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Human Resources Case Study

How to Keep Them Once You’ve Got Them

A novel approach cuts turnover to half the industry average.

By Bill Bufe and Leslie Murphy
December 2004
EXECUTIVE SUMMARY
A REGIONAL FIRM, PLANTE & MORAN (P&M), developed and implemented a strategy called “rerecruiting,” an ongoing program based on staff recognition and appreciation, to maximize staff retention. Its turnover rate for the past decade ranks between 8% and 15% annually—well below industry standards.

MANAGEMENT-CREATED WORKSHOPS explain the value of rerecruiting and traditional recruiting on college campuses. When P&M recruits potential staff members from college, it discusses their unlimited potential heading toward becoming a partner someday.

THE FIRM CAUTIONS THAT IMPLEMENTING a rerecruiting program is not a quick fix. Leadership must start from the top. If firms rely solely on managers to support the initiative without engaging partners and other supervisory staff, the initiative likely will fail.

THE KEY TO SUCCESSFUL RERECRUITING is consistent and proactive communication with valued staff members. It’s an idea that must be embedded in the firm culture coming from the tone at the top and reinforced through principles, policies and individual commitment.

THE BROAD-BASED COMMUNICATION program emphasizes contact with staff via e-mails and voice mails about firm initiatives, congratulations for a job well done, or a simple “Have a wonderful holiday.” This activity is based on the assumption that the more informed staff members are about the firm’s goals, the more they’ll feel part of the team and subsequently will want to stay with the firm.

BILL BUFE, CPA, is a partner and human resources director at Plante & Moran PLLC, headquartered in Southfield, Michigan. His responsibilities include firmwide recruiting and staff career development as well as compensation administration, performance management, training, and retention. His e-mail is bill.bufe@plantemoran.com . LESLIE MURPHY, CPA, is managing partner of consulting services and director of strategic planning at Plante & Moran PLLC. She is the vice-chairperson of the AICPA. She has been honored as one of the top 10 women business owners by the National Association of Women Business Owners and cited by Corp! magazine as one of the most influential women in Michigan. Her e-mail is leslie.murphy@plantemoran.com .

icture your most valued staff member—that loyal pinnacle of client service, technical knowledge, team spirit and productivity. Now picture that person expressing the unthinkable: She’s leaving your firm for another position. What do you do? Do you offer her more money? A promotion? Adjust her schedule or discuss her unlimited future potential with the firm? Do you point out just how valuable she is to the firm and how much you appreciate her efforts? These words might have been effective last week or last month, but odds are it’s too late now. You’ve lost her.

Your Staff Will Let You Know

When asked “What kept you here?” staff members’ top three responses were

Exciting work and challenge (48%).
Career growth, learning and development (43%).
Working with great people and relationships (42%).

Source: Survey of 8,000 staff, Career Systems International, Scranton, Pennsylvania, www.careersystemsintl.com , 2003.

The costs of staff turnover can be enormous (see “ What’s Your Turnover Risk? ”). From interviewing potential candidates to notifying valued clients that a great client server is departing to dips in productivity while the incoming staff member climbs the learning curve to get a handle on the full scope of the position, losing a critical staff member can be a devastating blow to productivity. The odds are against employers who shortchange staff retention: According to the Bureau of Labor Statistics, the United States will have 10 million more jobs than people by 2010. In addition, says The Conference Board, less than half of all Americans are satisfied with their jobs. So what can you do? How do you keep them once you’ve hired them? This case study details how one firm does it.

Plante & Moran (P&M), a regional firm headquartered in Southfield, Michigan, asked those very questions. To answer them, it developed a strategy called “rerecruiting,” an ongoing program based on staff recognition and appreciation to maximize staff retention. Read on to learn how the firm incorporated this program into its daily activities and culture and how it has kept the annual turnover rate for the past decade between 8% and 15%—about half that of the industry average for large firms.

What’s Your Turnover Risk?

Ask yourself the following questions about your key staff members. The more times you can answer “yes” to these questions, the more likely it is staff will remain with your firm.

