Feature Stories - October 2006

Today’s accounting firms face many of the same challenges being experienced by other industries and professions: recruiting and retaining qualified people, keeping up with competition, and reinventing themselves to adapt to a changing marketplace. In fact, it would not be unusual to attend a business mixer and find the same topics of discussion taking place among several different industry leaders. However, the accounting profession also faces unique challenges, which we discussed with the principals at several Nevada firms.

Four generations work side-by-side in today’s workforce, which in any industry keeps upper management hopping. For the accounting profession, it has required managing partners and mentors to become creative in truly understanding the differences between these generations in an effort to provide a working environment that can be all things to all people.

Recently, an article in Inside Public Accounting magazine broke down the specific differences between the generations. The main difference noted is that older generations are used to paying dues and putting in long hours to pursue the partner track, while younger generations do not want to wait 30 years to develop work/life balance. Members of the younger generation see time as currency, according to the article, and they do not want to trade it for money. However, when the older generation is doing the hiring, bridging the gap between the two groups becomes vital and provides challenges at the same time.

So, what’s an accounting firm to do? Baby boomers are getting ready to retire, Sarbanes Oxley has significantly increased work for accounting firms, and firms need to develop succession plans, in addition to filling holes that already exist in the ranks of experienced staff. One thing several Nevada firms are doing is getting to know who the Gen X and Gen Y people truly are and embracing these differences. Instead of trying to make individuals fit the firm, the firm is finding it has to fit the people.

What is this younger group like? Mike Klaich and Caesar Ibarra, partners with Muckle Anderson CPAs in Reno, explain that younger staff "aren’t loyal to a profession or an employer, but to people." While liking the company they work for is fine, that is not the priority that drives these people to work. In addition, this generation also looks to their parents for guidance beyond college. In a world where parents are continuing to provide as much as they can for their children, it is not unusual for a parent to help negotiate an employment contract with the goal in mind of providing their children with as much opportunity as possible when accepting a position with a firm.

Klaich and Ibarra also explain that these individuals like to work in groups, and teamwork is very important to them. However, though these generations like to work as a group, they also like to stand out in the team and create their own individual contribution. Because of this dynamic, firms are adapting in creative ways to accommodate the team mentality. Klaich and Ibarra say their firm started implementing changes a year ago and has been experiencing positive feedback.

The goals are still somewhat the same, in that a staff person has a goal of annual chargeable hours, with an estimation of how that time should be distributed throughout the year. However, the staff person has the choice when it comes to taking care of when the work is done. Flexible hours allow for staff to get their 40 hours in anytime between Monday and Sunday. Telecommuting creates productivity opportunities when a parent normally could lose a whole day of work staying home with a sick child. Now, parents can still remain productive from home.

For Kafoury, Armstrong & Co., the team concept has existed for years through the company’s mentoring program. Partners Felicia O’Carroll and Kristen Burgess explain the firm’s policy is to allow staff to choose the area on which they would like to focus, and then mentor that staff person with a partner and/or higher-level professional who is also strong in that area. In addition, the staff person is mentored in developing a plan to achieve professional goals. The emphasis is continually placed on allowing staff the freedom to determine their future, as opposed to the firm dictating the terms.

O’Carroll and Burgess also note the firm offers flexible hours for 40-hour work weeks, the option to work full-time for part of the year and part-time during other parts of the year, telecommuting and the option to take overtime in the form of time off or cash. The firm also pays for travel time incurred when staff members travel outside the immediate area to work for a client. For a firm with six offices located throughout Nevada, the option to place staff where needed helps to fill gaps, while the extra pay options provide incentives.

O’Carroll also notes that her firm offers marketing assistance to staff who are interested in ascending the corporate ladder. Clearly, developing new business is part of the responsibility of staff in higher management positions. In anticipation of the importance of providing training in all areas of management, Kafoury, Armstrong & Co. employs the services of its marketing company to teach marketing techniques in an effort to better prepare staff in the area of business development.

Carlene Gadosh, chairperson for the Nevada Society of CPAs, agrees that having an appreciation for the importance of work/life balance now, rather than later, is key to finding and attracting qualified people to a firm. For her firm, Thorne & Gadosh, offering flex time, part-time work, job sharing and the option to work from home have been instrumental in keeping staff satisfied. Gadosh explained that many young parents would prefer to work from home, and having access to these options helps achieve that goal.

However, keeping the lines of communication open is still a priority, so a once-a-week staff meeting called "work in progress" allows for everyone to meet face-to-face and stay on the same page. Within her firm, Gadosh noted that flexibility has been a success not only for employees, but for clients as well. She cited the correlation between longevity and the contentment of staff, which directly impacts the satisfaction of the client.

"Clients’ needs are being met on a more timely basis. We have teams who work on each client’s account. The staff may rotate, but the partner in charge stays the same," she explained. Gadosh also described the benefit to having an understanding and appreciation for those people who like to work, but do not desire traveling up the corporate ladder into partnership. These people are valuable because they offer consistency in a client’s team. Instead of having staff members rotate through as they promote up, the people staying in place have the opportunity to develop long-term relationships with clients.

For Curt Anderson of Fair, Anderson & Langerman, adjusting to staff seeking work/life balance is not much of an issue. "All of us as baby boomers want balance in our lives," he said. "For the most part, we are looking for the same things this next generation is looking for. In our firm we’re all after the same thing." Anderson figures staff members average 55- to 60-hour work weeks and that, while it is good to work hard, "Burnout doesn’t do anybody any good."

