West Falmouth Associates

How to Retain Talented Staff in Public Accounting

By John Allen, Ed.D.
Reprinted with permission of SUM NEWS

Is the public accounting profession doomed to failure because competent CPAs have found greener pastures in private firms?

Some public accounting firms who find themselves "stuck in the past" and unable to recognize the changing needs of today's staffers, may think so. Not surprisingly, these same firms often suffer from overactive turnstiles, with both employees and clients streaming toward the exits.

In the 21st century, an "Ebenezer Scrooge-Bob Cratchit" employer-employee relationship cannot exist in public accounting firms, largely because employment has become a matter of choice for today's young professionals-their choice!

Visionary firms understand that without high-quality customer service, delivered by a pool of future partners, there won't be a future to envision. And, that's why retention of high quality staff in these firms is "priority one."

Ted Flynn, executive director of the Massachusetts Society of CPAs (MSCPA), recently visited a cross section of the association's membership to see what was "on their minds."

"All they wanted to talk about was staffing and retention," observes Ted. "The issue is so important that the Society has formed a special task force headed by President-Elect Jack Finning of Alexander, Aronson, and Finning to address it."

Low unemployment spawns higher turnover
A key predictor in public accounting firm turnover is the unemployment rate for accountants, which is currently at a historic low.

The economic realities: more marketplace opportunities create keener competition for talent, more frequent headhunter calls, aggressive recruiting-and higher turnover.

Exacerbating the retention problem are "supply side" issues like fewer students entering the profession, more rigorous professional requirements for CPA candidates, and greater private sector opportunities-all influences that further serve to shrink the talent pool available to individual public accounting firms.

In the face of such doom and gloom, the 21st century version of a "Scrooge & Marley" CPA firm may have already turned over the keys to its counting house.

But, like the tale from another century, the story need not end here...bdeeper into the turnover mystery, smart firms have fingered another culprit at work-perception! If a staff member perceives they can find a better job elsewhere, it's likely they will pursue the opportunity.

Of course, the vision of that "better job" elsewhere is always a very personal one. But, dissatisfaction with work assignments, pay, promotional opportunities, supervisors, and co-workers are all factors that may prompt a search for alternative employment.

When staff members are unhappy, lack internal transfer options, and believe they can find another job without financial risk, it's no wonder they begin to look! And, once that search begins (particularly in times of low unemployment), the result is predictable.

They're gone!

Creating a work-life balance
"Long days" continue to be a common complaint. "Work hours are always near the top of the list when staff describe what they don't like about public accounting" says JoAnne Sperry, marketing coordinator for MSCPA, analyzing results from recent discussions with a cross section of member firms about retention issues.

Some firm managers see long work hours, especially during busy season, as a "given" in public accounting. But this generation places a much higher value on work-life balance than their predecessors. According to a recent study by the American Institute of Certified Public Accountants (AICPA), 93 percent of accounting staffers say work-life balance is a "highly important" or "very important" concern.

Indeed, times have changed-and the demands and pressures on accounting professionals are greater than ever before. Dual careers, single parenting, increased involvement in childrearing and children's activities (by both genders), responsibilities for aging parents, and community involvement all add to the workload pressures young CPAs face-often at the very time they attempt to scale the career ladder to become seniors and managers.

For those firms who still 'elieve their up and coming staffers will opt for career success at the expense of home life, these young professionals are already sending a strong message: "DonÕt count on it!"

Flexibility and autonomy pay off.
To attack the problem of long work hours, some firms are increasing staff-sacrificing short-term profitability to retain the services and institutional knowledge of their seniors and managers. Other firms offer part-time and flexible work schedules to accommodate family commitments.

At Alexander, Aronson, and Finning, staff workweeks during the busy season have been reduced from 60+ hours to 50. "We have discovered that if we offer some work-life balance, we tend to keep good employees." says partner Jack Finning. "Over the long run, we feel this will pay off for us in terms of increased staff longevity and individual productivity when we need it."

Giving staff more control over work can mitigate the stress of long hours, while increasing motivation. By developing flexible and alternative work schedules, permitting telecommuting and delegating more authority, many firms are handing off highly-valued autonomy and control to staff.

A word of caution: while many firms have adopted flexible and non-traditional work arrangements to retain good staff, these programs must be carefully monitored to ensure participants are not viewed as "second-class citizens" by associates who may perceive them to be less committed, or not pulling their weight.

Competing for talent.
Not surprisingly, satisfaction with pay also influences turnover. Firms need to compete against the overall market in three compensation arenas: public, private, and government. But, it's not all about money-a staff member working a 100-hour week will feel dissatisfied, even if highly compensated.

Satisfaction with the work itself is a predictor of turnover, says MSCPA's Sperry. 'Variety is at the top of the list for local staff in terms of job satisfaction. Firms that match job challenge to the staff member's interest and abilities and who provide diversity and variety in the work will retain more staff."

