Addressing the war on talent in tax firms

The labor market, especially for tax and accounting firms, is becoming increasingly competitive. According to the Bureau of Labor Statistics (BLS), employment of accountants and auditors in the United States is expected to grow by 4% from 2022 to 2032. The BLS also projects about 126,500 openings each year, on average within the next decade, largely due to the need to replace workers who retire or move to other careers.

This is where it gets tricky: Despite the solid demand for accountants, research shows fewer people are entering the field. Data cited by The CPA Journal indicates, “a 7% decrease from 2021 to 2022 for the total number of candidates taking the CPA exam.” The journal also points out that “30% fewer candidates passed their final section of the CPA exam in 2021 compared to 2016.”

CPA firms will likely face challenges in attracting and retaining workers, so it’s time to take action.

While it’s true that technologies such as AI are transforming the industry, a tax and accounting firm is still very much a people-centric business. Clients value trust, expertise, and personalized service; you can’t provide these if you don’t have talented individuals on your team.

This is why talent management is incredibly important, and involves developing and retaining skilled professionals to ensure high-quality service and firm growth. When implemented effectively, talent management initiatives can help maximize your staff’s potential and ensure they align with your firm’s goals.

If you’re running a firm, you must actively recruit, train, and retain top talent to stay competitive.

How to build and lead effective teams to retain top talent 

The team you have in place plays a big part in talent management and retention. After all, your team needs to be well-coordinated and committed to help achieve your firm’s goals.

To that end, here are some research and expert-backed tips on how to build effective teams and promote employee retention.

Factor in cognitive diversity

Teams flourish when they’re made up of individuals with diverse skills, experiences, and cognitive approaches. That’s why it could be beneficial to promote cognitive diversity in your firm.

Herrmann International considers cognitive diversity a strategic asset and crucial for broadening the range of perspectives within a team. Embracing this diversity not only bolsters problem solving and innovation, but also aligns with findings from Deloitte that suggest inclusive leadership profoundly impacts firm culture.

Leaders who promote inclusivity can significantly boost the engagement and productivity of their teams, with Deloitte noting that such inclusivity can lead to a 70 percentage point difference in employee engagement levels. This, in turn, enhances team performance by 17%, decision-making quality by 20%, and collaboration by 29%, all of which are vital as your firm expands and delves deeper into advisory roles.

Don’t just compete on salaries

If you’re a small- or medium-size firm, you may be worried about being unable to compete with larger firms who have bigger human resource budgets.

This concern is totally fair. But it’s also worth noting that while compensation plays a significant role in attracting and retaining talent, it’s not the only factor in employee satisfaction and loyalty.

Keila Hill-Trawick, CPA, founder and CEO of Little Fish Accounting, says that if you’re a firm with a specific budget for your workforce, the best thing you can do is be candid and set the right expectations.

“It’s interesting that people think small businesses should compete on salaries,” she said. “Yes, we want to pay people a fair wage and I don’t believe in underpaying anyone. But you don’t have their [company] budgets. You may not be able to bring in an entry-level person at the same rate as a major corporation. Be realistic about what you can pay, and be upfront with candidates about what that looks like. People take jobs knowing what they’re getting into; be clear about the salary and opportunities for increase and promotion.”

Remember, you may not be able to compete on salary, but there are other ways to set yourself apart as an employer (more on this below).

Ask employees what they want—and provide it

One way to enhance staff morale and ultimately improve retention is to get your team’s input on what they value in their employers and then act on that feedback. Hill-Trawick references an older trend in the tech industry where companies focused on amenities such as recreational drinks or having games at work. While these things can be fun, she says employees often value practical benefits such as flexible hours or better work-life balance more than workplace amenities.

“Maybe your staff says, ‘I really want to work less than 60 hours a week.’ If you could do that, you could take away all these games,” she said.

All of this is to say that firms must prioritize providing essential benefits and flexible working conditions employees actually request over less impactful perks.

Create thoughtful pathways for career advancement

According to Hill-Trawick, one of the best ways to foster employee retention is to create non-traditional or non-linear pathways toward career advancement. Most people assume that the only way to move up and earn more money is to climb the corporate ladder. For example, a staff accountant must become a manager to access higher pay scales.

But it doesn’t necessarily have to be that way.

“I don’t like the idea that the only way to get paid more is to get promoted,” she said. “You could be an excellent staff accountant and not a great manager, but feel like you need to get into a manager position in order to make more money.”

Her advice? Find ways to reward and compensate individual contributors based on their experience and skill level.

“Creating pathways for people to earn more without necessarily having to be promoted is really important. If a person has been working for you for years and doing an excellent job taking care of clients, why do they appear less valuable than a person who came in today, but is at a higher level?”

