2006 hiring and compensation trends.
A number of different factors are responsible for this strong hiring activity and resulting changes in compensation, including:
** Corporate governance demands. The continued influence of the Sarbanes-Oxley Act and related legislation on the public accounting sector is stimulating hiring activity at many firms. Organizations seek skilled professionals who can help them support ongoing compliance efforts of both publicly and privately held client organizations.
** Business growth. As firms become more confident about business conditions, they are planning expansion initiatives and need staff to support these efforts. Organizations are recruiting accountants with several years of experience who can hit the ground running when they join a firm.
** Fewer accounting graduates. While the number of people pursuing accounting degrees currently is on the rise, a decline in enrollment in university programs in the recent past is a key factor in heightened demand at the staff and senior accountant level. To secure the next generation of accountants, many firms are increasing their presence on university campuses; some are extending letters of intent to students as early as their junior years.
** Internal promotions. Firms that were not able to reward top contributors with more senior roles and responsibilities during the economic downturn are making such promotions today. As a result, firms need to fill the vacancies left by those who have moved up within their organizations.
To remain competitive under these conditions, firms are reassessing their compensation packages for new hires and existing staff at all levels. Many are encouraging employees to recommend skilled individuals for job openings by providing referral bonuses. They are also offering special performance bonuses, enhanced benefits and greater advancement possibilities to attract and retain top accounting professionals. Anticipating the retirement of baby boomers, many are implementing succession plans and preparing staff to assume more senior roles when vacancies arise.
Salaries in public accounting are expected to increase across the board in 2006. Following is an overview of specific compensation trends at small and mid-size public accounting firms, based on our 2006 Salary Guide. (Note: The salary figures listed below represent national averages at the time of hire and include professionals in audit, tax and management services. They do not reflect overtime or bonuses, which are significant portions of compensation for these positions. Add up to 10 percent for graduate degrees or professional certifications.)
Senior Manager/Director -- Senior managers and directors at mid-size firms ($25 million to $250 million) will enjoy a solid 3.4 percent increase in base compensation in 2006, to between $76,750 and $111,000 annually. At smaller firms (up to $25 million in sales), average starting salaries are forecast to rise 3.2 percent, to the range of $71,400 to $90,250.
Manager -- Managers at mid-size firms will see base compensation of $66,500 to $83,250 a year, up 3.5 percent from 2005. Average starting salaries for managers at smaller firms are expected to climb 4.5 percent, to between $60,000 and $72,500.
Senior -- Senior accountants at mid-size firms will experience the strongest salary gains of all positions at small and midsize firms, according to our research. Their base compensation is projected to increase 8.8 percent, to the range of $50,000 to $70,000. At smaller firms, starting salaries will climb 4.2 percent, to between $47,000 and $59,250 a year.
1 to 3 Years -- Base compensation for accountants with one to three years of experience at mid-size firms will be in the range of $43,750 to $53,000--a notable 7.2 percent gain from 2005. At smaller firms, average starting salaries are projected to increase 4.2 percent, to between $39,500 and $47,000.
Up to 1 Year -- Starting salaries for entry-level accountants are expected to post strong gains in 2006. Accounting professionals with up to one year of experience will be offered 7.5 percent more this year than last year at mid-size firms, to the range of $36,750 and $46,000. Those beginning jobs at smaller firms will see base compensation of $35,500 to $42,500 annually, up 6.5 percent from 2005.
The starting salary ranges provided above will likely vary based upon factors including region and area of expertise. For example, in major metropolitan areas where the cost of living is considerably higher, base compensation for top accounting professionals typically exceeds these ranges.
As business confidence grows and firms prepare for further expansion, there will be a corresponding need for more accounting personnel. Firms that take note of trends and adjust their hiring and compensation practices accordingly will be in a stronger position to secure the best talent today and in the coming years.
*The 2006 Salary Guide includes starting salary ranges for more than 100 accounting, finance and banking positions, as well as information to customize salaries for 70 local markets. To order your free copy of the Salary Guide, please call (800) 474-4253 or visit www.roberthalf.com.
Max Messmer is chairman and CEO of Robert Half International Inc. (RHI), parent company of Robert Half[R] Finance & Accounting, Accountemps[R] and Robert Half[R] Management Resources. RHI is the world's first and largest specialized staffing firm placing accounting and finance professionals on a full-time, temporary and project basis. Mr. Messmer's most recent books are Motivating Employees For Dummies[R] and Managing Your Career For Dummies[R] (John Wiley & Sons, Inc.).
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|Publication:||The National Public Accountant|
|Date:||Dec 1, 2006|
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