By Adrian Lawrence FCA
The accountancy profession has lived with a known leak for decades. Firms recruit graduates, put them through a three-year training contract, and watch a sizeable share walk out of the door within months of qualifying. It is irritating, it is expensive, and the model absorbs it, because a trainee becomes commercially useful somewhere in year two and the firm recovers its investment before the leaver hands in notice.
That leak is not the problem any more. The problem is that it has moved up a floor.
Across the conversations I have with firms — independents, regional practices and mid-tier offices — the attrition that is causing genuine difficulty is now concentrated at four to six years’ post-qualification experience. Assistant managers and managers. The people who review rather than prepare, who run the client relationships that partners do not personally touch, and who represent several years of accumulated judgement that cannot be replaced by hiring another graduate.
This is a structurally different problem from the one the profession is used to, and a number of firms are still managing it with the old playbook.
Why this layer matters more than the one below it
A practice is a leverage business. Its economics depend on work being done at the lowest grade capable of doing it properly and reviewed at the lowest grade capable of reviewing it properly. The manager layer is where that second function lives.
Lose a trainee and you lose preparation capacity, which is replaceable within a recruitment cycle. Lose a manager and you lose review capacity — and review capacity does not sit idle waiting to be refilled. It migrates upwards, onto partners and senior managers, who then spend their time on work that should cost the firm a third of what their hours are worth. The symptoms show up as partner time disappearing, chargeable rates slipping without anyone changing the rate card, and a steadily lengthening list of jobs sitting in review.
It also breaks the succession arithmetic. The partner pipeline is populated from the manager and senior manager grades. A firm that consistently loses people at four to six years PQE is not just short-handed this year; it has thinned the pool it will be choosing partners from in eight.
What changed
Several things at once, which is why this has crept up on firms rather than arriving as a single event.
The industry comparison got sharper. It has always been possible to earn more in industry than in practice at the same stage. What has changed is the visibility and the gap at this specific grade. A practice manager four years qualified is now routinely looking at Financial Controller roles paying materially more than their current package, with a shorter working year and no busy season. Specialist tax managers face the same arithmetic moving into in-house roles, where the in-house tax manager bands compare favourably with practice at the equivalent grade.
The work got heavier at exactly this level. Audit documentation requirements have expanded considerably under sustained Financial Reporting Council scrutiny, and most of that expansion lands on the people performing and reviewing the file rather than on the partner signing it. The job a manager does today involves more evidencing and more file discipline than the job their predecessor did a decade ago, without a proportionate change in what it pays.
The partner proposition is less obviously worth waiting for. The traditional bargain — accept below-market pay through your thirties in exchange for equity later — depends on the later part being attractive and reasonably certain. Lengthening partner tracks, capital contributions, and the arrival of external investment in parts of the mid-tier have all made that bargain harder to describe with conviction. Candidates who cannot see the equity date do the obvious thing and discount it to zero.
Flexibility normalised unevenly. Industry settled quickly into two or three days in the office for qualified finance roles. Practice, with its training model, its review culture and its client-site work, has had a harder time matching that, and firms insisting on four or five days are competing for people who can get three elsewhere.
What does not work
The instinctive response is to pay more, and within limits firms should — several of the practices I speak to are simply below market at this grade and have not benchmarked properly in two years. But pay cannot be the strategy, because a practice cannot win a pure salary contest against industry. The leverage model that makes a firm profitable is the same model that caps what the manager grade can be paid. Trying to match industry pound for pound at four years PQE breaks the economics that the partnership depends on.
The other reflex — the counter-offer — is worse. Counter-offers at this level buy an average of nine to twelve months and damage the relationship permanently, because both sides now know the firm was willing to pay more and chose not to until threatened. They are a cash payment to delay a departure, and they should be treated as exactly that rather than as a retention strategy.
What does
The firms handling this well are doing roughly four things.
They have built something between manager and partner. Salaried director, principal, associate partner — the label matters less than the existence of a visible, achievable grade that carries status, a step in pay and some client ownership, reachable in two or three years rather than eight. For the significant proportion of good managers who do not want equity and the risk attached to it, this is the single most effective retention structure available, and firms without one are asking people to choose between staying put and leaving.
They specialise people earlier. Generalists are the most portable people in the profession, because every firm and every employer can use them. A manager who has become the person for R&D claims, or employment taxes, or academies, or FCA-regulated clients, is harder to replace and — this is the part firms miss — harder to tempt away, because their specialism is worth more inside a firm that has clients needing it than inside a single business that needs it occasionally.
They are honest about the partner track. Not optimistic: honest. A manager told clearly that partnership is five to seven years away, subject to these specific conditions, will frequently stay and work towards it. The same manager told vaguely that it is “something we should talk about” concludes there is no plan and starts looking. Ambiguity reads as a no.
They recruit returners. The most underused pool in practice recruitment is people who left for industry two to five years ago and found it less interesting than expected — fewer varied problems, one business rather than thirty, and a ceiling that arrives sooner than they thought. They come back with commercial perspective their peers lack, and they come back having tested the alternative, which makes them markedly more settled than someone who never left. Most firms do not approach this group at all, because the profession has historically treated leaving as one-directional — and reaching them takes a deliberate practice recruitment approach rather than an advert, since by definition they are not watching practice vacancies.
The recruitment consequence
The practical effect of all this is that practice recruitment at manager grade has become a genuinely competitive search rather than an advertising exercise. The people worth hiring are employed, are not browsing job boards, and will have had two approaches already this quarter. They are moving for a defined reason — a specialism they want to build, a grade they cannot reach where they are, a client base that interests them — and a brief that does not name that reason will not reach them.
It also means firms are increasingly recruiting from each other, and from industry, rather than relying on the training pipeline to produce their next managers. That is a change in kind, not degree, and it requires a different approach to the market. Our page on practice accountancy recruitment sets out how we approach these searches across audit, tax, accounts and advisory, from newly qualified through to director and partner level.
The reckoning most firms have not done
One closing suggestion, and it takes an afternoon.
Take the last three managers who left. Add up what each departure actually cost: recruitment fees, the vacancy period, partner and senior manager time absorbed covering the work, the write-offs on jobs that ran over while the gap was open, the client relationships that needed rebuilding, and the ramp-up before the replacement was fully productive. In most firms that figure lands somewhere between half and a full year of the departed manager’s salary, and frequently more where a specialism walked out with them.
Set that figure against what it would have cost to create the grade they could not see, or to have had the honest partnership conversation eighteen months earlier. For the firms I have watched do this exercise properly, the comparison is not close — and the reason it had not been done before is simply that the cost of losing people sits in a dozen places on the P&L and never once appears as a line item.
Adrian Lawrence FCA is the founder of Accountancy Capital, which recruits qualified finance professionals across practice and industry in the UK. He is a Chartered Accountant, holds an ICAEW practising certificate in his own name, and was previously Finance Director of a listed company. View Adrian’s ICAEW profile.
