The GAAPweb blog

A future in the Public Sector?

It is safe to say, without raising too many eyebrows, that 2009 was not the most prosperous of years in terms of recruitment. However, in spite of the recession, working in the Public Sector seems to have taken on a new lease of life – and the early indications are that 2010 will be a far better, if not a ‘bumper’, year.

The Office for National Statistics (ONS) claims that public sector workers earn 7% more than their peers working in the private sector. Maybe it’s reasonable to assume that there might be other significant benefits working in the public sector. Despite the economy in disarray with numbers of vacancies distinctly lower, the shrewd candidate can turn that to his or her advantage.

Increasingly, people with a commercial background are looking for a new direction and, similarly, public sector line managers are favouring candidates with extensive commercial experience. As recruitment consultants, we are certainly seeing more and more candidates who are looking to join an industry that is selfless, yet rewarding. Despite the worrying plight that we find the economy to be in, candidates who posses strong, ‘in demand’ skills are experiencing first-hand the benefits that the public sector has to offer.

The ONS expects average annual earnings within the public sector to have hit £22,405 in 2009, compared to the average commercial worker reaching £20,988 – although we should be aware that this statistic is not specific to the finance sector.

However, the public sector has long been seen to offer other benefits, such as improved working conditions – an average working week of 35 hours is not uncommon – and the ability to take up a pension at the tender age of 58. For those with an altruistic streak, the most significant factor when working in the public sector is the ability to ‘give something back’; doing good for both oneself and others.

So what of the future of the public sector?

The public sector is arguably 12-18 months behind the curve compared to organisations within the industry. It is widely accepted that 2010 will be a tough year, particularly with a general election looming and a change of government a distinct possibility. In fact, it is almost certain that public deficit will be reduced with the help from cuts in public sector services, and this will have an inevitable impact on jobs. However, to reiterate an earlier point, those with strong experience and marketable skills will still be of interest to the public sector – perhaps more so now than ever.

Regardless of the political hue of any new government, we will see significant changes in the public sector. My prediction is that the next five to ten years will be more rewarding than ever for finance professionals in the public sector – particularly those who will take change by the scruff of the neck.


Nick Ross currently recruits finance and accountancy professionals across the Public Sector at WH Marks Sattin. For more information about joining an industry that is ultimately selfless yet rewarding, then contact anyone on the Public Sector team at WH Marks Sattin.

Not in control: The commercial world and the NIC increase

It’s official: Britain is now out of the recession. We’re all celebrating, right? Surely life can go back to how it was a couple of years ago. Jobs will be plentiful, businesses will suddenly turn from loss-making to profit-generating, and bankers can get their bonuses in peace without the rest of the country interfering.

You might have noticed that the above isn’t happening. Yes, the economy grew that vital 0.3%, but businesses are still suffering losses. There are far fewer jobs then there were three years ago, with more graduates searching and more qualified people with nowhere to go. And if the tabloids are anything to go by, we all still perturbed that bankers are getting their bonuses.

I could write a dissertation on the above with twenty pages of footnotes, but rather than covering old ground, I thought I’d take a look at an issue that has not got quite as much attention as it might have done if there hadn’t been quite so many changes to Income Tax: The National Insurance Contribution (NIC) increase from 2011.

In the Pre-Budget report it was announced that NIC contributions would increase by 0.5% from 2011. Since then, this has increased by a further 0.5%. The effects of this increase are that employees will now be paying 12% on main rates and employers will now be paying 13.8%.

This means that employees will be taking home a lower net pay, and employers will have a larger monthly payroll expense. According to the Treasury, this will raise an extra £5.1 billion to go towards deflating national debt.

The Chancellor has indicated certain concessions to counteract the negative impact that the increase will have. It has been suggested that no one earning less then £20,000 per annum will be worse off from NIC in 2011/12. This means increasing the rates bands and the primary threshold (currently at £844 per week) by £570 per week. Whether this will head off early complaints that once again lower income earners will take the fall that greeted the abolition of the 10% Income Tax band is yet to be seen.

The questions that are raised by the increase are as follows:

1. Is there any way for employees to protect themselves against the NIC increase?
2. How has the increase been viewed in the commercial world?
3. What other options could have been adopted?