Establishing performance-based incentives is one way to encourage professional growth and financial recognition. For example, you could offer bonuses or raises for reaching specific metrics or completing advanced certifications. This would reward the employee’s expertise without requiring a managerial role.

Create work-life balance

Work-life balance is a significant contributor to employee retention. Reuters reports that “work-life balance ranks as highly as pay on workers’ list of priorities” and that 57% of employees would decline a job if it negatively affected their work-life balance. 

So, how can you promote a healthier work-life balance in your team? Consider the following.

Ensure teams aren’t constantly maxed out. Working at a tax and accounting firm can be hectic, especially during the busy season. And while functioning at full capacity is unavoidable every now and then, you need to ensure your staff isn’t continually overwhelmed or overworked.

As Hill-Trawick points out, “We should be making more room for people to have space to be creative, rest, and be able to pour back into the company. A lot of the burnout experienced by leaders of accounting firms and people who work there comes from this idea that we are always full.”

Leverage workflows and automation. One way to free up your team’s time is to implement workflows and automations that streamline your processes. Using a revenue generation platform such as Ignition accomplishes this in several ways. 

Ignition simplifies client engagement with online proposals and engagement letters that you can prepare and send in minutes. Once clients sign, automated workflows take over, handling invoicing and payment collection seamlessly.

For instance, by integrating Ignition with QuickBooks® Online, you can automate invoicing and reconciliation, saving hours on billing and freeing up more time to focus on your firm.

Be open to feedback about their workload. It’s not always easy to spot the signs of stress or burnout. That’s why it’s crucial to empower your team to give you feedback about their workload in order to make necessary adjustments early and prevent stress from accumulating.

This is exactly what Hill-Trawick does at her firm.

She encourages her staff to let her know if a task is taking longer than expected or if they feel they are taking on too much at once.

Aside from giving her insights into the team’s capacity and mental health, encouraging this type of feedback also fosters a culture of open communication, which can enhance job satisfaction and loyalty.

“A lot of accounting firm cultures are built in a way that is so top-down that workers don’t feel like they can say anything. Ultimately, they may just get frustrated and leave. They think, ‘Well, it doesn’t seem like my voice is heard here. It doesn’t seem like it matters what I say.’”

You can prevent this by creating a space where employees feel safe to express concerns and suggest improvements.

How to navigate employee departures

Even the best firms experience staff turnover. Employers can’t expect their employees to stay with their company forever, so it’s best to have a strong succession and transition plan.

Here are three tips for navigating employee departures and ensuring your firm continues to run smoothly.

1. Stay on top of SOPs

Standard operating procedures (SOPs) are essential when an employee leaves, so be sure to have them in place before they depart the company. Depending on how your organization is structured, it may be helpful to come up with general SOPs for your internal processes, as well as client-specific procedures.

According to Hill-Trawick, documenting job roles and client interactions is a must. The goal here is to maintain continuity and minimal disruption when someone leaves.

“Have something documented [that details] what everyone’s job is. At our company, we have what we call client roadmaps. Every client has their own mini SOP so that if somebody left, I could still do things like send their invoices or manage nuanced bookkeeping.”

2. Have overlapping duties among your staff

Hill-Trawick also recommends creating overlaps in responsibilities between your team. By cross training employees in different roles, you can ensure tasks are covered even if someone leaves the company.

“At least one other person should be able to do it, even if they won’t be able to do it to the same level as the team member with the main responsibility. They’re not going to be the expert in it, but at least the task wouldn’t go completely undone if somebody left.” 

3. Talk to your team

Hill-Trawick emphasizes the importance of transparency, especially regarding employee departures.

“I’ve seen a lot of firms where people will leave, and then it’s just business as usual. That could create a domino of other team members thinking that the owner doesn’t care if people exit the company.”

That’s why she recommends setting aside time to have upfront conversations. Be sure to touch on how the employee feels and what the situation means for their workload.

Time to uplevel your talent management strategies

Thriving in today’s labor market isn’t just about competitive salaries; you need a comprehensive approach to talent management. We hope the pointers discussed above—from promoting cognitive diversity to creating nonlinear career paths—help you to not only retain your best employees but also enhance their operational efficiency.

Need a platform with time-saving features that can make life easier for your team? Watch a demo of Ignition and see how online proposals, automated engagement letters, and billing and upfront payments can help streamline your processes and free up your team’s time.

This blog post was co-written with Ignition. I have obtained permission to share it on my website/social media. For the original source of this post, please visit https://www.ignitionapp.com/blog.