Flexibility as a retention tool

MAP survey shows CPA firms’ efforts to limit turnover.
By Ken Tysiac

Flexibility as a retention tool
Photo by CatLane/iStock

CPA firms are responding to a competitive talent environment by offering a number of employee-friendly working arrangements, according to the 2016 Management of an Accounting Practice (MAP) survey released last fall by the AICPA Private Companies Practice Section (PCPS) team and CPA.com, the Institute's technology and marketing subsidiary.

The biennial survey examines financial and other information for fiscal year 2015 for the more than 1,500 firms that participated. For the first time in 2016, the survey asked for information about flexible arrangements that firms are offering their workers (see the chart "Firms Offering Flexible Arrangements").

Among the findings:

  • Flex time is offered by at least two-thirds of the firms in six of the seven revenue categories, including 96% of the largest firms ($10 million in revenue and up). The lone exception is the smallest firm category (under $200,000 in revenue), with 55% of those offering flex time.
  • About half of firms offer reduced hours in the offseason. The prevalence of this perk ranges from a high of 65% for firms with $500,000 to $750,000 in revenue to a low of 42% for the largest firms.
  • Telecommuting opportunities are provided by many firms, especially the largest ones (83%). This perk is less popular among firms in the three smallest revenue categories, where about a third of firms offer these options to their people.

These perks may be an important retention tool to accommodate a workforce that showed an uptick in turnover compared with two years ago in three of the four largest firm sizes represented in the survey. The largest rise came in the $750,000 to $1.5 million revenue bracket, where turnover increased from 6.8% in 2014 to 8.0% in 2016.


Firms offering flexible arrangements

Firms offering flexible arrangements

One benefit that various firms handle quite differently is health insurance (see the chart "Percentage of Firms That Offer Employees Health Insurance"). In all firm categories, the percentage of firms that planned to offer health insurance to employees in 2017 is at least as high as the percentage offering health insurance in 2016. In the $200,000 to $500,000 group, for example, 42% of firms said they offered health insurance for employees in 2016, and 51% said they plan to offer health insurance in 2017.

But the share of insurance premiums that firms are shouldering for employees is decreasing. In six of the seven revenue categories, fewer firms covered 81% to 100% of health insurance premiums compared with two years earlier. In 2014, 56% of $5 million to $10 million firms covered at least 81% of health insurance premiums for employees; that number fell to 49% in 2016.


Percentage of firms that offer employees health insurance

Percentage of firms that offer employee health insurance

Three-fourths of firms said that the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, has not caused them to change their policies with respect to health insurance. (At the time of this publication, PPACA remained in force, but its status for the future was uncertain following the national election in November.) But 25% said they are looking to change health insurance strategy and/or policies in some manner to offset increased costs, and 62% of that group said they are shifting more responsibility for health care premiums to employees.

MOVING TO THE CLOUD

The use of cloud-based software—technology that can make firms more appealing to younger staff in addition to providing enhanced capabilities—is on the rise at firms of almost every size (see the chart "Technology Trends"). Double-digit increases in the use of cloud-based software were reported among firms with revenue of:

  • $750,000 to $1.5 million (53%, up from 41% two years ago).
  • $1.5 million to $5 million (59%, up from 46%).
  • $5 million to $10 million (69%, up from 59%).

The largest firms, which held steady at 77% use of cloud-based software, were the only group that did not show an increase in this area.


Technology trends

Technology trends

Meanwhile, all but the smallest firms are using cloud-based remote backup for their systems more than they were two years ago. That increase was most acute for firms with $5 million to $10 million in revenue, 60% of which use cloud-based remote backup now, up from 45% in 2014.

All but the smallest firms also saw increases in the use of Skype or a similar service for videoconferencing. Among the largest firms, 48% reported using such a service two years ago, and 70% reported using videoconferencing in the 2016 report.

Technology is inspiring new methods in recruiting, too, as 77% of firms with $5 million to $10 million in revenue and 83% of the largest firms are using social media to aid their pursuit of new staff. Many smaller firms are not yet embracing this technology for recruiting, as it's used by just 9% of the smallest firms and 5% of firms with revenue of $200,000 to $500,000.

PARTNERS, EMPLOYEES SHARE REWARDS

At a time when firms are experiencing revenue increases (see "MAP Survey: Firms Continue to Grow Revenue," JofA, Dec. 2016), median partner compensation is rising across most of the firms responding to the survey. Four of the seven firm categories saw median partner compensation increase 10% or more—including the largest firms, which saw a rise from $384,786 in 2014 to $443,320 in 2016 (see the chart "Median Compensation, 2014 vs. 2016").


Median compensation, 2014 vs. 2016

Median compensation, 2014 vs 2016

In some cases, firm employees are sharing in the rewards. The median amount spent by firms on professional salaries (excluding owners) rose for three of the four highest firm revenue categories.

For more on the MAP survey, go to the survey's homepage at aicpa.org/mapsurvey.

The MAP survey, the largest benchmarking study of accounting firm practice management topics, is conducted every two years. Representatives from 1,537 CPA firms participated in the 2016 survey, which asked for details about their latest fiscal-year financial results. Responses were gathered from May through July of 2016. The poll's main sponsor is Aon.


About the author

Ken Tysiac is a JofA editorial director. To comment on this article or to suggest an idea for another article, contact him at ktysiac@aicpa.org or 919-402-2112.


AICPA resources

Articles

Publications

  • 2016 AICPA PCPS/CPA.com MAP Survey National Summary (#PCPSSUR03, online access)
  • The Engaged Employee: 10 Initiatives for Successful Firms (#PPM1402P, paperback; #PPM1402E, ebook)
  • Management of an Accounting Practice On Track (#MAPTKD, online access)
  • Management of an Accounting Practice eHandbook (#MAP-XX, online access)
  • Management of an Accounting Practice Bundle (#MAPTKDHI, online access)

For more information or to make a purchase, go to aicpastore.com or call the Institute at 888-777-7077.

Private Companies Practice Section and Succession Planning Resource Center

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, including the Succession Planning Resource Center, as well as a strong, collective voice within the CPA profession. Visit the PCPS Firm Practice Center at aicpa.org/PCPS. Visit the Succession Planning Resource Center at aicpa.org/PCPS/succession.

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