Anyone who in 2009/10 earned £95 per week, or £4,940 per annum will suffer NIC on their wage (i.e. you only paid NIC once you earned £95 in a week). The first item of significance here is that unlike income tax, NIC is calculated on weekly earnings and therefore even if you are under the annual threshold, you may end up paying NIC if in any one week you earn above £95 (£97 from April 2010 onwards). The second is that the NIC threshold is significantly lower then the Income Tax threshold. There have been plans to align NIC with Income Tax but these were disturbed with the abolition of the 10% starting Income Tax rate band.

As mentioned, the Chancellor has hinted at his intention to align the Upper Earnings Limit for NICs with the Higher Rate Threshold for Income Tax – we can but wait. So for those of you earning above £20,000 per annum there is a way to protect yourself. For any employee who receives a pension contribution it is possible for both the employee and employer to reduce their liability.

Whilst employee contributions to pensions are subject to both theirs and their employers’ NICs, employer’s pension contributions are not. One way to counteract the NIC rise is for the employee to forgo part of their salary and in return the employer increases their pension contribution by the amount of salary relinquished. This will save NIC for both employee and employer. The obvious downside is that a lower amount of actual cash will be taken home every month, which for many is a big issue. Of course, the other issue is that if your employer does not contribute towards a pension for you, you’re pretty stuffed. However, you may wish to take this opportunity of highlighting the advantages to your employer of them contributing to a pension.

So how has the NIC increase been viewed by the commercial world? Most commercial players have realised that in these times we need to curb public spending and at the same time reduce some of the country’s debt. This is by no means an easy feat, and most agree taxes will have to be raised. However, was raising NIC the best way to do this?

One of the biggest pressures for businesses currently is cash flow. Whether it is decreased sales, uncertainty of bank lending or harsher credit periods from suppliers, cash is in shorter supply then before. Increasing NIC means that their monthly cash expense increases, putting even more pressure cash flow. The effects are fewer staff being taken on, job cuts and the inability to pay debts. In my humble opinion this is not the best way to help the economy to recover! The British Chamber of Commerce (BCC) has also said as much.

The biggest issue for the economy is the effect it will have on job creation. Ashley Almanza, Finance Director of BG, suggested as much, adding, “…the cost competitiveness of the UK will suffer as a result of the rising total tax rate.” Equally, increasing NIC may scare away foreign business. If having a factory here means going along with Corporation Tax, VAT, and a business has a high payroll, companies could look to open up branches in other countries and this could have a very negative effect on the economy.

The question remains: are there any other options open to the Treasury? They have already increased Income Tax by more then they originally planned, and although it is still possible to raise more monies here, it is unlikely to occur with an election looming. Any significant increases on Corporation Tax would cause similar problems to those mentioned above. That leaves a VAT increase, which is what the BCC suggested. In fact, according to the BCC, just a 1% rise in VAT will raise £4.5 billion.

Arguments for raising VAT rather then NIC in my opinion are thus: Our VAT rate is currently much lower then most of Europe’s and therefore will not have such a negative effect from a national point of view. The other is perhaps a bit more controversial. NIC and VAT are two very different types of tax: one is on a purchase and the other is on earnings. I can understand that the government wants to ensure the economy continues to grow, but surely it’s about time that those of us earning were cut a bit of slack and given a chance to have a bit of money to play with – and dare I say it – even save some. It seems fairer that those who are willing to spend their money suffer the tax on it.

In my view there are no advantages to increasing NIC; it will slow job creation and growth. In the long run it is likely to have a negative effect on the nation’s current deficit. Businesses and middle income earners need a break and a chance to recover. If the Chancellor is brave, he will listen to the commercial world and back down. We can but hope.



Kim Grossman attended the University of Birmingham and graduated with a 2:1 LLB with Honours. She then completed the LPC at the College of Law, before working as a paralegal for nine months.

She currently works for Landau Morley LLP Chartered Accountants and Tax Advisers. She is part-qualified with the ICAEW and will take her three finals this summer.

What happens when you take the stabilisers off a bike?

For many, the letters V and W are synonymous with cars; for me, they denote the shape of this nation’s economic recovery. Some optimistic economic commentators and politicians would have us believe that we are out of the woods and that the worst is over. I am firmly in the W camp; I believe that that the UK will post a loss in the first quarter of 2010 and we will see a ‘double dip’ recovery.