Do you know why this staff member works for your firm and not some place else?

Do you know this staff member’s no. 1 career concern, and are you working with him/her to address it?

Does the staff member believe he/she is fairly compensated?

Do this staff member’s values align with your culture?

Does this staff member have enthusiasm and passion for the work he or she does?

Is this staff member’s expertise critical to the practice?

Is this staff member able to achieve and maintain a balance between personal and professional responsibilities?

Does this staff member know you will actively promote his or her development via training and challenging projects?

Have you asked the staff member what the firm can do to help him/her be more successful?

RERECRUITING, THE MANAGERS’ ROLES
When confronting personnel problems, an employer’s instinct often is to throw money at them, as more money ostensibly yields a happier staff member. And it might—in the short term. However, real problems continue and eventually will have to be dealt with—and the more-money solution can be potentially devastating to other staff members who perceive the short-term fix as unfair. Research shows that as long as compensation is fair, it doesn’t tend to be a major factor in staff turnover. So what is? A good retention program.

Nearly 20 years ago, P&M developed its rerecruiting initiative. Its human resources staff spoke with office leadership about staff retention. They convinced partners, managers and staff to “buy in” by reviewing the benefits of the “high-touch” system and achieved the results they wanted: higher staff morale, better teamwork and lower turnover.

To begin embedding the idea of rerecruiting in firm culture, Plante & Moran created workshops to explain its value and that of traditional recruiting on college campuses. When P&M recruits potential staff members from college, we roll out the red carpet. We let them know how much we like them and want them to work for the firm. We discuss their unlimited potential up to and including becoming a partner someday. That’s the first step in the retention program.

At management workshops, P&M poses a question: When’s the next time you’ll be recruited like that? Most likely the answer is only when you’re looking for another job. The essence of rerecruiting is to envision what you’d do today if that valued staff member were to tell you she was leaving—and do it now. The philosophy is to continuously rerecruit staff so they constantly feel important, valued and part of the team. All partners participate in these workshops.

Implementing a rerecruiting program is a gradual process and has slowly become embedded in our culture. One major caution: Leadership must start from the top. If firms rely solely on managers to support the initiative without engaging partners and other supervisory staff, the initiative likely will fail.

The key to rerecruiting is consistent and proactive communication with valued staff members. It’s not a program to be managed arbitrarily; rather, it’s an idea that must be integrated into the firm culture and reinforced through principles, policies and individual actions. These include the following components:

Buddy system and team system. Immediately upon arriving at P&M, each new staff member is assigned a “buddy” and a team partner. The buddy typically has three to five years of experience and functions as a big brother or big sister to help the new staffer become acclimated. The buddy is always available to answer questions, serve as a sounding board for ideas or offer advice. Buddies undergo training to learn how best to help acclimate new staff to the firm.

The team partner takes the mentor role. Team partners are responsible for career coaching and planning and performance evaluations. In short, all new staff members automatically have two people assigned to their care and career development, which helps to build staff loyalty and morale from day one.

In addition P&M has a secondary buddy program that pairs expectant mothers with a staff member who has had a child while at the firm and is familiar with our parenting policies and practices. This buddy helps the expectant staff member transition from work to home and then back to work upon expiration of the leave.

Open-door policy. P&M has an open-door policy whereby staff members are encouraged to talk with team partners, buddies and other leaders about questions, problems or career development at any time.

Performance management system. High-performance and high-retention cultures succeed by creating an environment in which everyone is pulling in the same direction for the common good of the firm. Ensuring that reward systems (compensation and promotions, for example) support the business objectives of the organization is a key component in aligning behaviors with desired outcomes.

