Story Rachel Alembakis, Ben Hurley and Susan Muldowney

Illustration Nigel Buchanan

Qualifying as a chartered accountant sets the foundation for a successful career in accounting and finance. From there, young CAs have abundant choices available, with paths that can lead to running a practice, making partner at a big firm, or becoming a CEO.

The 2018 CA ANZ Remuneration Survey shows that chartered accountants are one of the best paid professions in the community, with an average annual income of A$175,000 among CA ANZ members in Australia, and NZ$155,842 for those in New Zealand.

How much chartered accountants can earn depends on factors including their years of experience, their role and where the job is located. Unsurprisingly, the highest earners are likely to be chief executives followed by chief operating officers, chief financial officers and partners at the Big Four accounting firms.

Acuity spoke with remuneration specialists, recruiters, and successful CAs to canvass their ideas about how accountants can build on their skills to climb the career ladder and boost their earnings potential.

The five-year leap in accountants’ pay

One insight from the survey is that the biggest growth in remuneration (in percentage terms) typically happens between five and 10 years after CAs complete their designation. In part, that can be attributed to provisional CAs finishing their studies and then moving from a public practice into corporate work, notes Craig Malcolm, associate director – accounting and finance at Hudson in New Zealand.

“We see this in candidates that are newly qualified coming from one of the Big Four or second-tier CA firms,” Malcolm says. “For your first commercial role, if you’re coming out of one of those organisations, there has been quite a big jump in terms of what you can command.”

Beyond the five-year mark, the relationship between an accountant’s years in the job and pay rises tends to break down, meaning CAs really need to start differentiating themselves with skills above and beyond the technical basics.

“Where we see the really good accountants clicking through the gears and being promoted are the ones that have the business partnering skills, not just being technically good at the role, but that full package,” Malcolm says.

“Where we see the really good accountants clicking through the gears and being promoted are the ones that have the business partnering skills, not just being technically good at the role.”

In-demand skills for CAs

As technology advances – particularly in fields such as robotic process automation, artificial intelligence (AI) and machine learning – the accounting and professional services industry is being reshaped. This means the most in-demand CAs of the future will be those that are both comfortable with technology and have outstanding interpersonal skills, says Zeno Consulting principal Amanda Wilson.

“The most in-demand CAs of the future will be those that are both comfortable with technology, and have outstanding interpersonal skills.”

Wilson is a remuneration specialist who was previously the executive general manager, performance and rewards, at the Commonwealth Bank of Australia. Her advice for CAs who want to future-proof their earnings potential is to specialise in areas that aren’t under threat from AI.

“A lot of the transactional work is just going to be done by AI, including the legal and accounting realm. Obviously, you need to make yourself indispensable and work hard, but you need to look at what’s in demand,” Wilson says.

“If you look at who’s in demand at the moment, it’s cyber-risk specialists. You have to stay abreast of the trends and keep your education current. The other area that I’d look to is the broader socio-economic issues, such as the move to sustainability strategy, so developing skills in that area would be beneficial as well.”

However, Andrew Hanson, director NSW for recruitment firm Robert Walters, notes there is still demand for CAs who are highly experienced in more traditional areas of risk, compliance, remediation and audit.

“Especially for those who can demonstrate strong integrity,” he notes, adding there is a heightened demand following Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. “Employers want chartered accountants who can demonstrate ethical integrity.”

Rethinking executive bonus structures

Another outcome of the banking royal commission is that there is a renewed focus among regulators, business leaders and the wider community on how organisations pay executive bonuses.

The 2018 CA ANZ Remuneration Survey shows that the highest paid CAs have the highest proportion of their total earnings linked to bonuses and other incentive structures.

The average remuneration for an Australian-based CA in a CEO role is A$522,561 and NZ$295,398 for their Kiwi counterparts. Those CAs typically clocked up close to 20 years’ experience before landing a CEO role.

Among those CAs who are C-suite executives or partners at Big Four firms, roughly 12-15% of their total earnings come from bonuses, with nearly as much coming from ‘other components’.

Michael Robinson, a director with remuneration consultancy Guerdon Associates, believes that structure is likely to broadly persist because it allows employers to vary compensation to match performance and results.

“From a risk management perspective, variable pay allows employers to differentiate between people who occupy space and those who really earn their pay through high performance,” he says.

But employers need to think about what behaviours they’re encouraging. “Incentives influence behaviour. Whether the behaviours that are incentivised are the wrong behaviours is another question,” says Robinson.

Wilson notes that while incentive structures are not about to disappear, they are likely to change shape amid an intense focus on the role they can play in influencing corporate culture.

“We’ve seen bonuses and incentives come in for criticism when they have driven undesirable behaviour and excessive executive rewards,” says Wilson. “There was investor and community backlash.”

She notes that there are some roles where it is always going to be challenging to get the risk management settings on bonuses right.

“There has to be some criticism of whether or not functions such as audit and compliance should be incentivised at all, or whether they should just have a healthy fixed pay to give frank and full advice without worrying about not receiving their incentives,” Wilson says.