Why so pessimistic? (I hear you ask). Surely all the banks have flushed out their bad debt? Aren’t house prices increasing every time you pick up a newspaper? Well, the UK is like a bike with stabilisers at the moment, and when the stabilisers come off not even Chris Hoy could ride this bike without faltering.

UK Plc grew by only 0.1% in Q4 2009, as reported by the BBC. I must admit that when I read this headline, I wondered how may times the figures had been counted as ministers searched for even the slimiest margin of growth.

Here are some of the contributing factors to a potential double dip:


Quantitative easing
QE (or the art of printing money to you and me) has propped up the UK for a number of months. Last week, the monetary policy committee cut off the supply of QE to the UK economy, and this, coupled with the European Central Bank’s upcoming withdrawal of its liquidity boost in March, highlights the deteriorating levels of liquidity around the world

Greek debt
We saw the Dubai debt crisis unfold at the tail end of last year. Many British (and some state-owned) banks had interests in the debt of Dubai World, and if it hadn’t been for Abu Dhabi offering a helping hand to its Emirati neighbour, then potentially billions of pounds of debt would have been defaulted on. This would have resulted in more write downs by UK banks. Greece is facing a similar issue, which is resulting in uncertainty in the entire EU. As I write, the Euro has slipped to a nine-month low. British holidaymakers might see this as a good thing, but the destabilisation of the European single currency will have an adverse effect on the whole region; a region which is Britain’s biggest export market.

Bad weather in January
Despite Alasdair Darling’s best efforts, Mother Nature always holds the trump card. The snow kept a lot of people away from the sales and out of restaurants and bars. It’s likely that the prolonged period of cold will have an adverse effect on some Q1 retail figures, reports Management Today on the effects on the high street. With more snow forecast, this could only exasperate the problem.

Stamp duty holiday ended
There was a flurry of activity in the lower end of the property market towards the end of 2009, as buyers tried to complete on home purchases before the stamp duty holiday ended. According to the BBC, twenty-three per cent more mortgage applications were made in December than in November. It’s likely that deals that should have been completed post-Christmas will have been brought forward to save the buyer paying the 1% tax. This – combined with the snow – has seen the lower end of the housing market get off to a slower start this year. Citywire reports that buyer enquires fell for the first time in 14 months in January.

Inflation v. wage freezes
Inflation rose at its fastest month-on-month rate in December 2009 since records began. Map that to wage freezes, and suddenly affordability is dropping across the UK. Unless the government can combat inflation, there will be a negative impact on the economy. One way to combat inflation is to increase interest rates – a move that could force thousands more homeowners into repossession. For this reason, interest rates will probably remain on hold in 2010 and low in 2011. This means that inflation will play a bigger part in unsettling our fragile recovery as affordability declines.

House prices
Everyone has an opinion on house prices: homeowners are hoping for a recovery; first-time buyers like myself are hoping that they stay low for the time being. As a recent first-time buyer, I was shocked to see that prices in London had started to go up by 0.5% to 1% per month. On further inspection of the market, the price rises are being entirely driven by a lack of supply of new properties, coupled with a decrease in output by home builders. It’s likely that when supply returns to the market, we will see a decrease in house prices.


So, even with all the stabilisers on the UK’s bike, we managed a carefully calculated 0.1% growth. I do not think that the UK will fall back into recession as defined by three consecutive months of decline, but I do believe that the UK will not see growth in Q1 of 2010, and it could be 2011 before we see two consecutive months of growth.



Dave Thomson is Product Manger at Trinity Mirror Digital Recruitment, overseeing sites such as GAAPweb and totallyfinancial. Previously, Dave has worked on technology projects for some of the world’s largest investment banks.

Charities: a rosier 2010?

As we come to the end of a difficult 2009, the question on most jobseekers’ minds is the impending state of the employment market next year. I think we’re all in agreement that at the moment it is very much an employer’s market – but is this trend set to continue? Well, there just could be a glimmer of hope.
 
In the highly competitive job market we’re experiencing at the moment, skills such as change and crisis management, and cost-saving implementation will be paramount in working towards a more stable 2010.

