Insights

April 2022

Tax recruitment is booming

Contributed by Chris Nelson - Tenet Search Chairman

It’s hot, hot, hot!

Recruitment has reached a frenetic pace and, as we enter Q2 2020, shows no signs of letting up. Most commentators believe that the ‘war for talent’ has never been so fierce and that the market is at an all-time high. The tax recruitment market is no exception and is following the trend we see across other job markets in the UK and internationally.

There is no doubt that the pandemic and then the subsequent bounce back in economic growth, which started during the last quarter of 2020, has led to a dislocation in the recruitment market the like of which we have never seen before. This dislocation has taken on many forms to produce a perfect storm or utopia, depending on your point of view. What are the main contributing factors to this boom?

  • Economic collapse followed by a record bounce back in activity and growth.
  • The ‘quit rate’ is at an all-time high.
  • People are leaving our cities in record numbers.
  • Changing work patterns and flexible working are here to stay.

Let us look at the numbers that underpin these observations and go some way to explaining the unprecedented demand for talent.

The UK economy shrank by a record 9.9% in 2020. The contraction was more than twice as much as the previous largest annual fall on record according to the Office for National Statistics. Growth rebounded by 7.5% in 2021, which is another record.

Brits are quitting their jobs at the fastest rate in over decade latest studies show. In the US, where governments produce official data on what they like to call the ‘quit rate’; a record 4.5m (3.4%) people resigned in November 2021, by far the highest ever seen. The drift or is it a stampede away from our major cities has also added to the dislocation in the jobs market we see today. A recent survey by Hamptons showed that over 61,000 people living in London bought homes outside the capital city from January to June 2021. This has accelerated a trend which has seen 3.3m people move away from our cities since 2006. Hamptons’s recent survey highlighted that 44% of Brits feel the impact of coronavirus has made living in the city less appealing, while 24% of Brits no longer commute into the city to work.

The exponential increase in options, created by far less location-led restrictions for employers and employees, will continue to drive volatility. The biggest single reason for the unprecedented volatility in the jobs market is the desire for flexible working and a reboot of the work/life balance.

Lockdowns proved that people could work more flexibly and maintain productivity despite not going into the workplace. Managing one’s life and stress reduction due to not commuting were positive by- products of working from home.

PwC have been at the forefront of flexible working both pre- and post-pandemic. Their approach is explained by Donald McFarlane, Head of Tax Recruitment at PwC:

‘PwC’s strong candidate engagement, agility and speed during the recruitment process reflects the current candidate driven market in Tax. The world of work has changed and candidates appreciate our commitment to facilitating hybrid working. Our firm-wide Employee Value Proposition – ‘The Deal’ is built on two-way flexibility and trust, giving our people more freedom to work in a way that works better for them, but also meets the needs of their teams, the wider firm and our clients.’

The cutting of the cultural umbilical cord to one’s employer caused by months/years of working from home has also contributed to the record quit rate.

Candidates are reassessing their priorities and looking for an optimum work life balance.

Employers have been the most squeezed, particularly large employers with the historic brand value to dictate terms to employees. The leverage has shifted to employees, as start-ups are offering more flexibility and agility, and working from home as a result of COVID, for many people, has created lifestyle benefits they do not want to (and no longer must) give up. I suspect larger organizations will have to become more flexible and old-fashioned management/leadership will have to change over the next few years. As Wilf Cleave Founder of Tenet Search comments:

‘The race for top talent has never been fiercer and currently, candidates are most certainly in the driving seat. How long this will last, who knows. To be competitive in today’s market, companies must focus on strong candidate engagement at interview, run efficient hiring campaigns and offer financial packages that are based on what the role is worth, not just on the candidate’s current earnings. Agile working patterns are expected, and candidates look to join more diverse workforces and progressive organisations. People look at the overall offering from a company, which is more than just a competitive base salary and bonus’

Looking specifically at the tax recruitment market, the competition for talent is fierce for both in-house companies and the accounting profession. For both, acknowledging you are selling is the first hurdle and a prerequisite to successful hiring.

Professional service firms saw the quit rate hit record levels as we came out of lockdown and entered a new phase in early 2021. Since then, there has been a focus on retention with pay increases and promotions accelerating and previous ‘glass ceilings’ shattered in the stampede to reward existing employees. Marisa Williams, Head of Tax & Legal Talent Acquisition at KPMG UK, is someone right in the middle of this competitive market and comments:

‘The jobs market in tax is particularly competitive right now, so it is important that employers promote their value proposition to as wide a talent pool as possible.

‘For us, that’s about articulating the career pathways, opportunities, learning and development we can offer new starters and experienced hires to build an impactful and rewarding career.

‘Equally, the diversity of our workforce is one of our greatest strengths as a team and is incredibly valuable to our business. It brings fresh thinking and different perspectives, which are critical to delivering the best results for clients. This view will be shared by others across the industry which is why there is such an important focus on ensuring that the recruitment process and the candidate experience is inclusive.’

Hiring is non-stop at all levels, with the accent on streamlined and bespoke interview processes enabling candidates to determine their own ‘perfect job’ and working conditions.

For commercial enterprises, marketing the team and ensuring the right culture fit are paramount. Selling the breadth of work and opportunity together with the culture of the business are important steps in engaging candidates who have so many attractive options. In-house departments uniquely can develop candidates beyond the tax/technical, as subjects such as process automation and ‘enterprise employee engagement’ drive the broader agenda. Convincing candidates that they will gain from this broader business exposure, while maintaining technical expertise and managerial responsibility is always a delicate balance and key to attracting top talent.

Someone who knows the challenges of recruiting in today’s market is Mark Feldman, Group Head of Tax at Smiths Group:

‘With market and demographic traits changing, it is more important than ever to recognise the two-way dynamic of recruitment. Of course, from an employer’s perspective, it is as crucial as ever to get the right diverse talent for the role; now, in my view, it is as critical to ensure the candidate is comfortable, they are joining the right team for their career.

‘During the recruitment process at Smiths, we take time to really understand candidates’ motivations and career aspirations: team fit and culture, training and development opportunities, the importance of ESG, tax risk appetite and strategy are all areas that top Millennial and Gen Z candidates want to understand better before committing to a company.

‘I often now start interviews with candidates asking the questions, rather than the reverse. This allows me to differentiate Smiths’ tax team upfront – awards we have won, training programs we sponsor, as well as gaining an insight into what is important for the individual concerned.’

However, as we begin Q2 2022 with inflation at a 30-year high and war raging in Europe, a new landscape stretches out before us. Energy prices and inflation are set to be higher for much longer than predicted a year ago. Supply chains that were repairing after the disruption of COVID have been disrupted by the war in Ukraine. Against this background, an economic slowdown or global recession during the latter half of 2022 cannot be discounted. New challenges and questions face both employers and employees.

Will this bring an abrupt halt to the boom in the jobs market?

Should employers take stock now and concentrate on retention or press ahead recruiting in this fiercely competitive market with salaries rising by up to 20%?

Has the peak time passed for employees to seek new opportunities?

The recruitment market could seem quite different by Q3 2022.

Document downloaded on 26-04-2022 from Croner-i Navigate, the UK’s leading online research service for tax, audit and accounting professionals. Find out more at www.croneri.co.uk or call 0800 231 5199.

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