Anderson also recognizes burnout can also result in producing bad work for clients. He maintains it is important for a firm to be innovative for clients, and if burnout is high, production of creative work is low. Ultimately he believes, "You can’t help clients run a business if you can’t empathize with their needs for balance." At the end of the day, Anderson said he believes in two truths: "Nothing is more personal than business," and, "Don’t get between a mother and her children."

For Anderson’s firm, owners set the example for staff. If an owner in his firm works part-time in the office and part-time at home, it is important that staff members understand those options are available to them as well. He also believes that providing flexibility around necessary days off resulting from illness – or even a well-deserved half-day – are often more important than working around vacations, since working around a planned vacation is easy to manage.

Even larger national firms such as Deloitte & Touche LLP are experiencing challenges with hiring and retention. However, Managing Partner Stephen Comer sees the current trend as cyclical, responding to the current economic boom. Nevertheless, he admits the firm is spending more money on recruiting, while certain internal changes have been implemented to accommodate the need to retain qualified staff.

Comer lists significant increases in compensation as one way the firm is attempting to retain current staff. In addition, Deloitte has built more flexibility into schedules, so staff members are able to exercise more control over how work gets accomplished. Over the past summer, Comer said the firm also provided four floating days beyond regular vacation time to each employee to be used at their discretion. Unlike other firms, Comer described a program for paternity leave to help alleviate the stress of introducing a new child into the family. It enables new fathers to spend two to three weeks off after children are born. They also have the option of working from home.

Ultimately, Comer believes current staffing challenges are the growing pains that come with each generation in charge of a firm. He explained that when he came into the profession, "My boss would say my generation were slackers. Every group says they work harder than the next generation coming up." He does not believe the new generation is unwilling to work hard; it is just that they want to work differently.

Though many firms are dealing with the challenges of finding, hiring and retaining talented and qualified people, the reality is that holes sometimes exist. Outsourcing to other firms, and even to India, is an option firms may use. However, in Nevada, outsourcing is seen as a less than desirable option. Gadosh noted that only a few firms in Nevada outsource, usually to India, where there is a high population of accountants who are familiar with the United States tax code. However, she recognizes that many firms outside the state use this option and find it highly beneficial.

Gadosh explained the reason for the lack of outsourcing in Nevada is often relational. "People coming to a firm want help with the planning side," she said. Clients often do not appreciate hearing their work has been outsourced to an individual they cannot talk to in-person. Even if a confidentiality agreement is signed, clients still worry about confidentiality issues. Ultimately, it is better for the relationship with a client if a firm finds alternative means for accomplishing the work."

The accounting profession has long been seen as a man’s world, but recently this has changed with the increase in women entering the field. Across the nation, accounting firms have seen a dramatic rise in the number of women entering accounting programs and ultimately developing careers in the field. Klaich cited the higher level of women in the firm as a direct reflection of the number of women in the graduation pool. Gadosh noted that Nevada also has seen an increase in female partners, as well as woman-owned accounting firms.

Anderson pointed out that more than half the graduates coming out of accounting programs are women. Therefore, while the number of female partners may not accurately reflect the number of women in the profession today, it is just a matter of time before it does. Since this change in percentages started in the 1980s, Anderson thinks it is more a function of timing in getting a person trained for upper management, versus a prejudice against women in the workforce.

For Kafoury, Armstrong & Co. this change has been significant over just the last half dozen years. The firm is entering its 65th year and, at most, had only one female partner until recently. However, that number has now jumped to 10 female partners throughout the state. O’Carroll noted that the staff mix is still about 50/50 men and women.

Making sure these valuable female staff members stay with a firm provides different challenges. Typically, women are tasked with the responsibility of caring for children, and making sure the firm understands this dynamic is very important. Companies such as Deloitte & Touche have programs designed to allow for flex time for working mothers. In addition, female partners supervise a program designed to clearly understand the needs of female staff, so necessary accommodations can be made with the ultimate goal in mind of keeping these women in the workforce longer. Considering that women make up such a large percentage of today’s workforce, addressing these challenges is not just a touchy-feely benefit, but rather a necessity to remain competitive.

Several years ago, the accounting profession went through a change in which it added consulting services to basic accounting and tax services in order to remain competitive and provide the opportunity for clients to receive a "one-stop shopping" experience. However, among smaller firms in particular, trying to be all things to all people did not necessarily provide the payoffs that were anticipated.

Instead, smaller firms came to realize that clients generally come to an accounting firm for core services, and seeking assistance with things such as financial planning, business consulting and IT services were simply add-ons. Ultimately, clients did not come to a firm for consulting services and then add on accounting and tax assistance. The core services were still key for the firm’s success.

With this in mind, many firms that delved into the world of consulting services either backed away from directly offering consulting services, or partnered with professionals to provide everything a client needed. On the other hand, Fair, Anderson & Langerman, although not a large firm, has experienced success with offering a myriad of services in addition to core accounting, audit and tax work. It even spun off a separate IT consulting firm.

For Deloitte & Touche, consulting services are a very successful and profitable offering to clients. However, the firm operates on a national level and is able to support separate departments dedicated to services such as IT consulting and financial planning. Comer explained that Nevada is still small enough not to need dedicated consulting offices. However, the firm is able to pull from resources in other offices when needed.

The accounting profession is ever-changing and often a direct reflection of corporate America today. One aspect that does not seem to change is the foresight needed in order for strong leaders within the profession to meet these challenges head-on, remain creative in finding solutions, and ultimately develop proactive programs to turn challenges into success.