Flexibility almost as important as remuneration

Aside from remuneration, flexibility is the benefit CAs most want from their employers. Flexibility/flexible hours was nominated by 68% of survey respondents as the most important thing to them, aside from pay. This top response was selected by nearly three times as many people as the 23% who nominated workplace culture/atmosphere. Flexibility mattered most to CAs aged 30 to 49, corresponding to the peak years for caring for children.

Robert Half Australia director Andrew Morris says that given the stiff competition for chartered accountants in the market, employers that don’t offer genuine flexible working arrangements are going to be behind other firms looking to attract top talent.

Carl Piesse, the regional director at recruiter Hays in Sydney, says flexible working arrangements have to be authentic and spread through an organisation.

“Flexibility can encompass a number of things, from offering employees the ability to purchase annual leave to career breaks, study leave, community leave, job sharing and flexi-hours,” Piesse says.

“Salaries have been increasing, but they’re not keeping up with candidates’ expectations. Non-financial benefits have been making up for that. But it needs to be part of the DNA of an organisation. If it’s a superficial offering, candidates will see through that.”

Why the gender pay gap persists

The 2018 CA ANZ Remuneration Survey also reveals the gender gap in average earnings between male and female CAs.

In Australia, the average salary for male CAs is A$193,448, while women earn an average of A$144,776. In New Zealand, the average salary for male CAs is NZ$174,764 and for female CAs it is NZ$128,873.

This means the headline gender earnings gap sits at about 25%.

The researchers who produced the survey then began to unpick how much of that earnings gap could be explained by job-related factors. A technique known as the Oaxaca-Blinder Decomposition method was used to analyse the earnings gap.

Of the A$48,672 average annual pay gap for female CAs in Australia, it was found that A$34,119 (70.1%) of that could be explained by factors such as years of experience, role, number of direct reports, hours worked, and employer size.

That left A$14,553 (29.9%) unexplained. The researchers note this may be due to variables not included in the analysis or differences in preferences for non-remuneration factors in job choice, or workplace discrimination.

Wilson reckons one factor is that women have historically tended to be less aggressive in pay negotiations. “Women aren’t generally as demanding around pay negotiations and that, I think, plays a role,” she says, adding that there is now a lot of work being done in large companies to address that through initiatives such as unconscious bias training

How an experience gap feeds the gender pay gap

The survey analysis shows one of the strongest explainers of the gender pay gap is the difference in average years of experience between men and women. This is because 20 to 30 years ago there were far more men entering accounting than women, so the most experienced accountants today (the ones with the highest remuneration) are more likely to be men.

It’s notable that the gender profile of new CAs entering the profession is changing. CAs with less than 10 years’ experience are more likely to be female, with the profession even more strongly female-dominated among those who have entered it in the past five years.

Hanson says that while the C-suite remains male dominated there is a strong trend for companies to demand recruiters put forward “at least one” female candidate as part of any shortlist now.

Sharon Warburton CA, chair of the Fortescue Metals Group remuneration committee, is fed up with people denying the gender pay gap exists.

“I hear so many people say that their organisation doesn’t have a gender pay gap, but every organisation that I have worked with or been connected to has discovered that they do in fact have one when they peel open the detail,” she says.

“I continue to challenge organisations when they say that they don’t need to do even a preliminary investigation into pay equity.”

Warburton says gender pay equity is a standing agenda item on the Fortescue remuneration committee. In its 2016-17 report to the Workplace Gender Equality Agency, Fortescue stated that it had conducted formal pay gap audits across its payroll and taken various forms of action, including correcting like-for-like gaps.

“Research shows that biases appear in our thinking, whether unconscious or conscious, so pay equity must be a standing agenda item,” says Warburton.

“From my experience, until you complete a role analysis, you really can’t identify those core [pay] gaps. Forget the high-level, helicopter reviews. Executives should report on pay equity to the board on a recurring basis and if gaps appear for whatever reason, they can be fixed.”

Given that the younger cohort of CAs is more likely to be female, can we expect the pay gap to disappear naturally with generational change?

“Why wait?” asks Warbuton. “As leaders, we all have a role to focus on this, and today’s leaders will set the agenda for how quickly we will see change. Organisations need to decide what they deem to be an acceptable culture.

“If leaders are not driving reviews and making those changes now, then we’re reaffirming a culture where a gender pay gap is appropriate behaviour. If we don’t think that that’s the case, we have the accountability for change right now.”

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Methodology

Chartered Accountants Australia and New Zealand commissioned Colmar Brunton to survey CA ANZ members about remuneration. A total of 10,449 members completed the online survey – 6197 from Australia and 4252 from New Zealand. Interviews were conducted from 25 October to 21 November 2018, and data was weighted to be representative of membership by years of experience.

Figure 1. Average remuneration Australia (AUD) (Click image to enlarge)

Figure 2. Average remuneration New Zealand (NZD)