The Brancatelli File By Joe Brancatelli
HOME E-MAIL JOE PRINT SEND LINK 1986 COLUMNS JOE'S ARCHIVES SEARCH
Accounting for the London Connection
January 1, 1986 -- On most any recent Thursday in London, you could have picked up the Financial Times, Britain's salmon-colored equivalent of The Wall Street Journal, and found six pages of help-wanted advertisements under the rubric Accountancy Appointments.
Lever Brothers, the U.S. subsidiary of the Unilever consumer-product conglomerate, was recruiting "enterprising young accountants" for management accounting openings. Gillette International, the razor-blade manufacturers, wanted "young, ambitious accountants" to join one of the company's audit groups. Courage, the English brewer, was seeking "a highly accomplished innovator" to establish and manage its internal audit department. Meanwhile, Peat Marwick Mitchell was searching for a financial director for an engineering client. Arthur Young was seeking a financial planning manager for a communications conglomerate. And Touche Ross needed "an energetic and versatile" accountant to head a client's finance function.
But before you pack your bags and book the next Concorde flight to London, be warned. As far as recruiters for major U.S. accounting firms and large corporations are concerned, entry-level American accountants stand little chance of being invited to make the leap across the pond. Yes, the recruiters say, there are accounting jobs to be had in England, and U.S. firms do send American accountants to live and work in London. But new accountants need not apply for such plum assignments.
"Quite honestly, accountants just out of school have nothing much to offer when it comes to filling the kinds of jobs that require living and working in a place like London," says the head recruiter for one top accounting firm. Only a corporation's top-flight senior managers and executives are considered when it comes to handing out a major appointment like London. The job that goes with any overseas assignment is much too sensitive and complex for a young accountant.
Unfortunately, that harsh assessment of accounting realities is echoed by every recruiter contacted in recent months by New Accountant. The five dozen or so American accountants living and working in London on assignment for U.S. accounting firms or industrial companies all are very experienced, highly paid, senior-level managers.
"You can be sure that an accountant sent to London, or Paris or Rome or Tokyo, for that matter, is the cream of a company's crop," says another recruiter. "He or she is someone whose accounting skills are beyond reproach and whose knowledge of multi-national corporations is extensive. He or she is someone whose social skills are well-developed, someone who has the complete trust and faith of the partners and the senior executives of the firm."
ONE OF THE FEW
In other words, that accountant is someone like Jeffrey R. Macklin, one of only four U.S. employees of Deloitte Haskins & Sells who lives and works in the firm's 1,200-person London offices.
"Moving someone to London is a hell of a big decision for a firm. It's very costly, too," says Macklin, a 35-year-old native of Ohio. "I guess the firm identified me as a valuable commodity. "In many other ways," he adds modestly, "getting chosen for the London assignment was also a matter of being in the right place at the right time."
How Macklin, who transferred to DH&S in London from New York in the fall of 1984, managed to get there is a story of a talented young accountant who now seems perfectly at home in the world capital of pubs, afternoon teas and "chartered accountancy," the British equivalent of the CPA.
After graduation from Ohio State University in 1972, Macklin joined DH&S in his home town of Columbus. He left after about a year to obtain his masters in finance from Drexel University. He returned to the firm in 1975 as a staff accountant in the New York office. A full-time auditor, Macklin eventually worked his way up to a manager's position.
Life was pretty good in the Big Apple, Macklin readily admits. An executive at his level earns "in excess of $50,000, plus a 10-to-15 percent bonus," he says. He and his wife, Diane, lived in a terraced, one-bedroom apartment on New York's chic Upper East Side.
"We had a nice lifestyle in New York. Since Diane and I were both working, we were very comfortable. But we were both ready for a change. We were ready to leave New York and we were both interested in going overseas," he explains.
MAKING THE GRADE
Snaring a foreign assignment is a formidable task, even if you have Macklin's talents. He estimates there are only about a dozen homegrown DH&S accountants in the firm's overseas offices. And most of them work at their foreign posts for five years at a time before returning to the United States.
Despite the odds, Macklin let it be known around the firm that he was interested in a foreign assignment. "I felt I was a pretty viable candidate because I'd worked predominantly with multinationals and had traveled extensively throughout the world."
Macklin's opportunity came in 1984 when one of Deloitte's three American audit experts in London--the fourth is a tax specialist--returned to New York.
"When the firm approached me, there was no hesitation. I said yes immediately," Macklin remembers. He was not hurriedly dispatched to British capital, however. He had to survive a battery of interviews inside the firm, then both he and his wife were asked to undergo a psychological evaluation. "To this day I have no real idea of what that was all about," he says with a smile. "I guess it was to test whether we could survive internationally."
Macklin has worked out of the DH&S offices on Queen Victoria Street for more than a year. The space is a cobblestone's throw from the city's legal, financial and newspaper districts and hard by famous churches, theaters and tourist attractions. But Macklin is almost matter-of-fact about his new surroundings. Sitting in a pub eating a traditional English lunch, Macklin can discuss his job and lifestyle in a detached and analytical manner.
