Finders keepers: it's the little, and less expensive, things your firm can offer that attract (and keep) good people.
Welcome to a California CPA firm's human resources department. While the talent pool has improved over the past few years, recruiting those people to your firm--and retaining current employees--hasn't gotten easier.
The high cost of living in certain metropolitan areas of California--think San Francisco Bay Area and portions of Southern California--has made recruitment and retention difficult for many companies, including CPA firms. In a recent survey conducted by Forbes magazine, dubbed "Most Overpriced Places," San Jose was the nation's least affordable city, with San Francisco in second and Los Angeles ninth out of a sample of 150 cities.
But California CPA firms are not alone in their recruitment and retention challenges. In the national 2003 Management of an Accounting Practice "Top Five Issues" survey, "finding and retaining qualified staff" was identified as the most pressing issue facing CPA firms, followed by a similar topic, succession planning.
So, how can California CPA firms attract and retain the best and brightest? The answers range from the extreme--helping an employee with a down payment for a house--to the intangible, such as a focus on work/life balance.
HOME IS WHERE THE HEART IS
When recruiting potential employees from out of state, the No. 1 deal killer is often California's housing market, which ranks among the nation's most costly.
"Housing is really a heart-stopper," says Mary Richardson, a senior consultant at San Anselmo-based Herrerias & Associates, specializing in human resources. "The rest of the cost of living is not significantly different [than in other parts of the nation]. When it comes to persuading people to come to California, you're going to have to do a whole lot more in terms of housing."
Three years ago, San Ramon-based Armanino McKenna LLP decided to take that extra step.
It was during the Internet craze when accountants were being wooed by the promise of instant dot-com riches and stayed away from traditional firms. With the local talent pool shrinking, Armanino McKenna had a difficult time attracting potential employees to the expensive San Francisco Bay Area.
"When we instituted the program, it was almost impossible to find people and attract them," says Joe Moore, managing partner at Armanino McKenna. "The high cost of housing was one of the issues that came up repeatedly. I hear that more and more from other businesses, too, that people are much less inclined to transfer here because they take such a beating on housing."
The firm's answer: provide a low-interest loan of up to $50,000 for a down payment on a firm manager's primary residence. A state program that sells bonds to help teachers live in the communities where they work inspired the firm, Moore says.
Both a recruitment and retention tool, the program uses the federal applicable interest rate at 3.65 percent for the loans, an improvement over the prime rate of 4.25 percent.
"We have a relationship with the Bay Bank of Commerce; they loan us the money and we discount the rate to our employees," Moore says. "Typically, we would repay the principal over seven to 10 years, out of the employee's bonuses."
The program has helped three Armanino McKenna managers pay for housing, especially since the firm moved its headquarters to San Ramon in 2002 and some employees had a hard time relocating from the Walnut Creek and San Leandro offices.
"Without the program, I couldn't have afforded to move minutes from work," says Josh Nevarez, a manager at the 120-person firm. Had it not been for the program, Nevarez says he might have considered looking for a new job.
But others believe there are simpler ways of compensating employees. Human resources consultant Anne Pasley-Stuart, president of Pasley-Stuart Consulting in Boise, Idaho, believes a cost of living differential is far easier to understand and administer than housing loans. Aside from its relative simplicity, the differential--a calculation that adjusts an employee's pay based on the local cost of living--is also fair, and can be administered across the board, regardless of title or position.
"It's a very good recruitment tool, and a good retention tool, too, since it keeps people in the area," says Pasley-Stuart, who also is a spokeswoman for the Society of Human Resource Managers. "It's a fairly common practice. I've seen different kinds of subsidies, but the cost of living adjustment is by far the fairest."
The differential can be updated annually through a variety of cost-of-living differential calculators and software that can take into account an area's cost of living and area base pay, multiple earning levels and geographic differential data.
For example, a CPA making $100,000 in Mobile, Ala. would need to make $229,744 to afford comparable housing in San Jose, according to one such calculator at www.homefair.com.
ASSISTANCE AND INCENTIVE
Other tactics that fall under the umbrella of employee assistance include giving employees access to subscription legal aid or financial counseling and relocation bonuses to help employees get on their feet after a move. Also, a new industry has sprouted to help manage relocation costs, which often includes helping an employee's spouse or partner find employment in their new area.
"The HR terminology is 'keeping them whole,' so that their standard of living in the old place is equivalent to their new place," Richardson says.
