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Expand your client base with management advisory services.


Many accounting firms currently assist clients interview and select accounting personnel, but this service can be expanded to provide small to medium-size clients without a human resource department a full range of human resource services while strengthening the accounting firm's relationship with the client. The clients realize numerous benefits when an outside consultant provides guidance and consultation on their human resource program because consultants lend a degree of impartiality and objectivity when reviewing, formulating and/or implementing a human resource program. This impartiality and objectivity can result in better quality new hire because it usually de-emphasizes the person-focus approach and promotes fact-based decisions. Furthermore, the consultant provides the company with a fresh look at its policies, procedures and goals with respect to its human resources, and the consultant's contact with employees conveys a message that the company is serious about proper handling of personnel matters. Moreover, consultants can apprise management of employment practices which are potentially subject to legal review, including hiring practices, the performance appraisal system and promotion and compensation decisions.

As employees become better informed of their employment rights, it is sound practice for clients to critically examine their employment procedures and decisions to ensure that they are legally defensible. This examination should include recruitment, hiring, promotion, compensation, training and other personnel decisions. By "court proofing" the hiring, dismissal and promotion procedures, the employer can be more confident that management decisions are objective, performance-based, fair and accurate. If court proceedings occur, the company is able to furnish documentation to justify its decision. This ability to document and justify the decision may discourage terminated employees from filing lawsuits or encourage their lawyers to settle quickly.

For all personnel decisions there should be an established set of reliable and valid guidelines to follow which will enhance the legal defensibility of a system or process. A defensible system must demonstrate consistency in its application and measure precisely what it is designed to measure. It must be able to identify and discriminate among individual differences, but not against particular subgroups. Obviously, it is to the company's advantage to hire, train, retain and promote the employees who are best able to maintain and improve the company's efficiency while contributing to the advancement of company objectives. To accomplish this, clients must first assess their own knowledge, skills and ability to implement an effective and efficient human resources program and evaluate their current program. The outside consultant can be the stimulus to initiate the review process and aid in the procedure.

Hiring Procedures That

Protect the Company

To reduce theft, the first step is to eliminate dishonest individuals. A company must implement a careful screening and selection process that checks the applicant's references, credit history and police records at prior residences. A personal character examination may be conducted, which includes items such as psychological testing and/or polygraph tests (where permitted by law). Moreover, applicants need to be made aware that their background and references will be investigated and they will be required to take these tests. This may serve to discourage some dishonest individuals from applying; it also conveys to applicants that employee theft is not tolerated. By eliminating dishonest candidates during the screening process, you will have minimized the potential for employee theft.

Evaluating the Applicants

The client must determine what experiences and job skills are needed and set up some mechanism to evaluate each applicant. To illustrate, assume a company wanting to hire a chief accountant developed a matrix to evaluate and rank the candidates. Furthermore, the company decided to construct and include in the matrix the individual's education, accounting, experience, personal computer skills, management and supervisory skills, geographic accessibility to the work location (miles to residence and traffic conditions) and communication skills. Each applicant would then be ranked pursuant to established guidelines using some scale, i.e. 1 to 7 with 1 indicating weak skills in the area and 7 indicating strong skills in the area. Using this scale, a candidate could receive a maximum of 42 points (7 points x the 6 areas evaluated). The company could then decide to interview candidates receiving a ranking above some number, i.e., 36.

The Interview Process

A personal interview should ideally be conducted by several individuals in an effort to reduce or eliminate personal prejudices in the final hiring decision. It is, however, during the personal interview that the company must decide if the candidate's work habits and management style are compatible with the company and its valued employees. It is important to note that this final stage is subjective and may be the hardest to defend in the event of a lawsuit by a disgruntled candidate, especially if the company's employee conducting the interview asks illegal questions.

Laws vary from state to state, but under the equal employment law personal questions that are unrelated to a bona fide occupational qualification are generally illegal. Moreover, questions where an individual's race, origin, religion, sex, age or handicap status would influence the answer are also generally prohibited.

