plus 17 extraordinary benefits to consider offering.
by marc rosenberg
cpa firm staff: managing your #1 asset
“if you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it, you almost don’t have to manage them.” – jack welch
“pay your people the least possible and you’ll get from them the same.” – malcolm forbes
every cpa industry survey we’ve seen for decades shows that compensation is either no. 1 in importance to staff or close to it.
more: staff crave advancement and challenge | what leadership looks and feels at cpa firms | eleven things that good mentors do | give the recognition your staff needs | the importance of great bosses | how remote work is impacting accounting firms | make work flexibility work for everyone | why staff leave cpa firms … and how to stop them | how to solve the big disconnect in talent management | what relevance means for staffing in accounting | how accounting staffing has changed
exclusively for pro members. log in here or 2022世界杯足球排名 today.
our feeling is that compensation is the ante to enter or stay in the game. put another way, according to jeremy wortman:
if college graduates are looking for their first job, or if a young person with a little experience is job hunting, compensation is huge. if a person has two offers, one for $60,000 and the other for $65,000, the higher offer will get the person almost every time. but if the offers are $500 apart and the person likes the firm offering the lower salary better, it’s likely that the lower-paying firm will get the nod.
assume a situation where a senior or a manager at a cpa firm is doing well and is highly thought of. further assume he or she earns $120,000. if this person gets an offer from another firm for $140,000, compensation may affect the decision significantly. but it’s just possible that opportunity may be more important than money. it depends on the person and the situation.
just because compensation is at or near the top of the list, this doesn’t mean it always trumps everything else. if people are well paid but unhappy with their jobs, opportunities at other firms will most likely trump the money.
regardless of how this issue is analyzed, compensation is clearly very important to both staff recruiting and retention. firms interested in attracting and retaining good staff should make sure that they are offering competitive compensation.
tips for setting base salaries
- be in touch with the market. at a minimum, access salary surveys. also, touch base with executive search firms; they often have a good sense of compensation levels.
a very powerful tactic that many firms either don’t think of or feel is not worth trying is to poll your competitors. you will be surprised at how willing they are to share data.
tip: when you ask other firms for compensation data, ask them to respond with three components: base, bonus, overtime and total. this way, you ensure an apples-to-apples comparison.
another benefit of polling other firms on salary data is that it arms your firm with useful information in the event that staff complain they are underpaid when in fact, they are paid fairly.
true example: recently, a longtime client in a large city called marc rosenberg with a problem. this firm had a manager who was very highly thought of and was on track to be a partner. the manager’s salary and bonus totaled $120,000. the manager met with the managing partner and told him that, based on his feedback from friends at other firms, he was underpaid. he went on to state that $140,000 would be fair.
during marc’s call with the managing partner, there were two separate but related challenges. first, was the manager correct that he was being underpaid by $20,000? second, if the firm increased the manager’s salary by $20,000, this would put his salary at or near the compensation of senior managers.
marc told the managing partner that he would contact a dozen firms in the area and find out how they would compensate a manager with the person’s age, experience and talent. his research confirmed that, indeed, the manager should be earning $140,000. the firm is still trying to decide the extent that it needs to change the pay scale of senior managers.
the message is this: given the awful labor supply for staff, firms are raising salaries at unprecedented levels. all firms must continually make sure that they are paying their staff at least market level.
- do not, under any circumstances, use national surveys, including those tabulated by your own association, that show average compensation for various staff positions and/or years of experience. when firms from a range of metro population centers, such as new york, pittsburgh, new orleans, des moines, santa fe and macon are included in the computation, the results are meaningless to an individual firm. firms need salary information from their own market, not a national average.
- take care of your stars first; don’t worry about offending the marginal or ordinary staff. yes, we know, staff talk to each other about their salaries, so others will find out about the stars’ higher compensation and could get upset. stars’ comp is often a lot higher than that of the ordinary staff. for many years now, the average salary raise for staff overall has been in the 6-8 percent range. however, stars often receive 10-15 percent increases.
get over it. giving special attention to your above-average staff is far more important than appeasing the ordinary or marginal people at your firm.
besides, if you compensate the stars the same as the others, it will upset the stars. you can’t win!
- in the old days, firms that were national, regional and/or downtown always paid staff more than local and/or suburban firms, especially for entry-level positions. local firms felt that they couldn’t compete with the big firms.
these days, firms of all sizes are relying less on location in their city to guide compensation because of the very limited supply of staff. people want to be paid for the knowledge and skills they bring to the table, not based on working downtown or the suburbs.
- from time to time, the salary market for staff jumps up, most commonly at the entry and other lower levels. this creates a dilemma for firms because the salaries of lower-level people get uncomfortably close to the levels just above. when this wage compression happens, most firms give a one-time increase to the affected staff to get everyone back on an even playing field.
