The Virtues and Challenges of a Long Break

Some people do solo retreats for personal development. Others provide volunteer services. One CPA firm partner took his two adopted children back to their homelands—Korea and Vietnam—where his 21-year-old son was reunited with his birth mother, brother and sister after 14 years, and discovered he had six nieces and nephews. Such powerful sabbatical stories are becoming increasingly common.

Historically, sabbaticals have been associated with academia, but businesses began adopting them as early as the 1960s, with fast-food giant McDonald’s Corp., computer chip maker Intel Corp., and some U.S. law firms among the trailblazers.

Although they are still relatively rare in the accounting sector, sabbatical programs have been tapped by firms ranging from small to large as a robust retention and recruitment tool. They provide a platform for invaluable talent development that exposes individuals to growth opportunities. They also encourage a team approach to client service, since sabbaticals rely on collaboration to make sure service is never compromised.

Offering sabbaticals is not without challenges. Many overachievers have trouble letting go of work and fear the implications of an extended absence. For those left behind, a sabbatical means developing a plan to seamlessly pick up a colleague’s work. For the firm or employer, sabbaticals require an investment in scheduling and planning, and may result in lost revenue. But some accounting firms have found that the benefits outweigh the costs.

“There’s a real business case for this,” says Chris McCoy, CPA, human resources director and a partner at Plante & Moran PLLC. “It’s great for recruitment, and it’s an excellent succession-planning and colleague-partnering tool.”

“The sabbatical program helps us strengthen our client relationships from a team approach,” says Hugh Frisbie, CPA, who, as managing director of the RSM McGladrey Network, works with CPA firms across the country. On his own sabbatical, Frisbie climbed Mount Kilimanjaro in Africa.

WHAT DEFINES A SABBATICAL PROGRAM?
Because they reflect the firm’s goals and culture, sabbatical programs are as varied as the firms that offer them. The majority of programs allow unrestricted time away, meaning that eligible employees or partners can do anything they desire—from painting the house to traveling abroad. Many, in fact, choose to travel, either alone or with their families, but others use the time to accomplish a professional goal, such as enrolling in an executive education course or fulfilling a family need or personal priority, such as being a stay-at-home parent for a time or helping an elderly parent transition to assisted living.

Consulting giant Accenture recently rolled out a self-funded sabbatical program that offers all employees with at least one year of service up to three months of unpaid leave. Similarly, General Mills Inc. has instituted a personal unpaid sabbatical leave as well as a paid “innovation” sabbatical that restricts leave activities to those that can benefit the company. Sabbatical programs that restrict activities generally do so to tie the perk to talent development, executive development or an organizational value.

Eligibility requirements, structured resources and financial elements (paid or unpaid time off) for sabbatical programs fall across a spectrum. Despite their differences, however, all sabbaticals have three elements in common:

• The time away is planned (as opposed to a sudden need for a personal leave due, for example, to a family death);
• It is extended, generally at least four weeks, with some firms offering up to three months; and
• The employee or partner is expected to return (hopefully greatly reinvigorated) after the break.

WHY FIRMS ENJOY THE PROGRAM
Sabbaticals are largely seen as a way to allow critical talent time to recharge, and indeed, people usually return supercharged and more productive than before. What is often overlooked is the fact sabbaticals benefit individuals far beyond the person who qualifies for the long break. For example, sabbaticals offer:

Talent development. Those “left behind”—that is, those covering the individual’s work—enjoy proving grounds and opportunities they might not otherwise have.

When HLB Tautges Redpath Ltd.’s CEO Rob Tautges, CPA, left on his third three-month sabbatical, he put 28-year-old Jill Krueger, CPA, in charge. “The speed of change is requiring younger and younger leaders to take on great responsibilities sooner,” Tautges says. “The biggest mistake some firms make is that they starve these young leaders for opportunities.” Tautges believes his firm’s sabbatical program allows others to take on more responsibility and develop their strengths. “To leave and have confidence in those people sends a strong message,” he says.

For BKD LLP, talent development has been the biggest benefit. “It allows our younger managers to take over some of our key accounts and prove to partners that they can handle it,” says Neal Spencer, CPA, a managing partner at BKD.

