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  3. Cost of keeping accounting staff happy: You can't afford not to

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The cost of keeping staff happy: You can’t afford not to

Staff are key in maintaining healthy revenue growth for large tax and accounting firms, but turnover remains high and a costly issue. As firms look for ways to recruit and retain top employees, tech literacy is emerging as an essential skill for everyone in the profession. Modernizing your tech stack can help firms retain top performers and attract new grads, reducing staffing pressure, while improving productivity and efficiency.

  • For large tax and accounting firms, overall revenue growth is down and likely to stay that way

    • 2019 revenue Growth overall was down by 1.3%, significant decline – Rosenberg Survey Analysis 2020, Mark Miklosovic, Thomson Reuters
    • The decline in revenue growth is expected to be even worse in 2020 numbers, given the extended shutdowns and many industries impacted. – Rosenberg Survey Analysis 2020, Mark Miklosovic, Thomson Reuters

    Staff are a key factor in maintaining a healthy growth rate but turnover remains high and a costly issue

    As firms look for ways to recruit and retain top employees and maintain revenue growth, tech literacy emerges as an essential skill for everyone in the profession (accountants, auditors, and tax preparers)

    • Recruiting and retaining top performing employees is a top pain point for tax and accounting firms. AICPA. (2019, June 13). Staffing Remains Top Concern for CPA Firms, AICPA Survey Finds [Press release].
    • “The Sage 2019 bookkeeping statistics list all the necessary skills for accountants to join the industry. Most participants (57%) found tech literacy to be the most important.” - (Sage Practice of Now 2020)

    A cutting-edge tech stack can help firms retain top performers and attract new grads, reducing staffing pressure, while improving productivity and efficiency

    • “To meet the changing needs of clients, accounting firms are turning to cutting-edge technology to provide deeper insights and minimize the time required for repetitive tasks. 43% of respondents believe the integration of technology has already made them more productive, while 40% of respondents are either currently investing in or plan to invest in predictive analytic capabilities over the next 12 months.” 
    • “In fact, WorkMarket’s 2020 In(Sight) Report found that 54% of employees believed they could save a staggering 240 hours annually through automation.” - https://www.workmarket.com/go/2020-insight-report-what-ai-automation-mean-for-work
    • Keeping your tech stack updated with the latest solutions won’t just serve your existing employees and clients; it will also help attract a new generation of talent entering the workforce.” 
    • “In the U.S., Gen Z currently makes up a quarter of the population, and by the end of last year, they accounted for roughly 24% of the global workforce. 
    • “According to a recent study by Dell Technologies, 91% of Gen Z respondents said workplace technology would influence job choice among similar employment offers, and 80% wanted to work with cutting-edge technology in their future careers.” 

    The Rosenberg Survey 2020 reported that in 2019 revenue growth overall was down by 1.3%, a significant decline.  These figures are based on numbers reported pre-pandemic, so the decrease had little or nothing to do with COVID-19.  This decline in revenue growth is expected to be even more exaggerated in 2020 numbers, given the extended shutdowns and many industries impacted. 

    With revenue growth in decline, and a 5% increase in profitability as calculated by income per partner was based largely on a reduction in overhead, (See page 77 of Rosenberg Survey) opportunities for growth depend on a narrowing number of levers, including staff. 

    Rosenberg Survey 2020 says leveraging staff is a key factor in maintaining a healthy growth rate.

    Yet staff turnover was an issue in 2019, remaining a steady 18% across industry sub-segments. 

    Staffing is a top concern for many firms — and for good reason. Not only is the industry becoming increasingly competitive (especially as remote work capabilities have eliminated geographic borders and widened the talent pool), but losing an employee can negatively impact your firm’s productivity and profitability, and finding and hiring a replacement can be expensive.   

    Consider this: The Society for Human Resource Management (SHRM) estimates the average replacement cost of a salaried employee to be six to nine months’ salary.   

    Recruiting and retaining top performing employees has emerged as a top pain point for tax and accounting firms. 

    For tax professionals, up-to-date, best-in-class technology is no longer a nice-to-have, it is a requirement of doing business, in terms of both client and employee expectations.

    According to the 2020 Rosenberg Survey, leveraging staff is a key factor to maintaining a healthy growth rate for firms and yet staff turnover was an issue in 2019, remaining a steady 18% across industry sub-segments. 

    Staffing is a top concern for many firms — and for good reason. Not only is the industry becoming increasingly competitive (especially as remote work capabilities have eliminated geographic borders and widened the talent pool), but losing an employee can negatively impact your firm’s productivity and profitability, and finding and hiring a replacement can be expensive.   