Regularly scheduled meetings. Team leaders initiate informal meetings regularly with staff members to rerecruit them. We encourage these supervisors to ask staff questions such as “Do you feel challenged?” “Are you pleased with the direction of your career?” and “How can we help you be successful?” In addition P&M makes staff development an integral part of performance management. Each year all staff members also are required to develop a culture-enhancement goal to be realized the following year. They’re encouraged to step outside of their comfort zone and do something they normally wouldn’t do. This could be participating in a firm-sponsored community service event, such as Paint-the-Town or Adopt-a-Highway, or getting to know a new staff member who’s not part of their department and helping him or her acclimate to the firm. This is above and beyond the buddy program. It’s an additional incentive to assure that the firm culture is enhanced and the rerecruiting initiative continues to be successful.

Formal career planning. Staff members attend two sessions per year: one annual planning session and one midseason checkup. Team leaders make sure they’re in touch with how staffers are feeling, whether they’re challenged, whether they’d like to pursue a different direction and whether they need additional training/development. Many staff members take advantage of free, internal, in-depth vocational/psychological assessment to help them find the right place within the firm to maximize their contribution and fulfill their needs. The goal is for staffers to be excited about their jobs and feel appreciated and valued, even more so than they felt when they came to the firm.

GETTING STARTED
Here’s what P&M suggests CPA firms should do to develop a rerecruiting system of their own.

Develop a core purpose and set of principles. A core purpose and set of principles are more than a framed mission statement residing in the lobby. They’re the foundation of our firm’s culture. These are common-sense statements that supervisors can refer to when making decisions. P&M’s core purpose is “to be a caring, professional firm deeply committed to our clients’ success.” It’s from this purpose that we developed our set of principles. (The full text of P&M’s set of principles can be read online at www.plantemoran.com/about/statement.htm ).

Develop a mentoring program. Start with a buddy system of sorts. It’s a win-win situation, as it helps the new staff member acclimate to the organization and contributes to the current staffer’s development by expanding his or her confidence and skills in communication, relationship building and leadership. It’s important for the program to include all new hires—not just younger ones who are beginning their careers—and staff members at all levels, from administrative to senior managers. The mentoring program is a high priority for all staff members—not something that sits on the back burner until they find the time for it.

RESOURCES
AICPA Resources
Publications
Management of an Accounting Practice Handbook (looseleaf, # 090407JA); e-Map ( electronic, # MAP-XXJA).

Seven Principles for Effective Management by J. Curt Mingle, CPA (# 090480JA).

Conference
Staffing Conference
July 21–22, 2005
Renaissance Chicago Hotel, Chicago

For more information, to place an order or to register, go to www.cpa2biz.com or call the AICPA at 888-777-7077.

Measurement/Evaluation
AICPA Competency Self-Assessment Tool, electronic (# CAT-XXJA). The CAT is free to AICPA members.

More information is available at 800-634-6780, option 1, or at AICPALearning@aicpa.org .

Make an art of recognition. We try to make praise an ongoing practice and avoid stockpiling it for the annual performance review. When a staff member succeeds admirably, tell him or her. You also might consider sending notes home to a spouse or to parents and taking the staff member to lunch for no reason other than the fact that you care. Be sincere and be timely. These personal touches are invaluable as no one can be appreciated too much.

Some supervisors are better at giving praise than others; those to whom it doesn’t come naturally often want to forgo it altogether, rather than be viewed as mechanical or insincere. This is a big mistake. Staff members value recognition—some value it even more than money. And although CPAs are educated and trained to be professional faultfinders, this inherent preoccupation with the negative is a recipe for disaster when it comes to managing human capital.

Staff members’ tenure is determined largely by their relationships with their team leaders. If all you can muster to compliment a job well done is a noncommittal grunt, your valued staff members are probably halfway out the door already. In the book First, Break All the Rules by Marcus Buckingham and Curt Coffman (Simon & Schuster, 2001), the authors say, “If your relationship with your manager is fractured, then no amount of in-chair massaging or company-sponsored dog walking will persuade you to stay and perform.”

