Partner Remuneration and Staff Salaries

In the last week or so, the Government has indicated its desire to make doctors reveal pay from private sources and the BBC publicise salaries over £150,000.

Your instant reaction to this news might be to say “good thing too”. However, be careful what you wish for.

My guess is that most senior members of the accounting profession would be horrified if they were obliged to announce their salary/profit share to the world.

Struggling clients might not be impressed to learn that they were funding the luxury lifestyle of their auditor or tax adviser. You might imagine that their immediate response would be to suggest that if an accountant could earn that much, the charge out rates were too high (perish the thought).

Then again, if times are seen to be tough some existing or prospective clients might wonder whether your business was viable and moved to an organisation that was more obviously on a firm footing.

That might be bad enough but just think of the consequences if every member of your staff knew what you were earning.

The likelihood is that the average partner is getting at least five times as much as junior members of staff and, in many cases, a much more significant multiple.

The tried and tested phrases such as “we have had a bad year and cannot afford any pay rise (again)” would sound a bit thin if everybody in the room knew that the person speaking had increased their own remuneration from say £200,000 to £250,000 during the period. At some firms, this could lead to revolution or even a lynching, though a mass exodus is a more likely consequence.

There might also be questions raised about expenses. The average member of staff is probably not given access to the firm’s box at Stamford Bridge or Wembley. Nor will they enjoy that business staple, the five hour, Michelin- starred Friday lunch.

Personally, I would enjoy becoming a fly on the wall as one or more partners tried to talk their way out of this conundrum.

However, in reality, the chances of this kind of transparency becoming the norm are about the same as any firm offering every member of staff a 10% pay rise next year.

On the other hand, every cloud is reputed to have a silver lining and this one should too. If there is one thing that accountants are good at it is presenting data in the most appropriate fashion.

It should not be beyond the wit of any self-respecting partner to come up with a creative way of declaring salaries to staff. Once they had found the magic solution, you can only imagine that any number of doctors, TV companies and by then, lawyers, surveyors, architects etc. would pay hefty fees for such a valuable get out of jail formula.