    Consider this: The Society for Human Resource Management (SHRM) estimates the average replacement cost of a salaried employee to be six to nine months’ salary.   

    2020 Rosenberg Survey

    “In 2019 two familiar themes played out among CPA firm respondents to the Rosenberg Survey.  The first, leveraging staff is a key factor in maintaining a healthy growth rate…”

    “2019 revenue growth overall was down by 1.3%, a significant decline.  These are based on pre-pandemic reported numbers, so the decrease had little or nothing to do with the pandemic.  This is expected to be even more exaggerated in 2020 numbers given the extended shutdowns and the many industries impacted.  Firms need to identify ways to continue moving towards an advisor relationship with their clients to reverse this trend.”

    “Growth - Large Firms – Organic fee growth continues to be relatively flat while overall growth including M&A decreased for the first time in 3 years.  At the same time profitability as calculated by income per partner increased by 5% compared to 2% in 2018.  

    This appears to be mainly driven by a reduction in overhead per person of 3% in 2019 compared to 2018 including slim contributions from decreased marketing, technology and training costs.  (See page 77 of Rosenberg Survey)”

    Staff Turnover remained an issue for firms in 2019.  It’s a steady 18% across the industry sub-segments.  Again, Small/Mid data all over the board, but as an average remains in line with the Large sub-segment.  Turnover could dip in 2020 due to economic influence related to the pandemic, but would expect that to be short term.”

    “20. 57% of accountants find technology literacy to be the most critical additional skill for future employees in the field.”

    As the times are changing, the average accountant needs more skills than bookkeeping. The Sage 2019 bookkeeping statistics list all the necessary skills for accountants to join the industry. Most participants (57%) found tech literacy to be the most important. Next comes relationship building (46%), business advisory (44%), and experience outside accounting (43%). Only 36% of the responders consider project management a vital skill of a future accountant.

    (Sage Practice of Now 2020)

    “Reputation is the main reason why candidates for accounting positions choose to join one firm over another.”

    Company reputation was selected by 40% of the participants in the Sage Practice of Now 2019 study. Accounting industry statistics further show that equally important (34%) are the company’s culture and accounting job salary. Location can make or break the deal for 33% of future staff. Candidates also pay attention to the potential for promotion (21%), non-monetary benefits (17%), and modernity (16%). So, this is something employers should have in mind, with the job outlook for accounting majors improving, thus expanding their options.”

    2019 Accounting Graduates Supply and Demand Report - AICPA

    Hiring of new accounting graduates slowed 11%. Across the last two Trends reports, we have experienced an approximate 30% decline in hiring of new accounting graduates.”

    “The American Institute of CPAs' 2019 AICPA Trends Report, which is issued approximately every two years, says the decline occurred across the last two reports, going from nearly 45,000 in 2014 to 30,093 in 2018, with a 19 percent drop from 2014 to 2016, and 11 percent from 2016 to 2018.”

    The Practice of Now 2020

    Technology is playing a major role in the accounting profession, but may also be creating a divide.

    To meet the changing needs of clients, accounting firms are turning to cutting-edge technology to provide deeper insights and minimize the time required for repetitive tasks. 43% believe the integration of technology has already made them more productive, while 40% of respondents are either currently investing in or plan to invest in predictive analytic capabilities over the next 12 months.

    However, respondents from smaller firms were less likely to see themselves as early adopters of technology and less likely to be experiencing the benefits of current technology investment – signaling what could be a digital divide between smaller and medium-sized firms. To remain competitive, smaller firms must invest in technology solutions that help them keep up with client expectations.

    “In fact, WorkMarket’s 2020 In(Sight) Report found that 54% of employees believed they could save a staggering 240 hours annually through automation.”

    Attract your future workforce

    Keeping your tech stack updated with the latest solutions won’t just serve your existing employees and clients; it will also help attract a new generation of talent entering the workforce.

    In the U.S., Gen Z currently makes up a quarter of the population, and by the end of last year, they accounted for roughly 24% of the global workforce. The entry of this new generation into the workplace requires a rethinking of many internal structures or values—starting with technology.

    As the first generation to grow up as full digital natives, workplace technology is not an area that future talent is prepared to compromise on. According to a recent study by Dell Technologies, 91% of Gen Z respondents said workplace technology would influence job choice among similar employment offers, and 80% wanted to work with cutting-edge technology in their future careers.

    To remain an attractive option for the best global talent, firms need to align with the tech expectations of Gen Z. This mission will mean continued analysis of internal tech stacks, with companies staying committed to delivering solutions that best serve, nurture, and retain future employees.”

Happy staff is key to healthy revenue growth

A modern tech stack can help firms retain and recruit top performers, reducing staffing pressure, while improving productivity and efficiency