Currently, the focus on recruiting for charities is on those roles that rely on income generation – that is, those that have an income target attached to their role. These are primarily fundraising roles; relationship-building with major donors and community fundraising are currently prevailing. So, what about finance professionals? This would seem to leave little room for the recruitment need for core financial professionals – the demand for qualified accountants seems to have taken a hit. Looking forward, what are the best ways of securing the right role in the not-for-profit sector in such a seemingly bleak market?

Whilst finance-specialist roles might not be sitting at the top of recruitment priority lists, those candidates with some decent exposure to fundraising aspects of charity finance will be valued, particularly those who can demonstrate some interplay with major corporate givers (or, for that matter, individual philanthropists). Exposure to the links between core finance functions and their intricate collaboration with fundraising teams will be prized. And it’s probably worth bearing in mind that such exposure could come from the donor – as well as the charity – side of the equation.

Furthermore, whilst ‘downsizing’ and ‘redundancies’ are terms frequenting many recruitment scenarios, the streamlining of processes, procedures and organisational structures are still prevalent, which is where the need for cost-cutting and money-saving comes in. Larger, international charities will be hit hard in the coming months due to the substandard exchange rate; their finances are going only a fraction as far as they have done previously in a more buoyant market. Consequently, there will be a focus on crisis management within finance functions and the need for financial expertise in this area will be in paramount. This will then allow these larger charities to focus more on development and capital expenditure looking to the future.

So, what of the New Year? I do think that glimmer will start to get brighter, so now is the time to start working on your own ‘personal brand’ or ‘sales proposition’. Work out precisely what will make you attractive to an employer and use that to develop a credible and compelling ‘package’.


Becky Postlethwaite currently recruits finance and accountancy professionals across the Public Sector at WH Marks Sattin. Her portfolio of clients is ever-expanding and covers the Charity, Housing, NHS, Local and Central Government and Education industry sectors.

Was the decision to increase VAT a bold move?

Subsequent to the UK economy falling into recession after a 10-year boom, it became apparent that either a new tax would have been introduced; or, a direct tax (such as income tax) would have had to be raised in order to help the government out of its recession and protect frontline services.

In his pre-budget report, Alistair Darling confirmed that National Insurance (NI) would rise by 0.5% in April 2011 to help protect frontline services, and VAT would be restored to 17.5% to help the government out of its deficit and restore £12bn in revenues. This comes after a 13 month break from the lowered level of 15%.

There have been many debates against the increase in VAT. It has been argued that an increase will slow down business spending, thus causing a slower recession recovery. With businesses being more cautious about cash flow, it will end up defeating the purpose of a VAT increase.

Committees such as the Cut the VAT Coalition believe that VAT should have been cut further on maintenance and home improvement work. This would help “the government achieve its target of cutting carbon emissions by 80 percent” and “help millions of UK homeowners by getting rid of cowboy builders, helping those who cannot afford vital repairs to their homes, bringing our empty properties back into use and protecting the countryside”.

On the other hand, the treasury wants to see a higher increase in VAT to save the individual tax payer an increase in NI contributions. The treasury argues that the increase in NI by 0.5% in April 2011 will be regarded as a tax on jobs, causing more job cuts and less job creation in the future. Additionally, they claim that if VAT was increased further then consumer spending would be protected in the difficult times the UK economy is experiencing.

Guardian.co.uk quoted: “A 1% rise in National Insurance raises a total of £4.48bn in a full year. A 1% rise in VAT by contrast raises slightly more at £4.8bn.” Clearly, a higher rise in VAT is more favourable to tax payers rather than an increase in income tax.
 
I am leaning towards the treasury’s view of not increasing income tax, and instead implementing a flat tax (such as VAT). This is so that individual tax payers like myself are not affected by the deficit caused by careless government planning and spending after a 10-year boom in the economy. I am also glad that I am not in the shoes of Alistair Darling as it seems neither raising nor decreasing VAT percentage rates would be the right thing to do!
 

Nurtac Irfan studied Accounting and Finance at Hertfordshire University and is now Finance and Operations Director for a digital media company based in London.

Predicting our financial future

There’s no denying it: 2009 has been a difficult year for finance and accounting professionals.