Establishment of the one-firm model. Sabbaticals demonstrate that the client belongs to the firm, not to a particular individual within the firm. Not only do clients appreciate others in the firm; others in the firm get to see clients from a new perspective and appreciate them.

“Every time a partner goes on sabbatical, there’s something that pops up that has to be addressed. Our managers have jumped in and taken care of it. We’ve never missed a beat with clients,” says Spencer.

Opportunities to live the firm’s values. Whether it’s “colleague partnering,” “giving back to the community,” or “work/life balance,” sabbatical programs are opportunities for firms to demonstrate their values to the organization and the community.

For example, one of Plante & Moran’s three stated objectives for its sabbatical program is “leading by example.” By going on sabbatical, partners foster a healthy awareness of the ability to promote both a strong work ethic and a more gratifying personal balance to a career within the firm.

Client approval. One Plante & Moran partner, Jerry Gumbleton, CPA, who took his family for an extended stay in Italy on his sabbatical, recalls the firm’s sabbatical program as one of the reasons the firm won over a big client. “We were selected in a proposal situation, and one of the reasons mentioned was that they wanted to work with a firm that has such progressive policies as our sabbatical program and our team partner concept,” Gumbleton says.

David Katri, CPA, of Clark Nuber PS in Bellevue, Wash., explains why clients approve of his firm’s sabbatical program: “Clients know that if a partner is gone on sabbatical and we keep the level of service high that we have great people. It tells them we’ve got bench strength.”

Strengthened brand. A sabbatical program can be a strong indicator that a firm is a great place to work, and a company’s employer brand is critical to attracting and keeping talent, a growing problem many firms face, according to the 2008 Robert Half Global Financial Employment Monitor. The survey said 73% of respondents were concerned about losing top performers to other job opportunities. This was up from 46% in 2007.

SIZE DOES NOT MATTER
Many people naturally assume that sabbaticals are appropriate only at large firms. “In some ways, sabbaticals are easier to manage in a small firm,” says Jill Oswald, administrative partner at the Portland, Ore., firm of McDonald Jacobs PC, which has offered sabbaticals to its six partners since 1995. Every client at Mc-Donald Jacobs is served by two partners—a primary partner and a secondary who covers when the primary is away on sabbatical. Trust and collaboration are required, Oswald says. “We take care of our clients, and we take care of each other. We’re a cohesive firm, and the sabbatical program has helped us become one over the years.”

Helena, Mont.-based Anderson ZurMuehlen & Co. PC, with 19 partners, has offered sabbaticals since 1994, long before the firm grew to its current size, says partner Sam Allred, CPA. Size doesn’t matter; the key to a successful program in any size firm is careful planning, says Allred. He observes that when a partner goes on sabbatical, the client base produces the same amount of billings as in a nonsabbatical year. In other words, sabbaticals in his firm do not harm productivity.

SABBATICAL CHALLENGES—AND WAYS TO ADDRESS THEM
As Allred points out, careful planning is critical to a sabbatical program’s success, which begins with a well-crafted policy and clearly defined processes for work coverage and re-entry. Planning also includes anticipating and addressing potential barriers to success, such as:

Fear and ego. Some overachievers might be hesitant to leave, believing they are so invaluable they can’t be away for a while, says Reznick Group PC’s CEO Ken Baggett, CPA. “That’s an ego thing, as well as fear, and [the sabbatical-goer] has to get over them.”

BKD’s Spencer says the firm experienced a lot of apprehension when it rolled out its sabbatical program in 1998. “Those going on sabbatical thought, ‘Oh my gosh, the firm’s going to realize that it can exist without me,’ ” he says.

To address the “ego problem,” many firms with sabbatical programs make participation mandatory. Reznick Group even takes the concept of mandatory participation a step further: It penalizes those who are unwilling to participate by reducing their salary in one year by 5%. If, on the other hand, they do step out on sabbatical, they’ll get a bonus of 5% of their previous year’s total compensation.

