wall in those fee negotiation meetings!
Business Development Concerns
How are these non-college educated trainees going to business develop in future years? College is a fantastic networking hub. If a student really applies themselves to the task, they can leave college with not just a degree, but a vast array of contacts, who will eventually be in decision making positions in their respective companies. Who are they going to invite in to a meeting to tender as their Auditor? Business Development is a lot about who you know, so that you can at least get a meeting to pitch for the business. How are the Big 4 going to enable these people to network efficiently from what could be a standing start? How are they going to make Director, let alone Partner, if they can’t win business?
Does it all Come Down to Money?
My main concern is the elephant in the room – money. Yes, this is a government supported initiative but are any of these firms, and companies, doing away with the need for a college education, going to pay the same salaries, as they have done in the past to college graduates. I think not. I was in Big 4 HR for too long, and am very cynical about this PR stunt. I think, with AI technology advances, it is becoming increasingly easier to execute on audit and tax assignments than it used to be. Clients know this too, as their own accounting software is getting easier to run reports and make filings a doddle. They are querying their bills. I think the status of Accountants is going to decline fast, as AI speeds up.
I think the Big 4 are panicking. The partners, already badly hit in the last recession, and a probable looming Brexit induced recession, have hit upon this as a good idea to cut costs, while hoping to preserve their fees. If Brexit goes ahead, the stringent EU Employment Protection Laws may be dispensed over time, and replaced with a more 'flexible' structure.
Those without a degree are not going to be paid the same. I think the Big 4 sees this as an opportunity to cut their salary bill, and probably by a good margin. Deloitte are paying according to Glassdoor Between £15,029 and £24,000 on their Bright Start programme depending on what year you are in. Considering a starting graduate salary in the Big 4 in London is over €28,500 (much less in regional offices) this is a big difference and a big saving, especially as the work of the school leaver in the last few years on the structured apprenticeship training programme may well be very similar to a 1st year Graduate Trainee. If you look at the comparison between the two programmes kindly shown on EY’s website it is clear that the work is the same.
'Them' and 'Us' Problems
I think it will breed a bit of a ‘them’ and ‘us’ mentality, amongst the trainee intake, with those holding a degree begrudging or worse, looking down on those without one. The degree educated will have the pain of paying off their fees from college for a good many years and they will, secretly, I am sure, think it is very unfair. How are the Big 4 going to recompense them? Promotions and bigger bonuses probably. I know firms are offering bigger interest free loans to graduates and much smaller ones to school leavers.
These non-college trainees will have to have backbone and resilience to prove themselves over and over again not only to their peers but the management, partners and clients. The Big 4 suspects they have resilience and grit in bucket fulls, which they should have, on paper, if they fought their way up in a poor performing school to achieve 3 ‘B’s. But are they generalising?
I will be watching this space closely, as I expect other employers in the corporate sector to roll out similar programmes, regardless of government funding, over the next few years. In particular, because of the lower wage bill. More international offices of the Big 4 are joining in already. I look forward to seeing the results from the first intake of trainees. I hope they ace their CA exams!