"I get paid by New York, in dollars," he says. "My base salary hasn't changed and my benefits are the same. I'm still a New York executive. I'm just living in London for five years. My life is pretty much the same as it's always been?"
Well, not exactly the same.
Take his salary, for example. While the base has not changed, he is paid an "overseas premium." The figure, accounting firm recruiters say, is negotiable and usually in the double-digit range. Without discussing the specifics of his premium, Macklin characterizes his arrangement as "a flat percentage offered by the firm in return for a commitment to the overseas assignment."
HELP ON TAXES, NOT LAUNDRY
Taxes also have a place in the overseas equation. As an American citizen working in London, Macklin is liable for both U.S. and U.K. taxes. However, he only pays an amount equal to his normal U.S. tax burden. DH&S pays the difference between that and his double-tax liabilities. "It's a fair system," Macklin insists. "I certainly don't walk about with bags of extra money."
Overall, though, Macklin estimates his lifestyle has improved, but not necessarily in the monetary sense.
"London is a more livable city than New York," he says. "The Underground here is better than the New York subways. London cabbies speak English and know where they're going. And our flat in Belgravia is only a block-and-a-half from Harrod's," London's justly world-famous department store.
There are some drawbacks, too. "Laundry service here is extremely expensive. There are some dining restrictions. Everything closes early. The phones don't always work, either. And there are some limitations due to the traditions. It's frustrating when the local hardware store doesn't carry paint and the only reason they don't carry paint is because they, traditionally have never carried paint," Macklin notes.
On balance, though, Macklin is happy to be in London. "Diane and I went to Paris for Easter weekend," he remembers. "That helps you overlook the fact that it costs two pounds (about $3.25) to get a shirt laundered."
HAPPY ABOUT WORK, TOO
Macklin is also happy about the London assignment because of the nature of the work he is doing for DH&S. His is a wide-ranging, three-fold assignment, unique to an overseas position.
The first part is to act as a conduit between U.S. and U.K. divisions of DH&S. "We're like liaisons between two different accounting worlds," Macklin says of himself and his three American compatriots. Working primarily to protect the interests of Deloitte's U.S.-based multinational clients, he reviews the work of the DH&S London office, assists English accountants where necessary, and helps train local accountants to work with the multinationals.
Second, Macklin helps U.S. clients identify market opportunities in the U.K. and elsewhere overseas. Third, he operates in the reverse mode: helping British firms find markets in the United States.
"That's the real exciting part," he says. "That's where we're going to be spending more and more of our time. Because of the vastness of the U.S. market, we're going to concentrate on helping U.K. firms find debt and equity financing in the United States, help them make acquisitions in America and help them establish U.S. businesses."
Then there's the matter of "equalization," a complex index which evaluates the relative cost of living in major cities around the world. Employers use equalization to insure that the salary paid to the employee is neither too low nor too high for the local foreign economy. Equalization involves such factors as cost of living and currency exchange rates.
Since London is slightly more expensive than New York, Macklin is paid an equalization fee by DH&S. "I'm very happy with the equalization arrangement I have," he says. "Except for the overseas premium, I'm not financially better off, nor am I worse off, for living in London. The attempt is to equalize, not materially affect, the person's lifestyle."
One thing that equalization rarely covers is housing. But DH&S, like other firms, tries to make sure employees are fairly treated. One recruiter at a major accounting firm says that most companies pay 100 percent of an employee's housing costs in a foreign city. The employee is then expected to reimburse the company the amount he or she paid for housing before being sent overseas.
"If you lived in Nebraska, where housing costs are low, it just wouldn't be fair to ask the employee to pay all the costs of living in a much more expensive place like Tokyo," the recruiter says. Macklin's housing arrangement in London reflects that reality. He pays DH&S a set amount based on an estimate of his housing costs in New York. In return, he and his wife live in a company-owned flat in Belgravia, an upmarket London neighborhood broadly comparable to Macklin's old Upper East Side haunts.
KNOWING YOUR STUFF
Macklin says his work proves the true mettle of a U.S. accountant working overseas.
"When I go to a meeting here, it's with the CEO or a CFO. They assume you are an expert in your home market," he explains. "These high-powered people don't want to hear you say, 'That's a good question,' or 'I'll get back to you,' when they inquire about the U.S. situation. They want an answer on the spot."
The need to be well-versed in multiple markets is the major reason why Macklin insists that new accountants really have few opportunities to be sent overseas by a major accounting firm or industrial corporation. "When I've recruited on college campuses, I've always stressed that an accounting career, like any other, takes years of work before a person can achieve real proficiency," Macklin says.
"If a young person is looking toward an international assignment, he or she has got to do all the homework. It takes eight to ten years to get there. Good intentions, enthusiasm and desire are no substitutes for experience in the international market."
This column originally appeared in New Accountant magazine.
This column is Copyright © 2017 by Joe Brancatelli. JoeSentMe.com is Copyright © 2017 by Joe Brancatelli. All rights reserved. All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.