by Gail Perry
Last fall, the American Institute of CPAs released its annual “Top Five MAP Issues” survey, and for the sixth consecutive year, “Finding and Retaining Qualified Staff” was the top issue of concern among participating CPA firms.
In today’s business climate, turnover is the norm.
Where once a résumé filled with several job changes suggested a problem employee, now potential employers have reservations about the employee who has had a limited number of jobs.
There’s a historical explanation for this change. When the economy was flourishing in the 1980s and the Baby Boomers were hitting their stride, it was a buyer’s market.
“There was plenty of money to be spent, and companies were buying talent,” explained Neil Lebovits, president and chief operating officer of Ajilon Finance, an international accounting, finance and bookkeeping staffing service based in Saddlebrook, N.J. But the recession of the 1990s, accompanied by a shortage of available candidates among the smaller Generation X, led to a war for talent. “It created huge job-hopping opportunities. Somewhere in the mid-1990s [the practice of changing jobs frequently] became socially acceptable.”
Frequent job changes are a lifestyle today, not a sign of instability or lack of skills. But it’s not just the general acceptance of that lifestyle that fuels the fire. Many companies that traditionally nurtured and rewarded employee longevity have become complacent about the value of long-term employees. “The loyalty factor has been eroded,” explained Shane Hill, regional vice president for Hudson Global Resources in Raleigh, N.C. “You pick up the newspaper and see massive layoffs.”
Benefits of stability
Accounting firms require seasoned professionals to fill the ranks of departing partners, to provide continuity in service to clients, and to maintain the character of the firms. “Human resource professionals need to realize that the people they hire are the people who will attract and keep your customers or, on the flip side, lose your customers,” said Bruce Bailey, human resources consulting manager at RSM McGladrey, in a recent company newsletter.
Aside from the issue of customer dissatisfaction, frequent turnover of staff translates into higher expenses for recruiting, training and lost productivity, not to mention the negative impact it can have on employee morale.
Alternatively, contented employees can be counted on to show up for work, produce more, help make the work experience more positive for their co-workers, and promote the company.
“If you’re losing employees, you’re losing customers,” wrote Frederick F. Reichheld, author of “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value.” Reichheld argued that the relationship between employer and employee is the most important relationship, and that customer satisfaction is a direct result of having satisfied employees.
The value of employee longevity
Experts at all levels agree: The secret to success stems from employee loyalty. If employees don’t care for the company that they work for, how can they be expected to promote the company and its product or service? If employees aren’t willing to stay with a company for a lengthy duration, why should customers remain loyal to the company?
In the groundbreaking book, “The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction and Value,” by James Heskett, W. Earl Sasser and Leonard Schlesinger, the Harvard Business School authors demonstrated direct correlations between employee satisfaction and loyalty, customer satisfaction and loyalty, and company profit and growth.
The Service Profit Chain Theory holds that a company, at its core, needs productive, loyal, satisfied and capable employees. When these conditions are present, they combine to produce quality products which customers are willing to buy. A quality product delivered by satisfied employees results in satisfied and loyal customers. Satisfied customers ultimately generate revenue and profitability for the company.
It stands to reason that the more that employees are satisfied with their job and their company, the less likely they are to look for a different job.
“Many firms have held to the mindset that clients are their most important asset,” said Tom Porter, a human resources consultant and former director of human resources for Olive LLP (now part of BKD LLP) in Indianapolis. “The firm has got to make a true mindset shift to [believing that] people are our most important assets, and guide their practice around that. How good a firm is depends on how good its people are.”
“Great people equal a great firm,” Porter continued. “If you have a great firm, that will enable you to attract, retain and develop great clients, and that equals a great top and bottom line.”
Keep them from leaving
An obvious solution to the problem of keeping good employees is to pay them more. But compensation is only part of the answer, and, perhaps surprisingly, not the biggest part. There’s only so much a firm can afford to pay employees, and, as Porter pointed out, if an employee is discontented with the working environment, “no firm has such deep pockets that they can pay people what it takes to keep them.”
There are many different types of benefits that a firm can offer its employees, including the obvious health care and retirement benefits, state-of-the-art equipment, training and professional development programs, education and child care reimbursements, stock and other ownership options, and bonuses.
Other common workplace incentives include flexible and part-time schedules, day care and health club services, meals on the premises, free parking, legal services, weight rooms and saunas, specialized clothing, functional work rooms for individual and team projects, hot foods in winter and cool drinks in summer for outdoor workers, company social events, appreciation and recognition programs, scholarships for children of employees, company retreats, massages at the desk, time off for community service, and stress and counseling services.
The key to making employees want to come to work every day isn’t so much a matter of providing a plethora of benefits as it is tailoring the benefits to the desires of the particular workforce. And the best way to find out what employees yearn for is to ask them.
National business services and CPA firm RSM McGladrey, for example, has implemented a management strategy called “Managing from the Heart.” The program is unique in the accounting profession, according to Tammy Dehne, senior director of retention and employee relations at the Bloomington, Minn.-based firm. “Its basic premise is centered around treating people with respect,” she said. “We provide development opportunities that continually stretch people to the next level.”
The cornerstone of the RSM McGladrey strategy is the annual employee climate survey, which allows all employees to respond to questions about company values, work situations, rewards and recognition, performance management, supervising, and management and executive leadership. Survey results are monitored closely and communicated throughout all levels of the company so that appropriate issues can be addressed.
In addition, RSM McGladrey has hired a full-time work-life strategist with the goal of integrating a “truly flexible work culture that values the individual.”
“When I talk about flexible culture, I’m not referring only to flexible schedules,” Dehne said. “A flexible culture is a place that can be in tune with the flexibility that individuals need throughout their life.”
She envisions an environment where such things as personal appointments, family obligations and community involvement combine with a work schedule that produces stellar client service.
The Service Profit Chain Theory stresses an emphasis on determining what benefits and workplace features motivate employees and then following through with a plan for measuring the effectiveness of benefits and other features that have been implemented. Each workplace is different, and each set of employees has different motivations. Furthermore, the monitoring process needs to be ongoing because, over time, different benefits and workplace features will motivate different generations of employees.
The role of emotion
Lebovits stressed the need for companies to provide respect and recognition if they want to hold on to valuable employees. “People are jumping ship for emotional reasons. You have to invest in them, make them feel that they’re valuable, listen to them, care about what happens with them, get them involved in decisions, create a culture where the people help create the company. Most companies don’t treat their employees with the simple respect a stockholder gets who owns one share of the company,” he said. “It’s all about understanding that people are loyal to companies that are loyal to them.”
“Another piece of the whole retention equation is better selection, recruiting and hiring,” Porter added. He described a competency-based performance development program where new employees are chosen, developed and utilized based on how their specific competencies fit with the overall needs of the firm. “That’s where retention starts,” he said. “These people are more likely from the get-go to be successful in the firm, so that reduces a lot of involuntary turnover.”