Communicate openly, candidly and often. Although senior management can clearly see the future of the firm, the rest of the staff may be puzzled and confused. It’s crucial that senior management communicate the direction of the firm to all staff members and ensure they understand how they can effectively contribute as individuals. For example, our managing partner Bill Hermann travels to all 17 firm offices to conduct “road shows” where he meets with small groups (10 to 15) of managers to express appreciation, discuss the direction of the firm and answer questions. It has proven to be a significant morale booster, which cascades down to other staff members. Leadership and rerecruiting must start at the top.

What a Difference a Decade Makes
F or the first time in history, fully half of the new hires in CPA firms are women, and their unique needs and expectations are major recruitment and retention issues. The AICPA reports that 50% of its new members are women. Its annual survey, The Supply of Accounting Graduates and the Demand for Public Accounting Recruits, showed that 59% of female accounting graduates with master’s degrees were hired into public accounting.

Firms that support the link between women’s advancement goals and the firm’s business goals in their strategic plans are seeing success in the retention of women. Clifton Gunderson has experienced a positive female retention rate due to its emphasis on workplace flexibility and leadership development. Says CEO Carl George, “We now have one of the best retention rates for women in the profession, and it pays.”

The most recent study by the AICPA Work/Life and Women’s Initiatives Executive Committee, which tracks staffing trends in the profession, showed that, after having a child, 90.3% of women return to public accounting (two-thirds full-time and one-third part-time), leaving 9.7% as stay-at-home moms. Media attention in major publications tends to focus more on women opting out of the workforce than on the far greater number who are full-time, viable staff members, managers and partners.

According to Shaun Budnik, women’s initiatives director at Deloitte & Touche: “Since the launch of our women’s initiative in 1993, the percentage of women partners at the firm increased to 17% from 7%, that is, to more than 600 in 2003 from 97 in 1993. The growth in the firm’s revenue for the same period has also been dramatic: U.S. revenue increased to $5.93 billion from $1.93 billion.”

We also have a program we’ve dubbed the “Breakfast Club,” in which each member of management has breakfast once a month with small groups of staff (a maximum of three at a time). There’s no agenda. It can be a simple “getting to know you” meeting or a Q&A session. All levels of staff are included, and more than 600 staff members have attended these meetings over the past five years.

Finally, Bill Hermann and the rest of the management team communicate frequently with staff via e-mails and voice mails about firm initiatives, success stories, congratulations for a job well done or a simple “Have a wonderful holiday.” The more informed staff members are about the firm’s goals and accomplishments, the more they will feel part of the team and subsequently want to stay with the firm.

A famous newscaster interviewed a custodial worker at the Kennedy Space Center in Cape Canaveral, Florida. “What do you do?” he asked. “I helped put a man on the moon!” replied the custodian. This illustrates what can happen when staff are actively engaged.

The time to begin doing what’s necessary to retain your staff is now. Your staff members place more value on spontaneous acts of appreciation and recognition than on those that come when you’re forced to act out of desperation due to a raging job market (see “ Staffing Woes: The 404 Talent War ”).

It’s true that developing a firm culture that puts a premium on rerecruiting is an enormous undertaking. Moreover, it’s a considerable investment of nonchargeable time. However, investing in rerecruiting yields higher staff morale, lower turnover and better teamwork. This, in turn, yields happier clients and a better bottom line, allowing you to continue to invest in rerecruiting. It’s an investment that, frankly, we couldn’t afford not to make.

Staffing Woes: The 404 Talent War
T he word on the street is “Hold onto your staff any way you can.” Employees are being lured away with promises of greener pastures, which translate into workplace flexibility and money. Sounds like an old story, but there’s a new twist: Section 404, Sarbanes-Oxley’s guidance for managing internal controls, is fueling the fire.

“The war for talent is heating up,” says Leslie Murphy, managing partner—client services, Plante & Moran, a regional firm in Southfield, Michigan. “Our professionals are being heavily recruited and receive numerous calls from headhunters seeking experienced CPAs. The ante on referral bonuses has increased as much as $7,000 at some firms.” Murphy says that Sarbanes-Oxley, especially the extra requirements imposed by section 404, has put a tremendous talent pressure on CPA firms that audit public companies. In fact some of these firms are turning away business and letting go of smaller public clients, increasing opportunities for firms of all sizes. This new demand, however, is causing an immediate staffing shortage. “The phenomenon is a double-edged sword,” she says. The opportunities for public accounting firms are endless as long as you hold onto your staff.