Lack of top-management support. Support from the top is essential. From the start, people have to believe in the program and participate. “Firm leadership has to truly believe that it’s a good thing in order for it to be successful,” says CEO Bob Hottman, CPA, of Denver’s Ehrhardt Keefe Steiner & Hottman PC, which offers a four-week sabbatical and a $10,000 sabbatical bonus to its 39 partners every three years. “[Management] can’t offer sabbaticals and then resent it when people take them.”

Scheduling. In a 15-partner firm, having six people take a sabbatical in the same year would be a serious threat to business. Particularly in the initial years of a program, sabbaticals have to be timed carefully. Most firms don’t allow sabbaticals during busy season, and many require participants to submit their departure intentions well in advance (a year, for example). Doing so allows adequate work-coverage planning.

Re-entry. “The first couple of weeks after you return can be intense,” says Clark Nuber’s Katri. But appropriate delegation, planning and client communication should substantially ease this burden. A solid workcoverage process ensures a smooth and painless re-entry (see sidebar, “Tips on Re-Entering After a Sabbatical”).

“I got back to work and had no voice mail and three e-mails. Literally, by 9 a.m. that morning, I was caught up,” says BKD’s Spencer. “Everyone had taken care of everything. If you plan it right, that’s one of the best parts.”

Potential attrition. Perhaps the gravest possible pitfall is attrition. Although it rarely happens, it is possible that a person on sabbatical may discover that he or she wants to leave the firm. To reduce the risk of this, sabbatical policies sometimes include a clause that requires reimbursement of the sabbaticalgoer’s salary paid while on leave, should he or she leave the firm within a year after returning.

HOW TO INITIATE A SABBATICAL PROGRAM
None of the potential concerns of a sabbatical program is insurmountable. The best programs take the sabbatical concept a step further and find good methods for leveraging the program for talent development, team approaches to client service, succession planning and brand development.

“Everybody can find a way to shoot these programs down,” says Katri. “In the end, we thought, ‘Let’s try it and see how it goes.’ ”

Firms considering instituting a sabbatical program can avoid obstacles to success by following this plan:

1. Determine objectives. Is the objective to re-energize partners, encourage colleagues to partner and delegate, attract and retain younger-generation associates, provide developmental opportunities, or improve your firm’s culture and morale?

Define the firm’s objectives; they drive every aspect of the program.

2. Study the market. Be aware of what other firms are offering, and consider checking out what companies outside of the profession are doing, too. Sabbaticals are being used in a number of ways; some companies even offer more than one type of program, each with its own objectives.

3. Involve employees and partners. Once the main objectives and range of policy possibilities are established, involve others through either a formal survey or informal round-table discussions. Gathering input from the troops on topics such as perceived challenges and opportunities of work coverage, as well as anticipated benefits of the sabbatical program, will help gain buy-in and may provide valuable information that will help shape the program.

4. Develop the program. Write a sabsabbatical leave policy. Create support documents such as departure checklists, timelines, work-coverage processes, and scheduling requirements before implementing the program. A sample policy is available here.

5. Find one or more champions. Who in the firm is solidly behind the sabbatical program and can get people excited about participating? Having one or more champions is particularly important in the early stages.

6. Pilot the program. Roll out the sabbatical offering with the understanding that it will be evaluated after the first year and adjusted as necessary.

How Much Does It Cost?
As with other human-capital initiatives, establishing a concrete cost/benefit matrix for a sabbatical program can be difficult. Costs—at a minimum, salary paid during the sabbatical plus lost revenues—can be calculated, but quantifying benefits is almost impossible.

At Clark Nuber, which offers partners a three-month paid sabbatical after seven years (and thereafter every five years), the average salary paid during a sabbatical is $75,000. The lost revenue depends on whether the sabbatical-goer is a tax partner or an audit partner.

“In the case of a tax partner, the lost revenue [during the sabbatical] could approximate $75,000, which would probably represent specialized consulting unique to the partner and not compliance work,” says Clark Nuber CEO David Katri. “In the case of an audit partner, most of the audits are fixed-fee, so the audit department doesn’t really lose any revenue. The work gets done by subordinates and other partners.”