The following areas of questioning have been found to be evidence of employment discrimination: 1. Questions that indicate age

or birth dates, such as graduation

dates or years attended

school. 2. Questions that indicate the

marital status of the applicant

and questions about plans

for children or child care

arrangements. 3. Questions that indicate race,

national origin or place of

birth, such as color of hair,

eyes or complexion. 4. Questions concerning height,

weight and health are prohibited

unless these issues are

legitimate bona fide qualifications

that must be ascertained

to determine if the

applicant can perform on the

job. Therefore, questions as

to when they last saw a doctor,

if they have filed workers

compensation claims or if they

have any diseases are improper. 5. Generally, questions about

prior arrests, military discharges,

involvement in lawsuits

or other personal non-job-related

questions should

be avoided. However, it is

acceptable to ask if they have

ever been convicted of a crime.

Although of questionable practice, much of this information can be obtained outside the formal interview process. Secretaries or other employees may engage in polite conversation with the applicants while they are waiting to be interviewed, when the applicants are taken to lunch or on coffee break. Once the decision is made to offer employment and it is accepted by the applicant, the client can obtain the personal information from the new employee that is needed for health insurance, bonding or other legitimate needs.

Performance Appraisal

Every client faces the challenge of improving its competitive position, and an effective employee performance appraisal system can contribute to the professional development of the client's personnel, thereby improving their results and performance. However, the absence of an established performance appraisal system suggests that salary increases are not based on performance and may result in salary discrimination lawsuits.

Performance appraisals are generally accepted as the method by which to assess individuals' job performance for salary increases and promotion. Their focus is on individual employee performance and are designed to accomplish any of several objectives. Among the objectives are: a means by which performance differences allow supervisors to make career development decisions involving promotion, training and discipline; justifying merit increases; providing feedback to employees regarding their job performance strengths and weaknesses; improving performance and productivity; and serving as predictors of future success when used for promotional decisions.

The criterion used should provide a standard of reference by which job performance success is measured, should be relevant to what is actually done on the job and should be able to discriminate between high and poor performers. Key dimensions that are expected to characterize the change of positionas well as the personal characteristic that will be necessary for effective performance must be identified.

The appraisal system should follow written formalized company policies that are available to all employees as well as proscribe a standardized and consistent method for appraising each job description. Performance standards should be explicitly explained so that employees understand what is expected, and adequately trained supervisors can objectively measure the employees' performance. The process should be defensible while encouraging fairness and a high degree of accuracy and predictive ability.

Appraisals should be conducted in a uniform and consistent manner with standards based upon objective criteria so that employees' potential for new and advance jobs are reasonably, justifiably and legitimately evaluated. The criteria that are used to evaluate must be practical, sensitive and relevant to the company's objectives. For employees who posses desirable qualifications to undertake additional and more meaningful responsibilities or new positions, the appraisal should evaluate their immediate and long-range potential, including their ability in setting and achieving objectives, planning and organizational abilities, developing subordinates, problem solving and decision-making, effectiveness with other work groups, effectiveness under stress, initiative, productivity and quality of work.

Plans for additional training should be based on the company's current and long-range plans for the individual. There is no assurance that those employees who possess the qualifications perceived to be required for future job changes will in fact be able to perform adequately when job changes are made. If doubt exists or the client desires to observe the individual's actual performance in a higher level job, the client can consider acting or interim positions. To prevent managers from abusing the process in order to retain or promote favored employees, part of the supervisor's own appraisal should incorporate the supervisor's effectiveness in appraising subordinates. This should include a review by upper management of the evaluations conducted by the supervisor.

For the evaluation process to be effective, the supervisor and employee must act in good faith, with both agreeing on the employee's responsibilities and both desiring to maximize performance. The process should include coaching, counseling and training to improve performance. Moreover, the appraisal process consists of more than an agreement as to the employee's responsibilities. It should begin by establishing and communicating at the beginning of the appraisal period what is expected of the employee and the standards by which the job performance is to be measured. Once the supervisor and employee agree on accountability, objectives and standards, there should be an agreement upon the time period in which performance reviews are conducted. This does not preclude interim period evaluations to help the employee improve and accomplish the desired objective; in fact, they may be scheduled into the performance review period. During the interview and end-of-period review conference, the supervisor should discuss what corrective action needs to be taken and establish with the employee time tables for implementing the corrective action. This may also include additional employee training.