This year, we’ve watched the banking crisis unfold on a global scale. Nowhere has remained immune; even Dubai has had to curb the spending of its monopoly money. But as countries including Germany, France, China and even the US start to show strong signs of recovery, it’s only natural for us to wonder: is it the UK’s turn next?

Another common theme this year has been the UK’s changeable financial forecast. We’ve heard varying stories about the state of business, employment and housing markets and whether or not we’re bouncing back to economic health or plummeting further into debt.

On a local level, CFOs everywhere are making predictions for what 2010 holds for their company. If anything, I think this year has taught us to expect the unexpected. I’d hazard a guess that the term ‘cautious optimism’ is flying around boardrooms everywhere.

Most of us are putting our faith in the latest industry news, with positive predictions for both accountancy graduates and Financial Directors.

As a very wise man once said (and I’ll take the liberty to paraphrase), it’s probably not the beginning of the end of the UK’s financial rollercoaster ride, merely the end of the beginning. At least we’re all better prepared for what next year will bring.

January is a great opportunity to start afresh and bring your ideas to a new role. From all of us here at GAAPweb, we’d like to wish everyone a Merry Christmas and a prosperous New Year.

Green is the new black

Earlier this month, global leaders extended their carbon footprints further by gathering en masse in Copenhagen to discuss climate change and how to build a greener planet. Hopefully, this is a small, necessary step backwards to drive progress forwards; progress that is desperately needed after a decade of deference from the world’s largest polluters.

In my opinion, the link between global warming and the unabated growth of the world’s population is clear and total. In 1909 there were less than 2 billion people on earth, most without electricity (let alone TVs, computers, consoles and all the other gadgets plugged into my living room sockets). Our fragile eco-system simply isn’t able to handle the sheer volume of C02 that is being extracted from the ground, recycled in the air and sitting in our cupboards. Fewer plants + more humans + releasing hidden carbon doesn’t equal a sustainable planet. Anyone who fails to compute this simple formula may as well still believe that the world is flat.

For those wondering why a blog on climate change is relevant to accountants, there are several, simple answers. Climate change impacts everything around us: our families, our homes, our finances and our careers. We all need to play our part – whether through direct action, votes or simply through raising awareness. If you are still sceptical, here is some food for thought:

Our climate is changing your family’s future

You probably are, or hope to be, a parent. This presumably means that you want future generations to have the quality of life that you’ve been fortunate enough to enjoy. Over the past hundred years, every generation has been afforded more opportunities than the last due to technological advances driven by electricity. It’s quite possible that without creative solutions and a change in attitude our grandchildren will face shortages of everything we take for granted today. Put very simply, wasting electricity by leaving lights on overnight means less energy for your children’s children in the future.

Our climate is changing your finances

Anyone who has been looking at their household bills recently will have noticed a continuing rise in the costs of shopping baskets. It’s easy for the media to blame Tesco for strangling suppliers or oil companies for profiteering, but the combination of drought and farmers shifting from food to industrial production are the real causes of higher prices. Even if official figures claim that the inflation rate is close to zero, the cost of living for households IS rising (these days the RPI basket is loaded with products that are more or less intangible – for example, CDs, whereby no-one is really buying a little plastic disc, thereby distorting the measure). This erosion of ‘disposable’ income means that the frugal have less to save or contribute to pensions and face shorter retirements than their hard work deserves. Consider this: choosing to cycle rather than drive this weekend will save some extra pennies and take a small step to reducing drought in far away lands.  

Our climate is changing your career

Accountancy by its very definition is a function of commerce and economics. Our skills are needed by businesses, whether they are starting, growing or surviving. But, is our world economy (and, by association, our careers) sustainable? It’s unlikely to happen immediately, but current energy resources are finite and will one day run dry. The oils and gases that have taken centuries to form are being used to build major corporations. But what happens when these resources run out? You don’t need accountants if there are no beans to count. We need to be selfish; get our companies to cut costs by reducing energy consumptions which will help sustain the business and the need for accountants.

The choice to meet in Copenhagen is poignant. If the seas continue to rise unabated, the little boy with his fingers in the dyke could soon be floating down the streets of the Danish capital and our hopes and dreams could be following him.

