They say, “Money can’t buy happiness”. But that is most certainly not true when it comes to hiring talented employees for your accounting business. Since the pandemic, the accounting field has been struggling to find candidates with the right skill set even at record compensation. Challenges like the retirement of boomer accountants, the modern generation of accountants choosing a more flexible way of working, and perceiving “accounting” as a traditional job are among the top.
Another major aspect that has an impact on attracting and retaining the right talent is a compensation package that is at par. Millennials and Gen-Z refuse to settle for less. They know their worth and won’t budge. If your accounting firm is struggling to set the right compensation and attract top talent, you need to delve deep.
In this article, Finsmart Accounting – globally trusted for outsourced bookkeeping services in India – will help accounting firms and CPAs set the right compensation to attract the top accounting talent. Let’s start!
Compensation Benchmarking is Important in Accounting
The most common mistake that accounting firm leaders make when aiming to attract the right talent is taking a wild compensation guess. This leads to overpaying or underpaying your employees.
Benchmarking lays the foundation to implement a compensation strategy. Collect the available information on the role you are hiring for and the market pay scale. A sound compensation strategy for accountants (or anyone for that matter) helps explain the rationale behind making a particular compensation decision. Attracting and retaining the right talent often comes with the question “What is the basis of the raise”? With a foolproof strategy based on data, you are most likely to have an answer to that.
The compensation you offer also changes over time. This is based on the demand and supply of a particular accounting and bookkeeping skill set. Additionally, if you are aware of your competitors trying to poach talent, additional benefits aren’t such a bad idea.
Main Components of Accountant Compensation Package
Depending upon the size of the business, accounting firms, add several aspects to their compensation package. Here are the major components that firms can use as a bookkeepers compensation guide when setting up the pay:
– Fixed Pay: It is the minimum fixed salary paid to an employee monthly. If your firm has employees in different parts of the world, the compensation frequency is likely to change and so will the pay.
– Performance-based pay: An accounting firm has employees with many roles and this pay is often applicable for roles that have targets to meet. The weightage between the company’s performance and the employee’s performance is defined upfront when hiring an employee.
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– Stock options: This compensation method of pay is an incredible tool to ensure that the employees feel included and have a sense of ownership. With stock options, employees can receive ownership rights and participate in case of an M&A transaction or the company goes public.
– Benefits: Accounting firms often undermine the value of added benefits as an employee retention tool in the organization. Benefits like health insurance, paid time off, work flexibility, etc, are some of the added perks that employees look for.
Read on to discover expert tips for creating a beneficial compensation strategy for the accounting team or check out this trending blog about top finance trends for CFOs.
Tips for Ace Accounting Compensation Strategy
Accounting is a niche field where you need employees with specific skill sets. It is tough to find resources with adequate knowledge and expertise in the field. Even if you do, it becomes imperative to give them a compensation package that is at par with the market standards and their skill sets. Here are top tips to set a compensation strategy that will set you apart:
– Set a data-driven compensation strategy:
Every year, accounting firms set goals for new hires. While you need to set out a budget for the new resources, your preliminary focus should be on the existing employees. It is key to determine if their salaries and benefits match the ones you will be offering the candidates for open positions.
Analyze the current compensation strategy based on the metrics you had set in the previous year. If you hadn’t, then it might be time to standardize the metrics. Your HR team can measure the performance and reward the employees based on that. Use the market data to analyze if your employees are being underpaid. The lack of the use of data may result in an unconscious bias and differences in pay. These may be passed as favoritism, especially when a promotion or appraisal is due.
– Evaluate the market and competition
Resource poaching is incredibly common in niche fields like Accounting. Market rates are an average that is calculated, based on anonymous contributions on platforms like Glassdoor, Indeed, and Fishbowl. While finding anonymous reviews is relatively easier, researching the competition involves more work. The hiring managers or the founders will have to manually check the profiles of the biggest competitors or visit the “Career” page on the website to learn the compensation range of open positions.
However, many companies do not disclose their compensation in the job descriptions on the job portals. The key here is to look beyond the salaries – benefits like flexibility, time off, or even free memberships. Instead of looking for just the pay, most often candidates will choose a job where they have better facilities overall. Speaking to prospective employees about what is it that they value most can also give a better understanding of how to draft your total compensation plan.
– Maintain a transparent salary approach:
Gone are the days when accountants and bookkeepers would prefer keeping their salaries a secret. Today, they are looking for a more transparent approach. Once you have made your accounting compensation plan and strategy, figure out a way to remain transparent with your employees about salaries and communicate changes in strategy effectively.
One of the most common ways is to publish everyone’s salary internally. This is the boldest salary transparency approach. If you want to go more subtle, especially to publish externally, choose a range that is within the permissible budget. This helps build a culture of transparency and trust. Making pay bands visible internally also allows the employees to understand the skills they need to learn to move up in the organization.
Also, add employee benefits and pay ranges in the job description when you are posting a job. This helps the potential employees align better with the accounting firm’s values and know if it is the right place for them. Choosing to be transparent in the compensation has become the need of the hour. It helps attract and retain the right talent and makes sure that you are hiring people who are culturally fit for your accounting firm.
– Evaluate your company’s budget brutally
This is where you need to draw a comparison between the allotted budget and the competitors’ rates. It helps determine if your accountant pay ranges are at par. It is always beneficial to create a pay band, instead of determining a number. Make sure to keep a flexible upper limit and be sure that the budgets can easily accommodate the necessary changes.
A flexible upper limit also prevents you from losing exceptional talent to a few dollars. When crafting a budget for new hires, keep your current employees in priority. Also, aim for internal promotions. Another important aspect here is to make sure that you can sustain the budget you are crafting without running into financial troubles in the long run.
During the budgeting, develop a clear, detailed list of benefits for accountants and other staff. Whether you publish them internally, on the company’s website, or in the job description, make sure that your employees have a full picture of this accountant compensation aspect.
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– Decide the number of new hires and promotees:
By now, you already know the market rate and the pay of your competitors. This is when you have to decide how much you can and should extend your budget to attract and retain top talent. Your budget and the empty positions should help determine the number of new hires and the number of existing people you can promote. You should aim to hire a new talent only when no one in the organization possesses the required skills, especially when it is an “urgent” position.
Alternatively, you should promote an employee who is willing to upskill for the role when it is “not an urgent” position. Internal promotions are the best way to retain the talent you truly value.
Right accounting compensation package
Undermining the importance of a solid compensation package strategy can prove detrimental to accounting firms and CPAs. A good compensation package is a combination of pay and benefits. Employee loyalty has a lot to do with the compensation and perks you offer your employees. Take the time necessary to develop a comprehensive program that meets the needs of your accountants and bookkeepers. Also, make sure that you communicate the plan effectively to boost employee morale.
In case you are struggling to manage your existing employees and their compensation, you might want to outsource your accounting practice. Write to us at connect@finsmartaccounting.com to learn more about outsourcing.
Also, don’t forget to check out:
Accounts receivable outsourcing services
Outsourced financial controller services
Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