“Rule 404 is a huge human resources concern for public companies and their auditors,” agrees Chuck Landes, AICPA director of audit and attest services. “From the senior to the manager level, experienced CPAs are needed to document and test internal control systems as rule 404 becomes effective.”

Companies need extra CPAs to implement and manage section 404’s guidance over internal controls, and CPA firms need to adequately staff their client engagements. The result is a Rubik’s Cube effect on staffing, with companies hiring people away from CPA firms and firms hiring away from one another. Local, regional and national firms are actively recruiting to handle the extra compliance work and staff new business. William E. Balhoff, audit and consulting director at Postlethwaite & Netterville, in Baton Rouge, Louisiana, notes that “Rule 404 has given more work to our profession with the same number of staff to go around.”

Adding to the crisis, says Lauren Malensek, chief human resources officer of the regional firm Clifton Gunderson (CG) in Peoria, Illinois, is the fact that the baby boomer generation is getting ready to retire. Experts such as Bruce Tulgan, author of Generational Shift: What We Saw at the Workplace Revolution, predict a shortage of workers. By 2006, Tulgan estimates, two experienced workers will leave the workforce for every new worker who enters it.

Attracting and retaining qualified staff is not a new concern for firms. In fact it has been their top management concern for several years, but keeping that talent trained, motivated and inspired is another matter altogether. Skimming the surface of employees’ needs on an ad hoc basis might not be the best approach. In a PCPS survey of top talent conducted in 2000, 88% of respondents called respect for work/life issues the no. 1 reason they stayed with their firms. This statistic can be validated from the number of public accounting firm success stories (as well as those in the corporate arena) generated through flexible scheduling programs and creating opportunities for staff to participate in leadership development and mentoring programs.

Firms of all sizes are experiencing section 404 staffing woes: “We are always looking for good people. We are able to find new five-year graduates with strong GPAs from good schools—but finding people with three or four years of experience is very tough,” says managing partner Robert Harris of Harris, Cotherman & Associates, a firm of 15 professionals in Vero Beach, Florida. “Everyone wants to do tax and litigation consulting. Finding people who want to be auditors is very difficult—even though rule 404 is not an issue for us.” Harris says there is no silver bullet; you simply need to keep looking.

Firms increasingly are implementing strategies to retain staff. At CG this begins during the recruiting process. “We are getting prepared for the crisis—gearing up for the shortage of talent,” says Malensek. The firm has deployed human resources professionals to its 54 offices around the country to facilitate training and retention of professional staff. That training includes everything that falls under career development, such as “career pathing,” career planning and mentoring. “Management uses the predictive index, a proprietary management tool developed for personality profiling, during the recruiting and hiring process.” The index has helped CG identify what motivates people—“their work styles, self-confidence and how they relate to each other,” says Malensek—and has been beneficial in team building, training assessment, retention, and promotion and leadership assessment. Krista M. Kaland, partner in charge of Priority One—a plan to improve recruitment, retention and advancement of women—says CG has cut employee turnover in half. Kaland expresses satisfaction with the firm’s global use of the predictive index saying “management of CG is not alone in the positive response. Staff members are happy because they’re able to apply and focus their passions in areas they enjoy.”

Section 404’s challenges already have strained resources and affect all firms to varying degrees, even those practices that do not serve public companies. As it presents opportunities for practice growth and expansion, it also puts demands on firms to attract and keep the best professionals.

—Barbara Vigilante

Barbara Vigilante is manager of work/life and women’s initiatives at the AICPA. Her e-mail address is bvigilante@aicpa.org . Ms. Vigilante is an employee of the AICPA and her views, as expressed above, do not reflect the views of the Institute. Official positions are determined through certain specific committee procedures, due process and deliberation.

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