Few early signs of economic recovery will get as mixed a reception as the news that salaries in accounting are likely to rise in 2011.
Firm employees, needless to say, will wholeheartedly welcome the predictions in this year's edition of Robert Half International's annual guide to compensation in accounting and finance, which it compiles from data on the thousands of placements it makes across the country, as well as workplace research and the insights of its staff.
"Going into 2011, the accounting profession, broad-based, will experience a slight increase in salaries," said Brett Good, a senior district president at the staffing company. "The typical range is looking somewhere between 3 to 4 percent, with some a little more aggressive, some a little less aggressive, depending on what the functional role happens to be." For public accounting specifically, "Roughly 3.8-4 percent salary increases are anticipated," he added.
What's good news on salaries for employees, of course, is exactly the opposite for management. Firms that need to replace staff cut during the downturn, or to add staff to meet expanding workloads, will find it more expensive to do so.
"This time last year there was still a lot of downward pressure on salaries," Good noted. "It was not uncommon for organizations to offer below-market or slightly-below-market in the position they were hiring for, simply because there was a belief system out there that the marketplace was full of talent that was just waiting to be hired - when, in fact, with accounting and finance highly skilled professionals, it's really not the case. Hiring managers are finding many of the positions more challenging to hire for than they anticipated, which could be why we're seeing a slight increase in compensation in 2011."
Among the positions at accounting firms likely to see the largest increases are tax service senior managers/directors, senior tax accountants, audit and assurance senior managers/directors, and senior auditors. Generally speaking, the distribution of increases outlined for public accounting firms in the 2011 Salary Guide are somewhat bell-shaped, with higher bumps expected for mid-level staffers with more experience (including seniors and managers) - reflecting, in part, the need for firms to retain these veterans as workloads pick up. Senior managers/directors, meanwhile, will see somewhat smaller rises, and entry-level staff will generally receive the smallest increases.
Midsized firms (those with between $25 million and $250 million in revenue) are expected to offer the biggest percentage increases in all three categories that the guide covers: tax services, audit and assurance services, and management services. Firms with over $250 million in revenue should see relatively large increases at all levels in management services, as well as for more experienced employees in tax services. Management services also claim the lion's share of pay bumps at smaller firms, though the percentages of increase aren't quite as high as at larger firms.
In corporate accounting, business analysts and financial analysts are due to take home the biggest pay increases, while compliance officers and analysts at all sizes of company should also do well.
While few of 2011's raises will be confused for the increases some positions were commanding only four years ago, the main takeaway for staff, according to Good, is, "Don't be afraid to ask for the increase."
There's a very different lesson for firm managers. Employees may have put up with no or below-average raises in the depths of the recession - but that doesn't mean that they liked it.
"Depending on the surveys you look at, some 42-52 percent of existing employees will consider or are considering a change in career or making a change in their current position as the market improves," Good said. "That's a huge number - much, much higher than we've typically anticipated or have seen coming out of some of these recessions."
Combine that desire for change with a job market in finance and accounting that's beginning to perk up, and you have a recipe for high turnover. Firm managers need to pay attention to staff morale if they want to avoid an exodus.
Recent hires may be particularly difficult to retain. "If you were aggressively hiring or had made hires during this downturn, you could see that you actually have a large compensation disparity between tenured staff and some of the newer employees that you brought on board, simply because you tried to find them at or below market," Good explained. "Those people would be at risk as the market continues to improve, so if incentive and compensation increases are appropriate, make sure that they're timely."
Employees who felt under-compensated or overworked, or both, but stayed in place because the job market was too tight are on the verge of discovering that they have options. Robert Half's Professional Employment Report - a periodic survey of 1,400 senior-level executives in finance and accounting - has seen consistent gains in the number of chief financial officers and finance executives who are expecting to hire in the near future. "We've now seen three quarters of sequential improvement in the levels that people are anticipating hiring," Good said. "It's not huge numbers, but it's 'directionally correct,' as they say."
One area that he highlighted as experiencing above-average demand was in technology, specifically around ERP systems: "Organizations are still turning to technology to try to drive greater efficiencies, looking for cost-saving opportunities or identify revenue-generating opportunities within their organizations, so firms that are touching those ERP systems, whether they're implementers, maintenance, etc., seem to be hiring more aggressively than the general market."
Software and technology knowledge was the second-most-important qualification that CFOs were looking for in job candidates, with 27 percent citing it. The top qualification, cited by 31 percent of those surveyed, was personality/people skills - precisely the sort of "soft skills" that progressive firms have been working to inculcate in their staffs.
In terms of the job market as a whole, Good noted that Robert Half's direct-hire business was up 33 percent year over year, and that its temporary business was strong, too. "It's a far cry from the high-water mark back in 2007," he said. "You have to keep it in perspective, but compared to the past two to two-and-a-half years, it seems businesses are getting back to work. They've just cut so thin on resources, if they're having any incremental improvements in revenues, they've got to find and bring on new resources to help satiate the requirements they've got."
Robert Half's 2011 Salary Guide is available as a PDF online at www.roberthalffinance.com/salarycenter, or you can order hard copies by calling (800) 474-4253.
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