By the time Barack Obama flies into Denmark tomorrow, hopefully a lot of big changes will have already been agreed upon. Global policy, guidelines and regulation will help slow down the warming and drive a greener planet. As one in seven billion, all each of us can do is our ‘little bit’. That’s a lot of little bits.

Colin qualified with Arthur Andersen in 2000, eventually leaving in 2002. After a brief stay at Centrica, he joined Carphone Warehouse and worked in assorted roles with Talk Talk and Geek Squad as Finance Director. After working with friends at Mint Digital, a social media agency, Colin is now looking for a new challenge.

Has the ex-pat dream dissolved?

Leaving your home country for a job opportunity abroad is not a decision to be made lightly. Will the job and the company be all that you expect? What about the people and the place? If, however, you’ve been offered a position in a country perceived as one of the most prosperous in the world, it softens the decision-making process somewhat.

Over the past decade, Dubai has established itself as the crowning jewel in the Middle East’s crown, with some of the most opulent property developments and exciting job opportunities going.

However, this past week Dubai’s debt problems were made public as its shares plunged in the FTSE 100, highlighting the fragility of its once stable finances.

Most significantly, construction company Dubai World has accrued debts to the tune of £36 billion and is having to be rescued by Deloitte.

Dubai World – the company behind the manmade islands Palm Jumeirah and ‘The World’ – is state-owned, although the government is currently trying to distance itself from the company’s debts.

Apart from causing shockwaves around global financial markets, I can’t help but think about those British ex-pats out there at the moment. Is the bubble really bursting? Is a one-way trip back to the UK on the cards? The phrase ‘job security’ has always been a bit of a paradox during a recession, but it’s only really now that Dubai ex-pats are beginning to feel their collars tighten and their ‘secure’ positions slipping away.

The embers of this recession have settled far and wide, and anyone who thinks that their country is recession-proof or if this downturn hasn’t been global, is truly mistaken.

If you are considering accepting a role abroad, remember to exercise due diligence. No job is secure; the last thing you want is to arrive in a new country only to find that your job, or worse, the company is no longer there.

Employment ... rising or falling?

In August 2009 Kevin Green, Chief Executive of the REC, commented on recruitment records for August:

“For the first time in 17 months, this month’s report shows signs that the UK jobs market is improving. It seems that employers are becoming more confident in their hiring decisions with an increase in permanent recruitment and growth in temporary placements for the first time in over a year.”

The media then used these comments in such a way as to suggest that the UK was on the way back toward healthy employment.

In November 2009, the Head of the IMF commented:

“Unemployment in Britain is set to climb well into next year, despite the world economy being on the cusp of recovery.”

What is the truth in these statements and what are we to make of it?

Media hype, political sound bites and these conflicting reports add to confusion, uncertainty and worry for accountants who have been made redundant or who are under threat of redundancy. Experience in accountancy recruitment during the last recession has taught me that the apparent conflict will be reconciled and understood when both aspects are placed in context. I would also suggest that understanding the job market is essential for sound decision-making on job offers, and for developing personal strategies to ride out the economic storm.

The August report was correct but the optimistic conclusion drawn from it possibly misplaced. I suggest that what had been evidenced was a ‘spike’: the effect of pent-up demand. (Companies hold off from recruiting over a period of time to the point of damaging their businesses. As a consequence, they decide there is no option but to recruit. A number of businesses reach the same point and happen to enter the recruitment market at the same time). I would also suggest that such ‘spikes’ are unpredictable, irregular and repeated intermittently. As the market strengthens, the traditional recruitment cycle will return and such ‘spikes’ will disappear. This was certainly the pattern in the last recession.

Rising unemployment, as reported by the Head of the IMF, will happen. There are studies that demonstrate that, following a recession, unemployment will continue to rise after an economic upturn and usually for up to 12 months. It is rather like a large seagoing tanker – it takes a while for it to respond to a change in direction. It won’t turn immediately, but will continue for several ship lengths before responding.

The two reports are reconcilable when placed in the following context:

Over the same period of time that unemployment rises, there will be intermittent ‘spikes’ of pent-up demand for accountants. These can be seen as oases of opportunities in a desert of rising unemployment and should be taken advantage of in the best way possible. What this means is: be ready to react quickly during a spike; remain flexible in your expectations; and don’t dismiss opportunities and offers out of hand. If you are moving from a permanent position to an apparently sound role and business as part of a career move, apply rigorous ‘due diligence’. Identify the security of both before making your decision.

