The candidates for this program are top notch students who have excelled in their area of study. The U.S. offices are getting some very bright and ambitious people who are looking to kick off their career. There is a lot of hype about the high rate of turnover in public accounting firms, but few people take into consideration the necessity of turnover. If every employee that the firms hired stayed with the firm until manager, there would not be enough positions to promote everyone. The turnover rate is a natural weeding out process that allows for timely promotions. So, by having the Chinese Interest Program candidates return to China to continue their career, it leaves room for U.S. nationals to be promoted. Also, this turnover is considered a good thing because they are staying GT, just switching offices. I was told that GT is looking at their firm from a global perspective. They try to view all of their offices as a big family, whether the office is within the U.S. or abroad. The Interest Program not only strengthens relations between the offices, but strengthens the firm as a whole in the global market. This program allows the China offices to gain valuable employees who have been trained in U.S. GAAP to come back and share their knowledge, which in turn helps the industry move towards common international standards (which will help businesses and investors alike in a globalized economy). As a future GT employee, I view this program as a positive program that provides both offices with a valuable set of tangible/intangible benefits.

Question:

If a KMPG employee in LA goes to work for KPMG in Beijing as part of the exchange program you note, does he/she make their US salary while in China or do they make the salary of their colleagues in Beijing?

If they make their US salary, they would be able to afford to live like kings while in China.

I will be honest when I say don’t know about all of the Big Four Firm’s exchange programs but I do know a little about KPMG’s policy. After gaining some experience (normally 2-3 years) you can apply to work abroad at another KPMG office. Employees who choose to work abroad usually do so for anywhere from 18 months to 3 years. This is great for the firm and the employees because the firm gets to retain experienced employees and the employees get an opportunity to work abroad after having only worked for a couple of years. After reading Erik’s post, it seems KPMG’s program is different than GT’s ‘Interest’ program in that GT is starting their employees working abroad from the start of their career. This seems to be a much better deal for China than the U.S. In my experience, there were plenty of first and second year auditing associates at KPMG to fill client’s demands (and at times there was too many). The major problem was that people were burned out by their third year which is the time when employees start leading teams in completing an audit. Not only do they become burned out but they also are offered much higher salaries, and less hours from smaller, independent accounting firms. So the issue is about not only retaining any employee but retaining employees with experience who are able to provide value to the firm by leading audits and training new hires. The GT program is set up in such a way that the U.S. is only retaining these Chinese employees for a couple of years. The U.S. firms then have the responsibility of devoting the long hours and money that it requires to train new employees only to lose them when they are most valuable to the GT office they are working at in the U.S. China on the other hand is gaining employees who have already been trained. Without question seniors (third and fourth year employees) work the hardest and longest hours in an audit. They plan the audit, sign off on work papers, review associates work papers, train associates, complete their own work papers, and the list goes on and on. GT’s implementation of the ‘Interest’ Program then seems to set up to help their Chinese offices obtain and/or retain experienced employees. I think it will be really interesting to visit KPMG in China to see how they are trying to retain employees.

We will visit KPMG in Shanghai.

The Big 4 and Grant Thornton’s and even the regional California tax and accounting firms in the US are really scrapping for good people right now.

Their situation is even worse in China.

I suspect that when we visit KPMG in Shanghai, when you ask them, “what business problems are keeping you awake at night?”, they will tell you “finding and keeping enough good people because business is exploding and we just can’t keep up.”

Thus, be thinking about how you would attract and retain good people as a manager, especially if you were in China. Also, is Grant Thornton the only accounting firm using this strategy right now? If so, why? If the others are not, why not? Is it working? Does this make Grant Thornton more attractive to you as an employee? To answer these questions, you may need to and should hop onto the web sites of KPMG, PWC, Deloitte, etc. to see what they are up to …

Also, what career opportunities does this need/desperation for good people in China open up for you?