In an earlier article in Accounting Today, I wrote, "Without clients we wouldn't have a firm - but without employees we wouldn't have clients. So when it comes to answering the question of whether it is more important to have client or employee loyalty, I would have to answer that employee loyalty and satisfaction is more important." ("Whose loyalty is worth more - your clients' or your employees'?" March 19-April 1, 2007, page 27.)Employee loyalty is the foundation for long-term success and exceptional profits. Without employee loyalty, you won't have to worry about client loyalty, since you will spend most of your time worrying about recruitment, poor performance, poor quality and poor profits.
It's not getting easier to find employees. There's a definite labor shortage in the profession and in the overall market in general. All firms are fighting for the best employees. Many, however, are forced to hire less-than-ideal candidates. A managing partner recently told me that he was forced to hire his fourth choice. There is not much you can do about finding more people, but you can do a lot when it comes to keeping them.
In The Balanced Scorecard: Step by Step, Paul Niven lists four barriers to implementing a firm's strategy:
* 1. The vision barrier. According to Niven, only 5 percent of the work force understands the firm's strategy.
* 2. The resource barrier. It's amazing that 60 percent of organizations don't link budgets to strategies.
* 3. The management barrier. 85 percent of executive teams spend less than one hour per month discussing strategy.
* 4. The people barrier, or lack of accountability. Only 25 percent of managers have incentives linked to strategy.
Firms that are able to remove or reduce these barriers and implement some of the following strategies achieve higher employee loyalty and greater profitability. Below are 11 strategies that firms employ with success.
1. Mission, vision and core values. Nothing will keep good employees long-term, unless they understand and buy into your firm's vision, mission and core values. Vision is what you want to become. Mission explains the reason for your firm's existence, and core values describe those behaviors that are acceptable in the firm. I've seen too many firms that have a vision and mission that are basically meaningless and lack any substance - "We want to be the premier firm in the market."
Mission, vision and core values should ultimately drive all the main decisions that a firm makes. Without a meaningful mission, vision and core values, the firm will never keep its most valuable employees. According to a recent PCPS study, the No. 1 reason that the top talent stays with a firm is "respect for company mission statement."
2. What's in it for me? Every employee and partner wants to understand how they will benefit as the firm achieves its mission and moves towards its vision. Unless you can paint that picture for each one of them, and especially for your top performers, you won't keep them.
3. Align goals. Employees want to understand how the firm makes money and how their work during the year contributes to the firm's success. If they don't have a clear understanding of how the firm works, how can they make suggestions for improvement? You want your employees to find ways to increase profits. Make sure they know the drivers of your business.
4. Empower employees. If you are having trouble implementing change in your firm, give some power to the employees. Let them advise on employee-to-employee and employee-to-client matters. Giving employees power to make decisions makes most partners nervous because they feel they are losing control.
Employees need to know what authority they have so they can respond to client issues and problems, service quality, and other types of employee-to-employee interactions. This is where a firm's core values definitely come into play.
5. Share the firm's intellectual capital. Being successful today not only means knowing things, but also knowing how they impact a client or prospect. Employees need an open learning environment so they know where to get information and have access to it at any time.
6. Training. Training today is not the same as it used to be. The old ways of basic continuing professional education no longer keep good employees. They want to work for a firm that provides them the opportunity to develop new competencies as they progress in the firm. This would include building competencies in business, technical, marketing and personal areas. Employees are more eager to work if they know they will learn new things.
7. Career pathing. Career pathing can help keep employees charged, especially if you can find the employee's professional hot spot. Helping employees reach their goals makes them more loyal to your firm. If they don't get it from you, they look elsewhere.
8. Evaluations and reviews. Formal reviews used to be held on an annual basis. This no longer works. I recommend that they take place every three months. Informal reviews should be held more often. The purpose of the review is to address and evaluate progress toward goals, and what the individuals need to improve and how they fit in the firm. Frequent reviews are an effective tool for retaining and motivating good employees.
9. Recognition. Accountants are trained to find mistakes. On the one hand, this is critical for the work they do. However, on the other hand, it works against them. Employees often feel that partners only address them when there are problems. They also need to recognize employees when they do good work.
10. Challenge your employees. All the young employees I speak with do not want boring, drudgery-filled work. Many times, they select the firm that offers them the best career opportunities and the most challenging work. To attract top employees, firms must offer more than an attractive financial package.
11. Pay. While pay was not the top reason employees gave for staying, it did rank No. 3 in the PCPS study. Money is important, but not the most important element in keeping employees. Good firms offer a competitive or higher salary for their open positions. Remember the old saying, "You get what you pay for."
In today's world, your employees are either a competitive advantage or a disadvantage. Unmotivated and poor employees can cause your firm to fail; mediocre employees can get you to break even. It's the great employees that make any firm a winner. Stand behind and support your employees, and they will stand behind and support you.
August Aquila is a nationally known consultant to the accounting profession. Reach him at (952) 930-1295 or aaquila@aquilaadvisors.com.
