The search for top-notch employees is vexing some finance decision-makers, many of whom say competition for talent is increasing or remains an obstacle.
That's according to a survey by the AICPA, which said employee and benefit costs are a major challenge to their organizations. Some companies are enhancing benefit programs and training to recruit and retain workers.
Sixty-eight percent of the CPA decision-makers who were surveyed reported strong competition for workers. The highest number (43%) said the recruiting environment is characterized by increased competition for good candidates. An additional 25% said strong competition continues, similar to the end of 2014.
Nicole Vanderslice, CPA, is the CFO at Dolan Automotive Group, which owns four car dealerships in Reno, Nev. The company recently reopened a Lexus dealership in a new building that is twice the size of the former dealership of luxury vehicles. Vanderslice said the company expects to add about 50 full-time employees just for that dealership in the next year.
With technology in cars changing quickly, she said, the cost of employee training and equipment upgrades is likely to eat into profits. She cites regulation, such as a new commerce tax in Nevada, as a further obstacle. Another obstacle: Finding high-quality workers who can explain the technology advances to potential buyers.
Dolan is taking steps to attract and retain employees with several changes since Vanderslice became CFO about 18 months ago. The company is trying to eliminate high-pressure sales tactics—a turnoff to many customers—by switching its sales staff to salaried employees instead of commission-based ones.
New workers receive between four to six weeks of paid training when hired, and they are assigned a mentor for their first two months. For workers in lower-paying jobs, such as washing cars, Vanderslice hopes that improved benefits will help cut down a turnover rate that hit 30%. The benefits might seem customary for most workers, but car dealerships slashed benefits during the recession of 2008 and 2009 and have been slow to give them back.
"Something as simple as sick days, which we take for granted, didn't exist, or only in small pockets of the industry," she said.
Recruiting in Reno, especially in the technology sector, has been difficult for Dolan Automotive. Tesla Motors, the U.S. maker of electric cars and battery products, announced a year ago that it would work with Panasonic to open a battery plant in nearby Storey County. "Reno has a growing job outlook," Vanderslice said. "But we are competing now with other industries."
RECRUITING, TURNOVER ISSUES
The hiring survey was conducted in conjunction with the survey that formed the third-quarter CPA Outlook Index. Half of the respondents expect to expand some in the next year, and 10% expect to expand greatly.
And as long as companies are hiring—and as long as solid talent remains elusive—companies are expected to continue wrestling with recruiting and retention.
In April, Deloitte polled 500 executives of midsize companies. Of the respondents, 63% said they had noticed an increase in employees who were taking jobs elsewhere. In a similar survey three years earlier, just 43% of respondents reported higher attrition. Deloitte defines midsize companies as those generating revenue of $50 million to $1 billion.
Finance executives realize that talented workers have more options and that the cost to replace an employee can be steep—sometimes 25% of the employee's salary.
To tackle attrition, executives in the Deloitte survey said they would invest more in technology, raise worker compensation, and boost training.
Chris Wieser, CPA, CGMA, knows this strategy can work. He is the CFO of Hammer Packaging, which makes labels for items such as Nestlé bottled water and Snapple tea. He said the West Henrietta, N.Y., company, which has annual revenue of $125 million, has a culture of investing in technology and in employees, combined with solid benefits.
"We'll interview a bunch of people to find one good person," Wieser said. "It's difficult to find good workers." But once workers remain at the company for a short period of time, he said, they tend to stay.
ASSESS YOUR COMPANY
To assess their competitiveness in a tight labor market, Deloitte suggested executives at midsize companies ask the following questions:
- Are you focused on employee retention by offering competitive compensation and challenging training opportunities? Are you paying attention to voluntary attrition? The tacit knowledge your employees have is valuable, and the cost to replace them can be high.
- If your company provides products or services related to capital expenditures, do you have a strategy in place to address customers' pausing capital spending? Do market conditions provide potential benefits if you are contemplating a capital expenditure?
- Are there merger-and-acquisition opportunities worth considering? Understand the valuation of your enterprise, and monitor M&A conditions in your industry.
- Do you have a solid understanding of the implications and benefits of cloud computing and data analytics?
- Do you communicate again and again to drive engagement and build trust throughout your organization?
For complete versions of these articles, read "Recruiting Environment Remains a Challenge for Finance Decision-Makers," by Neil Amato, and "Midsize US Companies Struggle to Retain Employees," by Sabine Vollmer.
CGMA Magazine is published in conjunction with the Chartered Global Management Accountant designation, which was created through a partnership between the AICPA and CIMA. The magazine offers news and feature articles focused on elevating and emphasizing management accounting issues.