CPA firms rank staff recruitment and retention issues first among their concerns in managing an accounting practice. Despite increased interest in careers in accounting, futurists predict personnel shortages in all fields. Although work-life balance initiatives may help to get and keep staff, such initiatives may not be as important as the tone top management sets for the firm.

Once again, “finding and retaining qualified staff” topped the list of major concerns for CPA firms, according to this year’s “Top Five MAP Issues” survey, conducted by the AICPA. The survey polled CPA firms across the country ranging in size from one professional (sole practitioner) to 21 or more professionals, asking them to rank the most important practice management challenges they face. More than 1,000 CPA respondents completed the survey, twice the number that participated last year.

Staff recruitment and retention led the list of top five issues for the sixth successive year. Although staffing was the leading issue over all, among respondents from firms with 11 or more CPAs, the staffing issue placed second and “succession planning/identifying and developing future owners” is their leading concern. For sole practitioners, “changes and complexity of the tax law” topped the list. (See the lists at the end of this article for details of the top concerns by firm size.)

One reason for the unease about staffing in recent years has been a scarcity of accounting graduates. Recently, however, this trend seems to be reversing, partly because of the AICPA’s student marketing campaign to increase the number of students who major in accounting and become CPAs. Jim Metzler, AICPA Vice President, Small Firm Interests says, “Clearly staffing is an issue that is impacting the entire profession. Here at the AICPA, we are committed not only to providing resources to help firms overcome this hurdle, but also to exploring how to help firms of different sizes.”

The AICPA and PCPS/MAP groups continue to conduct research and develop programs to address staffing shortages. In late 2000, PCPS sponsored a survey of leading non-partner CPA professionals, the “Top Talent” survey. This assessment was followed in 2002 by the AICPA’s Recruitment and Retention Survey of CPA firm partners, which identified the obstacles CPA firms face in attracting, hiring, and retaining quality staff by evaluating trends and assessing current policies. Results from these surveys can be viewed at www.pcps.org.

Such efforts as these will be needed if CPA firms hope to recruit the talent they need. A tight labor market, however, confronts all businesses, not only CPA firms. Futurists predict a scarcity of employees in all areas. Tod Maffin, a technology futurist, for example, predicts that “by 2006, two people will be leaving for every one available to refill those positions. Two years after that, projections show a worker deficit of 10 million people.” He predicts further that the balance of power between employees and companies will shift radically. Firms then will have to compete to acquire the talent they need.”

Work-life balance
Prominent among the issues that will influence employees’ choices of employer will be work-life balance issues, Maffin says. Among the perks prospective employees will demand increasingly will be sabbaticals, “mental health days,” and paid leave to care for aging parents. The least attractive employers will be those that continue with the current practice of allowing a limited number of vacation days and other traditional time-off options.

Recruitment and retention, of course, should be viewed as separate issues. David Morgan, a partner in a larger firm, Lattimore, Black, Morgan & Cain, PC, in Knoxville, Tennessee, notes that his firm currently is able to recruit some very talented personnel. “Some people are leaving Big 4 firms because of feeling overworked and over-travelled. We have also recruited some folks who left public accounting during the Andersen meltdown, but now find they prefer public accounting to working in industry.”

Morgan cautions, however, that retention is affected by the economic climate. “On the reverse side,” he says, “we have also lost some talented people to industry since businesses seem to be expanding and hiring after a two-year slowdown.” He attributes their exodus mostly to wanting a change in lifestyle. “Unfortunately,” he adds, “Some of them may find that industry is as demanding, just in different ways. Success requires hard work and sometimes long hours, no matter where you work.”

The premium employees seem to place on work-life balance is suggested in the recent responses to Working Mother magazine’s annual survey, published in its October issue. Among the top 100 companies for working mothers were those “committed to work-life programs for their employees despite the tough economic conditions,” says Jill Kirschenbaum, editor-in-chief. Companies on the list (all large companies) were rated on such features as the number of work-life programs offered, employee use of these programs, and women’s roles in the company. The survey gave particular weight to flexible scheduling, advancement of women, and child-care options.

All 100 companies offered flextime. More recent trends include child-care for older children and elder care resources and referral.

