by Melissa Klein
Proving that CPAs are indeed their clients’ most trusted advisors, an increasing number of accounting firms across the nation are helping their clientele eliminate hiring headaches.
Equipped with first-hand knowledge of the skills and background that their clients’ in-house accounting and finance professionals require, firms like Edison, N.J.-based Amper Politziner & Mattia and Pittsburgh-based Alpern Rosenthal are filling a need by helping clients recruit and hire qualified staff.
While the Sarbanes-Oxley Act prohibits most consulting services for public company clients, a number of CPA firms are adding executive search and recruitment services for non-Securities and Exchange Commission-registered clients to their arsenal of offerings.
“Three years ago, when we had a very inflated job market, we had a lot of clients hiring candidates who weren’t really qualified for the positions they were hired for and who were overpriced,” said Hayes Mac-Arthur, director of Amper’s human resources consulting group. “We realized that if we had a say on who our clients hired, we could ensure that someone qualified got the job and it would make our lives easier.”
“We had a vested interest in ensuring that our clients have a capable person in their accounting function,” MacArthur said. “The demand has been absolutely incredible, because a lot of clients are tired of dealing with recruiters who are paid extremely high commissions,” he added. “Our staff aren’t paid commission, they’re salaried. They are compensated for client service, not just for making a placement.”
And, since CPAs spend a lot of time with their clients, they’re often the first to know when a client has a position to fill. According to MacArthur, most of the clients who seek the firm’s recruiting help are companies with $10 million to $50 million in revenue that are looking for controllers, chief financial officers or other accounting positions. In keeping with independence rules related to consulting work, the firm doesn’t do any recruiting or consulting work for SEC clients. The majority of requests come from clients who are referred by Amper’s staff.
Services run the gamut from position assessments, putting together search plans, identifying and screening candidates, and helping firms define job positions.
Amper’s executive recruiting practice has grown by at least 30 percent in each of the last three years, and MacArthur expects it to continue to expand, as the firm has started to receive requests from non-CPA firm clients. “We’re working on 10 senior-level accounting positions at any given time,” he said. “That’s all we’ll take on right now, because that’s all we feel we can serve well. We’ve had to turn away clients because we’re too busy.”
After several requests from clients for help finding qualified employees, Alpern Rosenthal added recruiting and placement services to its offerings. A little over a year and a half ago, the firm’s Corporate Placement Services practice was born.
“We used to do search work on a casual basis. Our shareholders might just review resumes and charge a bill rate for that,” explained manager Cheryl Jones. “We decided to package the service and offer it as a value-add.”
Since the firm’s clients aren’t publicly held companies, independence issues aren’t a problem, Jones said. Most companies that turn to the firm are looking for controller or accounting manager positions.
“Clients trust us to do this,” said Jones. “One of our biggest selling points is that we have a lot of candidates referred to us. We have the ability to tap the inactive job seeker market through our networks. That gives us an edge over a typical executive recruitment firm.”
Last year, the firm did 20 searches. “Companies doing searches are getting inundated with resumes,” Jones said. “They don’t have time to search through them and do all of the pre-screening. And the people who are on the hiring committee may not know some of the right questions to ask.”
While the firm initially focused on its existing clients, CPS has expanded its offerings beyond the firm. Services include candidate prescreening, reference checks, criminal background checks and personality profiling, for which the firm charges a percentage of the position’s annual salary.
Clark, Schaefer, Hackett & Co., in Middletown, Ohio, started a human resources consulting and training practice within the firm five years ago because of a need it saw among its clients, according to Jon Horn, the firm’s director of HR consulting and training. “Most of our clients are smaller companies that don’t have a formal HR department,” said Horn. “We saw a need to offer basic HR consulting services.”
The firm bills for the services on an hourly basis. “Clients end up paying us a lot less than they would pay a headhunter, who might get a third of the annual salary for the position,” said Horn. “It’s a positive for our clients, and we give them individualized, targeted services.”