- more and more firms are moving their staff away from overtime, consistent with the overall movement to treat staff like professionals, not hourly workers. professionals in all walks of life are paid a salary without overtime, with the understanding that the person works as much as necessary to get the job done.
the trick to converting from overtime to no overtime is to increase the base and/or bonus to cover the overtime pay lost. firms must keep their staff’s comp whole after the change. in the first year or two some trial and error may be necessary, but after that it’s smooth sailing.
bonuses
firms have a number of different bonus programs:
- goal setting. create a short set of high-impact goals that are linked to a bonus. make these goals smart: specific, measurable, attainable, realistic and time-bounded. for example:
| goal | % of total bonus |
| join abc organization and become active. | 10% |
| convene 3 meetings per month with clients and/or prospects, by name, over breakfast or lunch. | 25% |
| develop expertise in a technical area or an industry that provides genuine value to the firm. | 15% |
| head up the firm’s new-employee orientation and training program. | 5% |
| achieve annual billable hours of ____________ at a minimum realization of _____%. | 20% |
| management’s discretion. | 25% |
| total | 100% |
caveat: goals should clearly help both the firm and the staff.
to increase the likelihood that the goals will be achieved, put everything in writing and set hard deadlines.
a sure way for goals not to be achieved is to develop the goal on january 1 and then never discuss progress with the person
until december 31. progress toward goals must be monitored regularly throughout the year.
- bonus for bringing in new business. some firms prefer to build this into the staff’s annual salary increase. the downside is that if the bonus is built into the base salary, the bonus is paid every year for the same accomplishment.
my tip on this: make sure that the program pays for generating leads for more senior personnel, in addition to actually closing a new client. it’s a lot easier for young staff to generate a lead than close it.
- discretionary bonus tied to production and intangible performance factors. bonuses are determined by the subjective judgment of the firm. they are often also affected by the firm’s performance. partners reason that if the firm had a really good year, they should share some of the profit with the staff instead of pocketing it all for themselves.
there are three problems with this method:
-
- the staff have no idea what they have to do to earn the bonus, because most firms don’t disclose specifics about how the bonus is decided. so at the end of the year, staff nervously open an envelope without any idea what is inside.
- most firms that award discretionary bonuses do so without regard to differences in performance among the various staff members. they often decide an amount to be paid for different positions: staff, senior and manager, with bonus amounts higher for each successive level. also, there is often no consistency from year to year regarding how those bonuses are awarded.
- this approach lends itself to one of the cardinal flaws of bonus programs: annual bonus awards get to the point that they are expected by the staff and don’t have any incentive impact.
- pay bonuses strictly on the basis of staff exceeding their billable hour targets. payouts may be quarterly or at year-end.
- pay bonuses to staff who refer new hires who stay with the firm for a prescribed period of time. that is, create a referral program.
- pay bonuses to staff who obtain signed change orders on client engagements.
an important point: regardless of how you decide to pay bonuses, always give staff an expected range each year. while it may seem fair to set the range as low as zero, we’ve seen many firms struggle to recruit talent and be forced to retain staff who are marginal at best (on the premise that the firm is better off with marginal staff than no staff). in these cases, it may be reasonable to pay even these staff a small bonus.
when setting the bonus range, err on the side of the lower range versus the higher. this is for obvious reasons: say the firm tells staff at the beginning of the year to expect a generous 20-25 percent range but then has a down year because of economic reasons and can’t afford to pay that out. you are left with unhappy staff who lose trust in leadership and may start looking elsewhere.
one of the best staff compensation practices we’ve ever seen
each year, ask each staff person to write a one-page letter explaining what they would like to be paid and why. the substance and credibility of the letter and their ability to prove their case are factors affecting the bonus award.
extraordinary staff benefits
- staff are offered tuition reimbursement to pursue a graduate degree after completing a certain number of years of service at your firm.
- staff are given lots of options for outside courses in university/curriculum-based training.
- staff are offered a study-abroad opportunity with a sister firm in another country for 6-12 months. the foreign firm pays the person’s comp and the home firm pays travel and living expenses.
- the firm invites all employees in the firm, from partner to file clerk, along with a guest, to a resort for a long weekend – all expenses paid.
- the firm provides a separate bank of pto hours for staff to perform volunteer work during the day.
- a $2,000-$10,000 subsidy is offered to first-time home buyers.
- set up a whiteboard in the lunchroom on which staff are encouraged to write interesting things.
- in the tax season, staff are required to take at least one long weekend off.
- following a major deadline, staff are given a day or a week off that does not count toward their pto bank.
- staff are offered sabbaticals after a certain number of years of service.
- the firm provides complimentary concierge services (laundry pickup, grocery shopping, etc.).
- the firm provides meal and snack services:
- chefs are brought in to make lunches or meals are provided via delivery service each day during the busy season.
- in the busy season, celebrity chefs are brought in to prepare gourmet dinners; spouses and families are invited. this gets firm members to socialize with each other.
- corporate accounts for meal delivery companies are used to order meals for virtual team meetings.
- the firm provides caregiving services, including day care on saturdays with licensed providers or access to care providers for elderly family members.
- masseuses, manicurists and shoeshines are available at no charge right in the office. cellphones or tablets are purchased for all firm members.
- the firm covers the cost of a health club membership or provides a stipend to use toward wellness benefits.
- the firm uses a recognition system that awards points to staff members for achieving goals or going above and beyond. staff can redeem those points for company swag, gift cards or even vacations.
- the firm offers a parental leave program. staff are compensated at their full salary for x number of weeks to care for a newborn or adopted family member.