Becoming a partner at a Big Four accounting firm was once seen as a golden ticket, but that honor is being eroded by rampant title inflation, with rival firms offering status rather than cash in the battle for talent.
On Monday, Ernst & Young became the latest firm to promote thousands of employees to “partners” without offering them a profit share, further undercutting a role once seen as the financial pinnacle of the industry.
“It’s hard to stop title inflation because [it is] A pretty powerful recruiting tool, and cheaper than normal pay,” said one salaried partner who has been promoted at EY.
The title of “partner” is traditionally reserved for senior practitioners who own and operate accounting firms and share in annual profits.
In recent years, as companies try to incentivize employees to stay without diluting the profit pool shared by equity partners.
Ernst & Young’s job title change will affect about 1,800 employees in Europe, the Middle East and India, with an undisclosed number in the rest of the world. That doesn’t apply to the U.S. or countries with regulatory restrictions on who might be called a “partner,” one of the people said.
In the UK, Ernst & Young said it was “upgrading” the titles of its 679 partners and would refer to them as “partners” from now on. But they will still earn less than the 844 equity partners who own the UK business and get a share of the profits – Average £749,000 Year ending June 2021.
A person familiar with the title promotion denied it was misleading because the partners were “very experienced professionals”. The new positions will help partners win business, they added.
The Ernst & Young people said their salaries and conditions would not be affected by the change in their titles. A partner at a rival firm said the move by Ernst & Young looked like an attempt to prevent salaried partners from being “picked” by competitors.
Deloitte and KPMG have referred to their most senior British staff as partners without giving them a share of profits. Elite law firm Firms such as Kirkland & Ellis also use salaried “partner” positions to attract and retain employees without diluting the share of profits earned by equity partners
EY’s move comes as its equity partners prepare for a potential multi-million-dollar windfall and the firm’s leadership is exploring A once-in-a-lifetime audit and consulting business split. Separation could raise billions of dollars from outside investors.
Professional services firms have struggled to find enough resources to meet demand as clients seek advice on mergers and acquisitions and post-pandemic business and technology overhauls.
Ernst & Young said the title change will “create career opportunities for Ernst & Young employees”. The company won’t announce an annual pay rise for UK staff until October, but a person familiar with its plans said PwC’s recent decision to raise wages for most UK workers by at least 9% “sets the market” ” . “We absolutely want to be competitive in the market,” the person said.
Ernst & Young said on Monday it had promoted 75 staff to equity partners, made a record round of appointments in the UK and hired another 45 partners externally.