The accounting profession continues to grow at an unprecedented pace. Enrollment in accounting programs and hiring at accounting firms both hit all-time highs in the American Institute of CPAs’ (AICPA) “2015 Trends in the Supply of Accounting Graduates and Demand for Public Accounting Recruits” report (PDF). These factors, combined with the gradual collective retirement of the Baby Boomer generation, have created an environment where top performers are in higher demand than ever before. While some companies, both public accounting firms and other organizations, are able to retain those employees with pay increases, many don’t have the resources to compete in that stratosphere.
However, those companies can level the playing field to a degree by making their workplace a desirable environment and attracting employees who share the company’s values — in other words, creating a strong workplace culture. Creating a culture that draws top employees can help smaller employers survive in an extremely competitive environment.
Last year, the VSCPA conducted a survey to ascertain the importance of firm culture among VSCPA members and how well firms are filling the cultural needs they identify. Areas studied included performance expectations, leadership traits, the value of the CPA designation, diversity initiatives, employee benefits and strategic planning.
Nearly half of the respondents have been with their current employer for 11 or more years. The largest career stage represented was the owner/partner level at 30 percent, followed by the manager level at 27 percent.
To understand the responses to the survey, one question is particularly instructive: What are the key factors affecting your career decisions? On a four-point scale, three factors stood out as significantly higher than others — work/life balance (average rating of 3.58), work environment (3.49) and enjoyment of profession (3.48). Salary and stress also came in just over the 3.0 mark, followed by family issues, opportunities for promotion, employee recognition and a consistent work schedule. These rates were consistent across different ages and industries.
“I definitely think people feel more confident that they can make life and public accounting work,” said Susan Moser, CPA, managing partner at the Tysons Corner office of Cherry Bekaert. “Everybody always used to talk work-life balance, but I think the better term is work-life integration. People need to make phone calls during the day and work at night.”
Planning for employees’ plans
The respondents valued stability, with 56 percent planning to continue with their current role or advance within the organization. Twenty-six percent planned to retire from their current organization within five years, and 13 percent planned to leave their current organization.
Thirty-six percent of respondents under 30 plan to become a partner or C-suite executive, while 34 percent plan to continue to progress in their current role. In public accounting, 14 percent of respondents under 40 plan to transition to corporate finance in the next five years.
That statistic mirrors results from the 2016 AICPA Private Companies Practice Section (PCPS) National Management of an Accounting Practice (MAP) Survey. Across all age ranges, 16 percent of staff turnover was caused by employees leaving to enter business and industry, the second-most prevalent reason following poor performance (18 percent). The other reasons broke down as follows:
- Firm change: 11 percent
- Career change (left accounting profession): 11 percent
- Moved: 8 percent
- Retirement: 7 percent
- Staff conflict: 3 percent
- Insubordination: 1 percent
- Other: 15 percent
Nationally, according to the MAP survey, firms with more than $10 million in revenue saw a median turnover rate of 13.4 percent, while firms between $750,000–$10 million averaged 8–9 percent turnover.
Among the least experienced staff, 2.1 employees leave voluntarily for every employee fired or let go, while that ratio rises to 5.2 to 1 for staff with 2–5 years of experience and 5.5 to 1 for staff with 6–10 years of experience. The senior position, generally occupied by staff with 3–5 years of experience, is often a traditional point of departure for companies as employees assess their career options.
The departure rates illustrate the need for advancement options and diverse career tracks within each company.
“Not every person wants to make it to partner. Not every person even wants to make it to manager,” said Darden Bell, CPA, tax manager at Keiter in Glen Allen. “So you need different tracks to meet people’s standards and make sure they’re an asset to your firm.”
“The best thing we can do is tune into the needs of our people, individually, and take action in response to their feedback, individually,” said Marty Einhorn, CPA, managing partner at Wall, Einhorn & Chernitzer in Norfolk. “It’s critical to understand that one size does not fit all. We embrace the concept of ‘one size fits one.’ You must cater to each individual’s needs and desires and cultivate each individual’s talents and strengths.
“We empower our employees to take initiative and push themselves — our people are very much in control of their own destiny. If someone wants to go from intern to partner in 10 years, that path exists. When we see the determination and drive to go down that route, we’ll do everything in our power to help get them there, but they will remain in the driver’s seat the whole way.”