Katri notes revenue could be lost in another area—sales development. “It takes the partner time to get this process going again upon his or her return,” he says.

BKD has a partners-only program. With 240 partners, it may have 60 individuals out of production on its sabbatical program one month each year. “We lose about $1.5 million partner billable hours on an annual basis,” says BKD CEO Neal Spencer. “But the program more than makes up for itself in allowing others to serve those clients and from having a recharged partner upon return. I feel strongly this helps with turnover, as employees are given opportunities to step up to new challenges. … It hasn’t affected our profitability; in fact, I think it’s helped. These partners come back with more energy and enthusiasm, and their stories are inspiring.”

Another way to look at the cost of a sabbatical is to calculate the costs avoided—losing and replacing valuable contributors. According to Rita Keller, management consultant to CPA firms and president of Dayton, Ohio-based Keller Advisors LLC, the cost of replacing an entry- to senior-level person is roughly 150% of salary and stretches to 200%–250% of salary for manager-level employees in accounting firms.

Joel Cooperman, CPA, managing partner at New York-based Citrin Cooperman & Co., agrees. “It costs us basically four weeks salary per person, which is far less than paying a recruiter and retraining someone,” Cooperman says. “It’s a huge morale play for the staff. When they get to the fourth year and they smell what equates to nine weeks vacation about two years away, it’s very hard for them to walk out.”

Tips on Re-Entering After a Sabbatical
The key to a successful re-entry to the firm after a sabbatical is thorough planning prior to leaving. As part of their preparation, sabbatical-goers should:

1. Schedule the first three days back before they leave. A good formula is 30% unscheduled time and 70% scheduled for meetings of one hour or less with key people, who will have covered aspects of the job or client work during the sabbatical, as well as time spent reviewing communication materials to get back up to speed.

2. Determine re-entry questions for debriefing sessions. The sabbatical-goer should develop three key questions to ask each person who will have covered his or her work. All parties should agree on those questions prior to the beginning of the sabbatical. The questions, which should focus on priority issues, will protect the sabbatical-goer from getting mired in the details of what happened during the time away. Eventually those details will come out, but not in the first days back.

3. Arrange for an e-mail reminder to announce his or her return. It should be sent to the work-coverage team within four days of the sabbaticalgoer’s return and remind them of the return date, the meeting time they scheduled prior to the beginning of the sabbatical, and the three questions that the sabbatical-goer will ask.

4. Prepare a meaningful answer to “How was it?” The returning employee or partner may want to focus on catching up, but people will be curious and interested in what happened during the time off and how it went. The best way to balance curiosity against a need to catch up is to paint the experience with broad strokes and assure everyone that details of the odyssey will come later. A good way to share more details later is by hosting an informal “lunch and learn” session or writing an article for the firm’s newsletter.

EXECUTIVE SUMMARY

n Sabbatical programs are relatively rare in accounting, but firms that incorporate them as part of their benefits package may find that they act as a powerful recruitment and retention tool, help develop talent, serve as a visible statement of corporate values, and engender client approval—all in addition to re-energizing those who take the extended time off.

n Sabbaticals are appropriate for any size firm Small firms as well as large firms can benefit with proper planning.

n The cost of a sabbatical program depends, in part, on the level and function of the person going on extended leave. Commonly costs are calculated in terms of the salary paid and the revenues lost.

Elizabeth Pagano and Barbara Pagano are founding partners of yourSABBATICAL.com and Edge-Quests Inc., a research and consulting firm that helps clients deploy sabbatical programs. Their e-mails, respectively, are epagano@yoursabbatical.com and bpagano@yoursabbatical.com.

AICPA RESOURCES

Private Companies Practice Section
The Private Companies Practice Section PCPS) is a voluntary firm membership section for CPAs that provides member firms with targeted practice management tools and resources, as well as a strong, collective voice within the CPA profession. Visit the PCPS Firm Practice Center at www.aicpa.org/PCPS. For other retention strategies, visit the PCPS Center’s Human Capital Center at http://pcps.aicpa.org/Resources/Human+Capital+Center.