In the late 1980s and early 1990s, public bodies were willing to pay a premium for accountants with commercial experience who could help to make their organisations more efficient and able to attract private finance and trading income. This drive for commercial experience coincided with a recession in which banks were laying off staff, giving accountants a ready home to move to. That trend has been reversed. NHS trusts are merging, under pressure from a government keen to rationalise management costs. One result is that the number of senior financial managers will fall dramatically, perhaps by as much as a half. Many NHS financial managers are reported to be considering moving into other sectors as a consequence.
A similar environment exists in local authorities. Many councils are rationalising - often following local government reorganisation that has eliminated some smaller councils - reducing the number of departments and chief officers. Often the director of finance has been replaced by a head of corporate services or director of resources, who will not necessarily be a qualified accountant.
Some councils have not so much chosen to downgrade the role of head of finance so much as had it forced upon them. Finding a person with the right mix of skills, experience and qualifications can be difficult, especially for smaller, less prestigious local authorities with tight budgets. Merging finance operations into corporate services can be a pragmatic solution.
Adrian Slater, national director, public sector, of Hays Accountancy Personnel, says that local authorities need to do more to attract high- calibre financial managers, not merely by paying more, but in promoting themselves as well-managed and dynamic organisations. And not all, he suggests, are persuaded of the benefits of using accountants with private- sector experience. "Local government is still unusual for someone to break into from outside the local government marketplace," explains Mr Slater. "Some of the new unitary councils have looked for elements coming in from outside, but I haven't seen much evidence of new people being appointed."
But Gill Lucas, senior consultant in the public sector with MSL Search and Selection, says that managers with private sector experience do not always fit into the local government environment. "Local authorities are very complex places to work, and people from the private sector may have difficulty in dealing with their councillors and structure," she says. Both she and the Local Government Management Board - a body funded out of government grant to help councils recruit and train staff - make the point that public and private sector accountancy qualifications are still not regarded as fully interchangeable. The vast majority of local government accountants qualified through the Chartered Institute of Public Finance and Accountancy. "People make a decision at an early stage of their careers whether they will work in the public or private sectors," Ms Lucas explains.
Until recently, housing associations have been more successful in attracting high-calibre financial managers from the private sector. Derek Joseph is director of financial services at HACAS, which provides recruitment consultancy to housing associations. "Eighteen months ago I would have said there was very little problem in recruiting finance directors," says Mr Joseph, "but the market has tightened dramatically, partly because of the particular blend of skills that housing associations now need. The world doesn't throw up a lot of people who are skilled managers with expertise of private finance deals."
Associations want people with experience of managing a high volume of transactions as well as overseeing major bond issues and negotiating substantial loans. Even a small housing association will typically borrow between pounds 15m and pounds 20m a year. Preferably the finance director will also have a commercial outlook. This combination of attributes inevitably attracted associations to applicants from the banking and financial services sector, where many experienced accountants had been made redundant during the recession.
Now, though, it is the banks that are recruiting the associations' finance directors, and the associations find it difficult the retain their best staff. "The source had been the banking and finance industry," explains Mr Joseph, "but the recession has pulled round and it is difficult for associations to offer the finance and remuneration packages these people are now sitting on. People in the sector are surprised at the number of good people going into the banks keen to lend to associations."
For all the recent emphasis on attracting finance managers from commerce, when it comes to the top salaries the public and not-for-profit sectors can hardly ever match the private sector.Reuse content