Planning for turnover
While some churn is healthy, too much turnover can create major issues for companies in terms of institutional knowledge and relationship building. A 2013 survey from Hinge Marketing, “How Clients Choose an Accounting Firm” (PDF), showed that 87 percent of buyers rely on word of mouth when looking for a new financial services provider. If a company isn’t retaining its top employees and keeping recognizable faces in the fold, it runs the risk of losing out on those personal recommendations.
That extends to the look of those faces. Diversity initiatives and maintaining a diverse staff shows clients that a company is committed to supporting individuals who share their backgrounds. According to the 2013 Harvard Business Review study “How Diversity Can Drive Innovation,” “When at least one member of a team has traits in common with the end user, the entire team better understands that user. A team with a member who shares a client’s ethnicity is 152 percent likelier than another team to understand that client.”
One-third of VSCPA respondents said their company had a diversity initiative, while 36 percent said their company had a women’s initiative. More than 13 percent of respondents were unsure if their organizations had either. Respondents rated both initiatives between “somewhat effective” and “effective,” with women’s initiatives being viewed as slightly more impactful.
Employers are equally focused on what’s ahead for their most valued workers. Organizationally, respondents rated finding and retaining qualified staff as their anticipated top issue over the next five years. Projecting further out, owner/partner accountability and succession planning were the top issues cited over the next decade.
In 2016, the AICPA PCPS issued its CPA Firm Succession Management Multi-Owner Survey Report (PDF), in which 95 percent of firms said they needed a written succession plan, but only 44 percent said they had one in place. Smaller firms are less likely to have succession plans in place, a distressing finding due to the AICPA’s recommended time frame of three years to find a new leader. Succession issues impact client retention and the very viability of a company.
“It can’t be, ‘Oh, by the way, I’m retiring and I’m introducing you to the new partner who’s going to take over the relationship,” said Libby Dishner, partner and CEO of Cresco Coaching and Consulting in Richmond. “It needs to be, ‘You know Jonathan. He’s been to meetings. He’s worked on your account. You know him.’
“When you’re transitioning that partner, it’s, ‘Oh, sure, that makes sense.’ Then when you retire, he already has a relationship.”
While 59 percent of organizations have a strategic plan in place, 31 percent of respondents said their organization didn’t have one or that they weren’t aware of one. Of the organizations with a strategic plan, only 46 percent rated their plan as effective or very effective.
That said, members in corporate finance had a slightly greater degree of confidence in their organizations. That segment agreed with the following statements at a rate of 85 percent, compared to between 75 and 80 percent for public accounting:
- My company has a clear vision for the future.
- My company has clear values.
- My company has a clear corporate culture.
- My company’s culture is aligned with what is important to me.
- I would recommend my company as an employer to a friend.
“It’s critical to be able to show staff how the firm and their work is meaningful for them as well as the community,” said Mary Aldrich, chief operating officer at PBMares in Newport News. “As a profession, we’ve always been intent on serving the public and clients and providing good careers, but it goes beyond that now. We have to show how we are bettering multiple facets of people’s lives.”
Employers value the CPA credential
Respondents of all ages indicate their employers make a point to hire CPAs for accounting functions. Ninety-five percent of respondents from public accounting firms say they agree or strongly agree that their organization places a high value on the credential, while 91 percent of respondents in corporate finance agreed. Just under three-quarters (74 percent) of government employees gave the same responses.
Results were less clear on additional credentials such as a Master’s in Business Administration (MBA), Chartered Global Management Accountant (CGMA) or any of the other specialty credentials. Thirty-five percent of respondents didn’t think their organization placed a high value on such credentials, and that number grew to 44 percent for respondents under 40.
Across industry lines, 77 percent of respondents feel they have clear performance expectations at work. While that number matches the results from corporate finance exactly, just 68 percent of respondents over 40 agreed with the statement, while 91 percent of those under 40 agreed.
Results from public accounting firm show the opposite. Seventy-one percent of respondents said they have clear performance of expectations. Just 63 percent of respondents under 40 gave the same answer, compared to 77 percent of those over 40. Interestingly, 100 percent of respondents who worked in government said they had clear expectations at work.
“If they can understand what’s involved, they can figure out where to add balance,” said former VSCPA Board of Directors Chair Colette Wilson, CPA.