To accomplish improved productivity and performance, the goals to be accomplished by each individual employee should be mutually agreed upon by the supervisor and the employee. Prior to setting goals, the supervisor must have a clear understanding of what contributions are realistically expected from their group. Knowing what the total group's responsibilities are, the manager can then write specific responsibilities for each subgroup or employee that fully describes each job. Examples of responsibilities include performance standards (indices), employee development, affirmative action, community and intra-company relations, personal effectiveness, special projects, etc. Once individual responsibilities have been decided, the employee and supervisor should agree on how each is measured. Numerical measurements such as indices are noncontroversial; however, not all responsibilities can be measured with numbers. These responsibilities must be measured by observing employee behavior that can be identified. Once the responsibilities have been determined and the methods for measuring employee results are established, the supervisor and employee should individually, then jointly, set realistic, specific goals for each area of the employee's responsibility. Where appropriate, written plans should be created to accomplish specific goals. Quarterly meetings should be scheduled to track progress, analyze priorities and direct resources toward the desired achievements. The final meeting for the year should begin the process again.

The supervisor must effectively communicate with the employee at each meeting. This requires careful planning and review, ensuring that the supervisor has factual information when discussing the appraisal with the employee. Caution should be exercised when conducting the interview.

Typical mistakes which supervisors make include: 1. Allowing one very good or

poor performance to override

the evaluation process; 2. Using only the most recent

performance because the

supervisor failed to keep records;

3. Ranking all employees the

same; 4. Letting personal and subjective

feelings about the employee's

non-job related personality

affect the appraisal;

and 5. Not being candid with the

employee when job performance

is poor.

Suggestions for improvement should be stated in a positive manner, avoiding criticism where possible. Too much criticism and the employee tends to reject the counselling and the responsibility for any deficiencies. However, praise alone will not improve the individual's long-term performance; the supervisor should discuss the employee's improvements, weaknesses, accomplishments and needs. However, during the interim period, the supervisor should be constantly observing employees' performance, advising them on how to correct mistakes and complimenting them for exceptional performance. The supervisor should record these observations instead of trying to rely on memory when the time comes for the formal appraisal.


When an employee possesses qualifications to effectively perform in the job but is considered to be a poor performer, a lesser qualified but higher performing employee should be considered for retraining. Employees who are dismissed due to marginal performance on existing jobs may plead ignorance of this assessment when there is an absence of an appraisal system or a lack of management feedback. Hence, the implementation of an effective appraisal system is critical to avoid this situation and to reduce the number of marginal performers. (An ongoing appraisal system leaves little doubt in the employees' minds as to the company's impression of their work.)

In conclusion, accounting firms can easily expand their services into the human resources area, especially if they have had the experience of instituting quality procedures within their own firm. With proper marketing, the new service can expand the range of services offered to existing clients and increase the firm's client base.

James F. Hopson, JD, CPA, is professor and chairman of the Department of Business Administration at the State University of New York at Fredonia. He has co-authored two books and has published articles in several tax, accounting and business journals. He received his JD from Southern Methodist University and his MSA from the University of Houson.

Theresa Domagalski received her MBA from the State University of New York at Buffalo with a concentration in Human Resource Management. She is employed as safety/training administrator with Alumax Extrusions, Inc., in Dunkirk, New York. She also serves as an adjunct faculty member at the State University of New York at Fredonia, teaching courses in human resources and management.

Arlene M. Hibschweiler is an assistant professor in the Department of Business Administration. State University of New York at Fredonia. She earned her juris doctorate from the State University of New York at Buffalo, magna cum laude, where she served as an editor for the Buffalo Law Review. She engaged in the private practice of law, concentrating in the fields of taxation and pension law, prior to accepting her current academic position.
COPYRIGHT 1990 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Hopson, James F.; Domagalski, Theresa; Hibschweiler, Arlene
Publication:The National Public Accountant
Date:Aug 1, 1990
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