Being made partner at a Big Four accountant was once seen as a golden ticket but the honour is being undercut by rampant title inflation, with rival firms offering status instead of hard cash in a war for talent.
EY on Monday became the latest firm to promote thousands of its employees to “partner” without offering them a share of profits, a further dilution of a role once seen as the financial pinnacle of the profession.
“It’s difficult to stop title inflation as [it is] quite a powerful recruitment tool and cheaper than paying properly,” said one salaried partner whose job title has been upgraded at EY.
The “partner” title was traditionally preserved for the senior practitioners who owned and ran accounting firms and shared in the annual profits.
The rank of associate or non-equity partners — senior employees who are paid a salary plus bonus but who do not own the business or share in its profits — has become more widespread in recent years as firms try to incentivise staff to stay without diluting the profit pool shared by equity partners.
The change of titles at EY will affect about 1,800 staff in Europe, the Middle East and India with an unspecified number in other parts of the world. It will not apply in the US or in countries where there are regulatory restrictions on who may be called a “partner”, said a person briefed on the move.
In the UK, EY said it was “elevating” its 679 associate partners’ job titles and would call them “partners” from now on. But they will still earn less than the 844 equity partners who own the UK business and are paid a share of its profits — an average of £749,000 for the year to June 2021.
A person briefed on the title upgrade denied it was misleading because associate partners were “very experienced professionals”. They added that the new job title would help associate partners to win business.
Their pay and conditions will not be affected by their change in title, said people at EY. A partner at a rival firm said EY’s move looked like an attempt to stop salaried partners from being “picked off” by competitors.
Deloitte and KPMG already call their most senior UK employees partners without giving them a share of profits. Elite law firms such as Kirkland & Ellis also use salaried “partner” positions to attract and retain staff without diluting the share of profits received by equity partners
The EY move comes as its equity partners prepare for potential multimillion-dollar windfalls, with the firm’s leadership exploring a once-in-a-generation split of its audit and advisory practices. The 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 M&A and post-pandemic business and technology overhauls.
EY said the title changes would “create career opportunities for EY’s people”. The firm is not due to announce annual pay increases for UK staff until October but a person with knowledge of its plans said PwC’s recent decision to increase salaries by at least 9 per cent for the majority of staff in the UK had “set the market”. “We definitely want to be competitive in the market,” the person said.
EY said on Monday it had promoted 75 staff to equity partner and hired another 45 partners externally in a record round of appointments in the UK.