Clear expectations are a major way employers and partners can set the tone for their employees. Transparency about what is expected of employees leaves no room for confusion and misinterpretation. Another way organizational leaders can create a culture of transparency is by modeling the expectations they set.
“One of the chief qualities I see in the success and failure of firms is in how the leaders address (or fail to) the very tenets of leadership through their everyday actions,” said former VSCPA Board of Directors Chair Jim Shepherd, CPA, senior vice president at Verus Financial Partners in Richmond. “I firmly believe that leadership is not about striving for greatness or taking credit, but having the confidence, integrity and humility to mentor others to not only succeed but thrive. It is in that environment that truly great things can occur.
“Leading with humility and integrity allows those around you to reach their full potential. Both clients and your team look to you for the confidence to provide direction with humility and integrity; it is that combination that allows for the right choices to occur and for success to be perpetuated.”
Respondents’ employers are offering competitive benefits, at least according to the respondents themselves. Thirty percent of young professionals surveyed categorized their employer’s benefits as progressive, while 60 percent feel they are standard. Just 10 percent of respondents think their employer’s benefits are lagging behind the times.
What do those benefits look like? Across all organization types, more than 80 percent are offering:
- Competitive salary and benefits
- Competitive vacation time
- Payment for professional services
- Payment or reimbursement for continuing education
- Payment for professional licenses
- Payment of membership fees for professional organizations
- Open-door management policy
- Casual dress days
- Up-to-date technology
And it’s not just lip service. More than 85 percent of respondents feel their organizations are supportive or very supportive of their use of benefits. The benefits offered largely dovetail with the benefits most valued by VSCPA members. With the exception of casual dress days, the benefits listed above all ranked above a 3.0 on the importance score in the VSCPA survey, along with 401(k) matching — offered by 80 percent of companies in the corporate finance field — and flex time, a variation from traditional starting and departure hours.
Of the benefits rated at 3.00 or above, respondents rated the importance of each individual benefit as follows:
- Competitive salary and benefits: 3.51
- Competitive vacation time: 3.43
- Up-to-date technology: 3.40
- Open door management policy: 3.33
- Payment for professional licenses: 3.28
- Payment of membership fees for professional organizations: 3.27
- Payment or reimbursement for continuing education: 3.22
- 401(k) matching: 3.17
- Flex time: 3.07
Performance bonuses just missed the threshold at 2.99.
Flex time is likely to grow in both importance and prominence in the coming years as technology makes it more productive and younger, more tech-savvy employees assume a greater share of the workforce. Nationally, according to the 2016 MAP Survey, 71 percent of firms offer flex time, while 54 percent offer reduced hours outside of busy season and 44 percent offer a telecommuting option (2.84 importance score).
“For millennials, there’s a need for understanding that they can get my work done, but don’t have to work within a confined time frame,” said Kim Ruiz, CPA, head of tax at LivingSocial in Washington. “They know what they have to do and make sure to have it done within the required time-frame, whereas older generations want people to be in the office from 9 to 5 or later if you have chargeable hour goals. So there may be some growing tension between the generations on the need of showing face time in the office and how much time is truly needed to get the job done.
“If the older generations want to attract the best and the brightest and retain good people, there needs to be some kind of interaction or understanding that the traditional work life may not work anymore, especially for the growing size of the millennial work force.”
The high rate of health coverage runs counter to national results from the 2016 MAP Survey, where the percentage of firms paying 80–100 percent of employee premiums dropped below 50 percent for the first time, settling at 48 percent. That’s a precipitous drop from 68 percent in the 2010 MAP Survey. Smaller firms are particularly likely to drop health coverage.
As always, the strongest employees are able to leverage their options and draw interest from other firms. Strong compensation and benefits packages and a welcoming culture can help employers retain their strongest talent and enhance future prospects.
Trust in employees
The trust and good faith implied by firms’ embrace of progressive benefits is echoed by the 90 percent of young professionals who feel their leaders give them the authority to make decisions and voice opinions. And more than half of respondents say their organization offers leadership training programs and on-the-job leadership training, along with alternative career paths for staff who are not interested in becoming a partner or senior leader. However, 35 percent say they don’t have a clear understanding of what’s required to become a partner or senior leader in their current organization.
It's that kind of disconnect that, when left unresolved, can fester and lead to negative outcomes for firm and employee alike.
