Could Grant Thornton’s EBT model help it attract and retain staff?

Last month, Grant Thornton revealed that when it agreed a deal for outside investment, it had set aside some equity in the business in an Employee Benefit Trust (EBT). As a result, eligible employees at manager grade and above will be allocated equity units. This will aim to reward them for their contributions to the firm alongside their salary and bonus. The company believes it will allow its staff to think more long term and have a clearer path to partner while allowing the firm itself to retain and attract top talent.

The specifics

Part of the allocation of equity from the EBT is done now as initial units, and then staff will have the opportunity to earn additional units over the next few years by demonstrating good long term behaviours that the company would like to reward.

Fiona Baldwin, head of operations at the firm, refers to these long term behaviours as value add behaviours. “It’s about collaboration and helping people to think beyond their own parts of the business to the full business and being real brand ambassadors for us, both in the client and the people space. Things that are difficult to achieve in a one year period, but are things that we’re looking for people to do consistently year after year over a longer-term period,” she explains.

Other firms with this model

Grant Thornton is not the only firm to have taken steps to reward staff with equity. In April this year MHA revealed that as part of its IPO on the London Stock Exchange AIM it held 9.59% equity in an EBT, a move that chief executive Rakesh Shaunak said “shows our commitment to the future”. This differs to the Grant Thornton model as it is tied to MHA’s IPO whereas Grant Thornton’s EBT came as a result of capital investment.

“The EBT is a huge thing for us in terms of retention, recruitment and talent. That was winning the hearts and minds. Nobody asked for it and nobody expected it but we’re very, very keen, in creating the new structure, that everybody within the firm had the opportunity to benefit from that,” he stated.

Long term planning

It is clear from this move that Grant Thornton is looking to develop a longer term strategy. Baldwin stresses that how the equity in the EBT is divided up has nothing to do with which department made the most deals or the most money, it is purely a plan to give more staff a stake in the company in return for taking a more holistic view of the business. Over a longer period of time the company hopes that it is able to develop a different working culture, one that is not so focused on short term gains over everything.

Grant Thornton also hopes that this move will give the firm a better chance of retaining its best talent. “We are the only firm of our size where the partners have decided, as part of a transaction, that they would not take all the equity themselves, but we would leave a portion both for future partners and for our people in the EBT. I think it will help reward our people who see their long term future here with us, and they will be able to see that they’re effectively contributing to something that is growing for the future as well as, in year-reward and bonuses,” Baldwin explains.

She also states that she would be surprised if it does not help the firm attract talent from elsewhere. “It’s something that’s market leading, and it’s over and above a very competitive salary and benefits and bonus package. For people who are really keen on accountancy being their career choice in the long term, that they want to be with a firm that will think about things alternatively, that will do things that are slightly market leading, but very much have our people and our clients at the centre of that. It’s difficult to see that the EBT won’t help that,” she says.

Partner training programme

Baldwin also believes that this move will help the progression and development of existing staff as it will act almost like a partner training programme, giving staff who progress to manager experience of what it is like to hold positions of responsibility while having an interest in the performance of the firm. These positions will have less pressure and expectation than a partner but will allow some people to get a taste of what being a partner requires before potentially making the step up. However, it differs from other partner-track models as it incentivises things other than pure cashand deal making. She also hopes that this move offers a clear progression path to staff, helping to retain them.

The more senior our people get, the more equity they have. This allows it to be more of a continuum between managers, senior managers, directors and partners, so that people are thinking about things in the right way. As a result, we will communicate to our people in the same way as we will communicate to our partners going forward. There is an element of us all striving for the same things together, and the EBT provides real alignment between our people and our partners,” Baldwin states.

However, Grant Thornton is the biggest firm that has embarked on this journey, something that Baldwin believes sets the firm apart from others. “It’s shown both in terms of partners and our people, our partners held back a significant amount of equity for future partners. So this is not a closed door. It’s a sizable amount of equity for future partners and also then for our people. And I’m really proud that our partners voted to do that,” she says.

It remains to be seen whether this trend will catch on at other firms but it is clear that Baldwin and Grant Thornton have no regrets. “We feel it is the right thing to do. We think it provides longevity and success, succession and a real chance for our people to practice and get skilled in thinking about things in the way that our partner thinks about things. Clearly it is up to every firm and every partnership to do what they think is right for their people but we think that sharing the benefits, sharing the benefits of growth in the firm, is the right thing to do for our people,” Baldwin states.