The good news is that recruitment doesn’t stop completely during recession, it only slows down and even then there are intermittent surges of opportunities. 

Chris Cutting, of Chris Cutting Recruitment (CCR), has several years experience in accountancy recruitment at all levels. His career spans working for both national and regional recruitment consultancies in the Midlands and establishing two regional consultancies servicing the M5 and M4 corridors. The one constant throughout his career has been to provide a tailored and personalised service to clients and candidates.

Bah Humbug

The nights are drawing in, Starbucks have turned their cups red and the shops have dusted off their seasonal music collections. It can only mean one thing: Christmas is on its way.

Christmas is, first and foremost, a religious festival. However, both socially and economically, if Christmas didn’t already exist it would be a fantastic invention. For a Victorian factory owner producing textiles for the masses, Christmas would have made a huge difference. There would’ve been increased demand for his products as consumers bought or made presents for their families. His tired workforce would have had the opportunity to get some rest on the bank holidays and build up their energy stores by overeating. The times spent with family and friends would erase memories of the hard slog in the workhouses. Christmas would have been the perfect antidote to the effects of cold, dark winter nights and a perfect tonic for economies in hibernation.

Admittedly, it’s almost impossible to imagine a world without Christmas. That’s why it’s incredible to believe that, in workplaces up and down the country, it’s like The Grinch has stolen Christmas. Conversations with friends suggest that there are a number of British companies who have chosen to dispense with a Christmas institution, the Office Party. But why?

There are usually polar opinions on the value of the Christmas Party: those who think it’s a waste of money that could be better spent elsewhere, and those who think it’s critical to rewarding the workforce. Often these views follow Jungian patterns: the logical and un-emotive can live without the parties, but those who are more intuitive and feeling value opportunities for bonding. One could probably stereotype these as the ‘Accountants’ View’ and the ‘HR View’. Imagine the following board room scene:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

It’s the November board meeting at Marley Corp and the board has come to the final agenda item: the Christmas Party.

Mr. Scrooge, the FD of Marley Corp, thinks that the Christmas Party is a waste of money. The company employs 10,000 people in the UK and to spend £50 a head on a party is £500k down the drain. Scrooge (being an accountant) will also tell you that it’s not just the direct costs that matter. Marley Corp has a big Christmas order to complete and he knows that the-morning-after-the-night-before is going to be pretty unproductive … and that’s the staff who appear for work at all. Scrooge has estimated that there’s at least another £500k of costs the following day. Profits are tight at Marley Corp and Scrooge sees cancellation of the Christmas Party as a quick win to cut costs. There wasn’t a party last year and the company seems to be holding steady despite the recession. He’s strongly suggesting that they cancel the party again this year.

Mrs. Cratchett has a different view. She’s the Director of People and has been fighting retention and morale issues all year. Absence rates have gone from 2% to 3% since last Christmas, in part due to the late cancellation of the big annual party. Annual employee attrition has also increased, from 20% to 25%, despite Marley Corp holding sales and employee levels constant. As far as Mrs. Cratchett is concerned, Christmas provides an opportunity to boost morale by giving something back to the workforce, not taking it away. She has asked one of the finance team to do some analysis on the costs of the additional recruitment and impact of absence but they’ve been working on Mr. Scrooge’s presentation instead. She thinks that the savings from improving employee satisfaction could be in the millions next year.

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Who will the board side with?

It seems that in a lot of boardrooms across the UK, the Scrooges are winning. During a recession, jam today seems to be more valuable than a bit more jam tomorrow. This may well prove to be a sensible rather than selfish decision, but before directors and managers make the stereotypical choice about celebrating Christmas with colleagues, maybe it’s time to brush up on their Dickens and give in to the Spirit of Christmas.

Colin qualified with Arthur Andersen in 2000, eventually leaving in 2002. After a brief stay at Centrica, he joined Carphone Warehouse and worked in assorted roles with Talk Talk and Geek Squad as Finance Director. After working with friends at Mint Digital, a social media agency, Colin is now looking for a new challenge.