“I think the biggest cultural issue facing our profession is the shortage of qualified staff, coupled with workload compression,” said George Forsythe, CPA, managing partner at Richmond firm WellsColeman. “Firms feel forced to hire staff that they know may not share their same values. Inevitably, the honeymoon ends and both sides are left wondering what they saw in each other in the beginning.
“I believe the lack of vigilance to uphold your culture slowly erodes the fabric of firms and ultimately has a negative impact on our profession. Specifically, when someone has a failed experience, it’s often cast on the profession as a whole and run from public practice.”
The values of leadership
Respondents were asked to identify the top characteristics of a leader, and one trait clearly stood out above the rest. Integrity was far and away the top vote-getter at 71 percent, with visionary focus and willingness to share expertise coming in at 34 percent and trust coming in at 32 percent.
“Every leader that has motivated me to push harder, do more and be better, whether in a professional or personal setting, has been an individual whose actions and overall work ethic reinforced everything they ever said. Never once did I have to doubt their intentions, their honesty or their overall good character,” said LaToya Jordan, CPA, comprehensive annual financial report director at the Virginia Auditor of Public Accounts. “They were not only open to share their successes, but also open to discuss difficulties they encountered along the way. In doing so, it made them more relatable and generated a greater appreciation for their current leadership position. To have trust in a leader truly encourages commitment to his or her vision because you are not in a position of constantly questioning motives.”
Critical decisions for your company’s future
The accounting profession finds itself in a period of transition as the Baby Boomers approach retirement. With younger generations naturally moving into more leadership positions, culture can be a key differentiator as firms and companies look to secure their top performers. As George Forsythe said, “Culture is everything at WellsColeman. It’s the foundation of our connection to the firm. We retain staff and clients based on alignment with our firm culture.”
Along with key decisions about services offered, how companies handle the transfer of leadership to younger employees will determine which companies thrive and which ones are left behind in the coming years. A strong, forward-thinking culture can be especially useful for regional and local firms and smaller companies as they seek to attract and retain top talent.
Mary Aldrich said, “We are open with our people about where we are trying to go. Giving the opportunity to find target interests as well as a chance to work ‘on the company’ instead of just ‘in the company’ through task forces and leadership can provide the career development to keep high performers engaged for the long term.” That kind of employee engagement can help companies survive periods of transition and get into position for future success.
About the survey
The survey was sent to a random sample of VSCPA Fellow (CPA) members who work at public accounting firms and drew 286 responses from all VSCPA chapter areas. The respondents break down as follows:
- Public accounting: 76.9 percent
- Corporate finance: 16.7 percent
- Government: 3.6 percent
- Education: 2.7 percent
Number of CPAs at company
- 0: 0.8 percent
- 1: 14.8 percent
- 2–5: 22.2 percent
- 6–10: 10.7 percent
- 11–20: 9.1 percent
- 21–74: 18.5 percent
- 75 or more: 23.9 percent
- Entry-level accountant/associate: 5.5 percent
- Senior accountant: 14.8 percent
- Manager: 19.8 percent
- Senior manager/director: 17.3 percent
- Executive/C-suite: 10.1 percent
- Owner/partner/shareholder: 30.4 percent
- Firm administrator/liaison: 2.1 percent
Tenure at current employer
- 1 year or less: 7.8 percent
- 2–5 years: 32.4 percent
- 6–10 years: 13.5 percent
- 11 years or more: 46.3 percent
- 30 or younger: 14.2 percent
- 31–35: 10.4 percent
- 36–39: 7.5 percent
- 40–49: 17.9 percent
- 50–59: 25.0 percent
- 60–69: 20.8 percent
- 70 or older: 4.2 percent
- Male: 51.7 percent
- Female: 48.3 percent
- African-American: 3.8 percent
- American Indian: 0.4 percent
- Asian: 2.6 percent
- Caucasian: 89.8 percent
- Hispanic/Latino: 1.3 percent
- Native Hawaiian: 0.4 percent
- More than one ethnicity: 1.7 percent
- Battlefield: 4.2 percent
- Blue Ridge: 4.2 percent
- Central: 2.5 percent
- Highlands: 0.8 percent
- Northern: 31.7 percent
- Piedmont: 0.4 percent
- Richmond: 25.8 percent
- Roanoke: 5.0 percent
- Thomas Jefferson: 2.1 percent
- Tidewater: 18.3 percent
- Out of state: 5.0 percent