Incentives vary
Work-life balance, however, is not the only employee incentive. Staff expectations differ. Therefore Peggy Ullmann of Ullmann & Company, Phoenix, advises, “Figure out what your staff wants—flex time, more overtime during off season, more money, a chance to learn a new area—and give it to them. Different things motivate different people.”

Ullmann recognizes that there may be generational differences in expectations. Consequently, she advises firms to consider such differences. “Give up those ridiculously long hours of our early staff days,” she says. “Yes, working Saturdays during busy season is probably needed, but try to shoot for something realistic—8 to 11 Saturdays, but not a lot of late nights too. Sundays should be a rare working occasion.”

“How do you do this? Plan for it—hire interns and per diem workers as needed, and raise your fees if warranted to reduce the less profitable, more stressful workload. Then take the best care possible of those hard workers: order in lunch; order in dinner for take-home consumption; have an intern pick up bagels, fruit, and snacks throughout busy season.”

Tone at the top
Factors other than work-life issues affect employees’ loyalty to their companies and the likelihood they’ll stay. One factor—perhaps surprising—unearthed by several recent studies pertains to organizational culture. It is that employees are more likely to remain committed to organizations perceived to be highly ethical. This finding on organizational culture was part of a study released in September by two Indianapolis-based firms. Walker Information and the Hudson Institute issued the “2000 Global Employee Relationship Report” based on 10,000 survey responses in 32 nations. The study concludes there is a strong nexus between loyalty, job satisfaction, and retention; and ethics, values, and integrity.

Ethics placed well above pay among young executives considering job offers, according to a McKinsey & Co. study conducted two years ago. The top ranking factor influencing their decision to accept an offer was the firm’s “values and culture” at 58 %, while “high compensation” was important to only 23 %.

Employees’ trust in the company and its reputation are influenced by consistency between senior management’s actions and its words. Inconsistency breeds distrust and a lack of productivity, according to a study by Fenton, Missouri-based Maritz Research. Employees who are dissatisfied with the way their organization communicates with them are less likely to say that they were satisfied with their jobs or that they would still be with the company a year into the future. Employees who approve of the way their organization communicates with them are likely to be satisfied with their jobs and most (79 %) expect to be with the company a year into the future. Similarly, a survey by the Ethics Resource Center in Washington, DC, reported that “employees say that their organization’s concern for ethics is an important reason they continue to work there.”

Good news for many CPA firms, as well as many of their clients is that, according to a study conducted last winter by the aforementioned Hudson Institute, employees of small organizations (50 to 99 employees) are significantly more likely to agree that their company was highly ethical and was led by a person of high personal integrity than were employees in medium-sized or large firms.

2003 General Top Five MAP Issues

1. Finding and retaining qualified staff
2. Succession planning/developing future owners
3. Marketing/practice growth
4. Seasonality/workload compression
5. Fee pressure/pricing of services

2002 General Top Five MAP Issues

1. Finding and retaining qualified staff
2. Marketing/practice growth
3. Seasonality/workload compression
4. The effect of the new regulatory environment on local and regional firms
5. Succession planning

2003 Top Five MAP Issues by Firm Size
Sole Practitioners

1. Changes and complexity of the tax laws
2. Keeping up with technology
3. Keeping up with the standards
4. The effect of the new standards on smaller firms
5. Seasonality/workload compression (tie)
6. Fee pressure/pricing of services (tie)

Firms with 2 to 5 CPAs

1. Finding and retaining qualified staff
2. Marketing/practice growth
3. Fee pressure/pricing of services
4. Succession planning/identifying and developing future owners
5. Seasonality/workload compression

Firms with 6 to 10 CPAs

1. Finding and retaining qualified staff
2. Succession planning/identifying and developing future owners
3. Marketing/practice growth
4. Seasonality/workload compression
5. The effect of the new standards on smaller firms

Firms with 11 to 20 CPAs

1. Succession planning/identifying and developing future owners
2. Finding and retaining qualified staff
3. Marketing/practice growth
4. Seasonality/workload compression
5. Fee pressure/pricing of services

Firms with 21 Or More CPAs

1. Succession planning/identifying and developing future owners
2. Finding and retaining qualified staff
3. Marketing/practice growth
4. Seasonality/workload compression
5. Establishing accountability for compensation for partners