For Urbach Kahn & Werlin Advisors Inc., domiciled in the high-profile area of Brentwood in West Los Angeles, recruiting employees from the other side of town is a problem. The traffic that has made Los Angeles a poster child for urban congestion has also severely limited the firm's recruitment efforts.
Only two of the 26 employees in that office live in Brentwood, and the commute alone is enough to put off candidates from as near as Pasadena, which is roughly 25 miles away. Given L.A.'s congestion, those miles could result in a two-hour commute--each way. "It's a really big challenge, finding people that live within a tolerable commuting range," says Elena Sweda-Neff, co-chair of the Los Angeles Chapter's Administration Committee and firm administrator for Urbach Kahn & Werlin.
The firm offers a plan to help pay for public transportation, and in the future might institute an auto expense plan to help pay for mileage. But the company lists certain intangible assets as being vital to retention.
Urbach Kahn & Werlin offers flex staffing to help accommodate the commute, allowing several employees to work four days instead of five. The emphasis on work/life balance is a mandate from the top of the organization, Sweda-Neff says. "We won't let people be in the office for over 12 hours. We literally kick people out," she says.
In addition to supporting continuing education and in-house development, the firm also emphasizes communication, often briefing employees on the state of the business. "If you don't communicate what's going on in the big picture, employees are just going to feel insulted if they get a 3 percent raise when they think they're doing a good job," Sweda-Neff says. "When they did a good job three years ago, at the height of the boom, they got a 10 percent raise."
On the other side of town, recruitment is a little easier, says Michelle Johnson, director of operations for Pasadena-based Stanislawski & Harrison CPAs and co-chair of the Los Angeles Chapter's Administration Committee. Pasadena is a much more attractive area for affordable housing, but has seen massive development in the last decade.
"We pay for our employee's parking costs, which are getting worse here," Johnson says. "And we have a very good comprehensive benefits package."
The firm's health care package pays half of the full premium for an employee's dependents after two years of service, and pays the full premium after three years. Johnson also cites CPE support and flex hours as valuable recruitment tools.
Armanino McKenna has another program that gives a vacation to an employee for every five years of service. Those with the company for five years get $1,000 toward a vacation of their choosing; at 20 years, an employee receives a $6,500 trip.
"Every year, we probably have five or six people at different levels taking trips," Moore says. "We budget about $20,000 a year for that."
CAN'T BUY ME LOVE
The reason most CPAs join a company or firm isn't money, but the promise of a good working environment and professional development.
"All the research we've done indicates that people usually join a firm because they sense a values match; then they look at the opportunity for development," Richardson says. "Compensation packages are somewhere between three and five on the list."
And surprisingly, the No. 1 reason people leave an organization isn't money. "It's because of the way they're managed," Richardson says. "People will put up with a lot. They'll defer the promise of development if they have a good working relationship and trust in management."
Outside of office parties, softball teams and group outings, "you've got to reward your employees every day," Sweda-Neff says. "People don't leave because of money, they leave because they don't feel appreciated."
Urbach Kahn has introduced performance metrics to its employees, but worries "if someone exceeds in all categories, we're not doing a good job of keeping it interesting and challenging, and we run the risk of losing that employee," Sweda-Neff says.
The firm also does a formal 'busy season' review to keep the lines of communication open between management and staff.
At Stanislawski and Harrison CPAs, there's also a push to give people professional diversity.
"One of the things I hear over and over again in interviews is that people change jobs because they feel pigeonholed into one area or one small part of a client's work," Johnson says.
So the whole staff interfaces with clients, and rotates between tax, audit and write-up work "to get a little bit of everything. It's a conscious effort to diversify our employees and offers a lot of opportunity to learn," she says.
Some believe that retention is a full-time job in itself.
"Retention is where most of our energy goes," Sweda-Neff says. "And when the available talent pool tightens, that energy really pays off. The best thing you could do in a nasty recruiting environment is retain your best people."
While keeping the work environment interesting and accommodating might outweigh monetary considerations for some, the reality of the housing market in parts of California never goes away. According to the California Association of Realtors, the median statewide price for a home is $383,320--a 19 percent jump in the last year.
But again, health care packages, transportation and child care credits, and even down payments for a house, can't measure up to the importance of the intangibles: communication, professional development and work/life balance.
"All that warm and fuzzy stuff that people think doesn't matter," Sweda-Neff says, "actually has more to do with attraction and retention than one could imagine."
Jerry Ascierto is CalCPA's associate editor. You can reach him at firstname.lastname@example.org.
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|Date:||Dec 1, 2003|
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