Supervisors and co-workers impact turnover, as well. Attentive supervisory practices like timely feedback on performance, meaningful reviews, training, adequate tools, and engaged supervision can help retain good staff and control turnover.

By "tweaking" career and promotion paths to accommodate non-traditional and alternative work arrangements, firms can ensure a steady stream of satisfied employees willing to stay on because their personal needs are being met.

How committed is your staff?
Much like job dissatisfaction drives staff out, organizational commitment invites them in.

By offering interesting and engaging assignments that afford opportunities to work with a variety of co-workers and partners, firms create the "stickiness" to emotionally connect employees with the work and the firm.

Similarly, encouraging and supporting staff involvement with the AICPA increases occupational commitment to the CPA designation. The experience also serves to highlight the unique benefits of a public accounting career: professional independence, prestige, stability, advanced training, and long-range earnings potential.

The more personally (and emotionally) aligned staff becomes with the job, the firm and the profession's culture and values, the more "stickiness" is created.

A surprising number of new recruits and recent hires plan to leave public accounting-even before they're hired! While the field has always been a gateway to private industry and other occupations, firms can help reduce turnover upfront. By asking job candidates about their intent to stay in the field and at the firm, and reviewing their job tenure history, a sense of commitment can be gleaned from prospective hires upfront.

By providing prospective hires with realistic job previews that address both the favorable and unfavorable aspects of the job and workplace environment, unwanted "surprises" that could later lead to a severed relationship are reduced.

Word-of-mouth is another powerful tool. By hiring employees referred by friends or relatives, the firm improves its odds of creating a lasting employer-employee relationship-piggybacking on a loyalty bond that has already been created. Hiring the right people... right away When markets are tight, some managers lower their standards-opting to pick up warm bodies to staff jobs. This is always a losing strategy. When firms employ below-average performers, results are predictable: less productivity, more mistakes, alienated clients, and unhappy co-workers-who wonder why management doesn't notice the talent gap.

One firm that eschewed this kind of the insanity was Boston-based Raphael and Raphael. "Boston is a tough employment market, but we made sure we were patient in our hiring process and didn't compromise our selection standards" says partner Jeff Simmons.

How did they do it? First, they analyzed staff and manager jobs to determine the skills and abilities separating average performers from superior ones. They also asked about "uniquely favorable and unfavorable" aspects of working at Raphael and Raphael.

What the Boston firm found was that staff loved the professional independence, flexible schedule, varied client work, and the firm's informal atmosphere. Using these criteria in the recruiting and selection process, they decided to pursue professionals with "high ability and independent initiative," who also understood when to ask questions.

Raphael and Raphael then developed a "structured selection interview" that was administered by two partners and also included an Internet-based "critical thinking test." Because the test was based on the characteristics of current staff members, candidates who might not fit into the firm's cultural environment were quickly weeded out. The result: a faster decision process that takes the guesswork out of hiring and yields high-quality new staff who readily transition into the firm's culture.

Turning the tables on turnover.
Sometimes turnover is progressive. When a dissatisfied staff member becomes less involved in their work or begins to exhibit the telltale signs of withdrawal-lateness, inattention, or absenteeism-there's a reason. And, managers can often intervene through coaching, counseling or transfer before the unhappy staffer begins a job search.

Another less predictable kind of turnover can occur even with perfectly satisfied employees. Sometimes, a significant event or "shock" in the employee's personal or professional life stimulates turnover. The event can be "good"-like a terrific job offer from a headhunter, a spouse's promotion requiring a move, or even achieving the CPA designation itself. Or, the event can be "bad"-like a family member's death or illness, a bad review, or an argument with a co-worker, partner or client.

To stem this type of turnover, managers need to recognize these "shocking events" early and, without invading the employee's privacy, find out how he or she feels about the event. Good managers have regular "how's it going" sessions to ascertain an employee's job satisfaction. And, they stand ready to intervene when something big happens in the employee's life.

The "retention risk audit" is a new approach that systematically takes the pulse of firm employees about issues that can lead to turnover. Staff members (anonymously) complete a survey about issues such as job satisfaction, perceptions of the job market, and commitment to the firm. Individual or small group interviews are then held to gain a qualitative understanding of particular issues facing the firm. Once issues are defined, interventions can be developed to target areas of vulnerability.

Retention is the upstream cousin of turnover. To keep good staff, public accounting firms must attract and select good raw recruits, focus on predictable sources of turnover, and then design a progressive work environment that mirrors the unique benefits of both the firm and the profession.

"Much of this is simply good management," observes MSCPA President-Elect Jack Finning of Alexander, Aronson, and Finning.

Bob Cratchit would agree.