The firm conducted six searches last year for firms ranging from manufacturers to professional services and financial services firms. It currently offers the service only to existing clients. “Most of the work we do is referred through our engagement partners,” Horn said. “That’s why we exist - to serve our existing firm clients.”
While many CPA firms that offer recruiting and search services focus on accounting and finance-related positions, the majority of searches by the Human Capital Resources division of Kreischer Miller aren’t in those areas, according to director Nick Araco.
Like many firms, the Horsham, Pa.-based firm had been helping clients find staff informally for years. “When we formed this practice three-and-a-half years ago, we drew off the firm’s platform across industry and functional lines, so our practice moves across those lines, as well,” Araco said. “We’re considered to be generalists. Only a third of our search work is related to accounting and finance.”
Roughly half of the firm’s search work is for existing CPA firm clients, including private equity firms and their portfolio companies, residential and commercial developers and real estate clients, as well as financial services firms.
The firm focuses on mid- to senior-level executive positions, such as certified financial advisors, chief executives and chief operating officers, as well as director positions. “We leave the high-level executive CEO searches to the large national firms,” said Araco. “We work primarily with privately held companies in our audit and tax firm, so search delivery mirrors that approach.”
The firm, which charges a flat fee, conducted 35 searches last year. “We’ve remained busy in a very down hiring time because we’re generalists,” Araco noted.
“We are our clients’ financial consultants. Because we know their business so well, they think that we know what type of individuals suit their needs,” said Ann Cotton, firm administrator at Birmingham, Ala.-based Warren Averett Kimbrough & Marino, which conducted 10 to 15 searches during the past year. Most of WAKM’s clients are looking for bookkeepers, accounting managers and controllers, Cotton said. For clients who want help interviewing and reviewing candidates, the firm bills hourly. For full search services, WAKM charges a percentage of the first year’s salary.
“It makes sense,” said Cotton. “Our clients rely on us for a lot of information on how to run their businesses. We know what it takes to fill their needs a lot better than a lot of the search firms in our area.”
While the firm hasn’t marketed the service, Cotton said that it has already picked up some business outside of its client base by word of mouth.
“There’s a built-in trust factor,” said Marc Savage, president of Cohn Executive Search, a venture formed two years ago between Roseland, N.J.-based J.H. Cohn and an executive search firm. “Surely the client knows and trusts their accountant and knows that they wouldn’t put them on to a service that might interfere with their relationship.”
“Most of our work is CFO and controller searches, because we’re introduced to clients by the CPA firm partners, and the main contact the partner usually has is through the CFO,” said Savage.
The firm, which focuses on searches for positions with salaries of $100,000 and above, works on a retainer basis. The fee is 30 percent of the candidate’s salary. “We get paid one-third when we start, one-third in 30 days, and one-third in 60 days,” Savage explained. “If we don’t fill the position in 90 days, we return all of the money to preserve the relationship between partner and client.”
He said that the firm has only had to return a retainer fee once in two years.
In its first year, the firm conducted 16 searches and Savage said it is currently averaging 24 to 25 searches yearly. He noted that the firm will begin offering the service outside of the CPA client base, and may extend it to other CPA firms.
“We felt that we could provide our clients with some of the intangible things they’d want when searching for potential [employees]. We know what type of controller or CFO they’re looking for,” said Dan Hamann, human resources manager at Doeren Mayhew, in Troy, Mich. “We thought it a natural complement to the other services we provide. We know the skill sets required. It’s more efficient than them getting inundated with resumes.”
“We see this as an added resource to solidify the relationship. We can service every aspect of our clients’ business,” Hamann said. While the firm typically bills the service at an hourly rate, it also offers a flat-fee option.
“There’s been a tremendous demand for financial professionals,” he added. “Right now, we’re spending more time servicing our existing clients as opposed to trying to solicit new business.”
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