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Accounting firms get more flexible to retain employees

Public accounting firms, tired of annually replacing good employees, are increasingly acknowledging that some staff might actually want a life outside of work.

Accounting firms have traditionally run as lean operations, hiring less staff than needed for the workload. That meant that during slow periods, they didn't have a lot of employees sitting around doing nothing. But during the busy periods, the lean staff had to work long hours. The tax partners generally spent those long hours in the office. The audit employees were on the road.

That had been a good mix for the firms but it often burned out employees, who would leave after a few years.

Several forces acting on accounting created a shift to a more flexible work schedule, including changing demographics, new regulations and a shortage of accountants.

In past decades, fully half of the students graduating in accounting have been women, and they often are the primary care-givers to their children.

“Women pushed the issue of free time more than men ever did,” said Robert Yetman, assistant professor of management at the University of California Davis Graduate School of Management.

Moreover, the Sarbanes-Oxley Act — passed in the wake of accounting scandals — completely changed the structure of public accounting, which has created more rigorous reporting. That reporting demands more work, and many in the industry call Sarbanes-Oxley an accounting full-employment act.

With a tremendous demand for a limited number of trained auditors, accounting firms are offering more flexibility to their trained staff than ever before in an effort to retain them. That effort is difficult, however, because of the nature of the work: It still tends to come in concentrated waves with short deadlines.

“On the audit side, it is not a job where you can say when you will be home that night. You might not even know where you are going to be that night,” Yetman said. “The underlying nature of audit is not going to change. If anything, we are going to have to throw more people at it.”

No more 'move up or move out': That demand for more auditors flies into the reality that there aren't enough trained auditors out there now, and that is giving the employees some leverage in getting some control over their time.

“The demand is huge. When you look at the number of people who go into accounting and the number of Securities and Exchange Commission-regulated companies there are, there is a large gap,” said Anker Christensen, chief financial officer at River City Bank.

He worked for a decade as a recruiter for a national firm. Typically, that firm would hire students at the top of the class. For the first couple of years, the new employees would learn the basics of their trade. Then between their second and seventh years, most of them took jobs with the firm's clients. The percentage of people who stayed with the firm for a decade was less than 5 percent.

Historically, accounting at a large national or regional firm has been predicated on the notion that all employees either “move up or move out,” Yetman said. The staff auditor eventually becomes a manager. The manager becomes a senior manager. The senior manager eventually moves up to partner. If you weren't moved up after a set number of years, it was often in the contract that you would have to move on to some other place.

For most accountants finding other work is pretty easy, and most of them get hired by companies for which they have done audit or tax work. That “up or out” progression was thought of as a way of keeping the very best professionals in the firm, Yetman said.

But with the tremendous demand for staff now, another model is now taking shape that lets employees simply stay in their current positions for a long time.

“As a profession, the model has changed,” said Tim Stenvick, managing partner off Deloitte's Sacramento office. “Finding and retaining good people is one of the most important jobs every day. People are our asset. The most important thing is keeping the people we deploy in the field. … We have to offer people flexible arrangements for their family situation or for their own pursuits.”

The long and the short of it: Sheila McGovern, Robert Planesi and Mary Walters in October started a CPA firm at Watt Avenue and Folsom Boulevard. The firm's name, appropriately, is McGovern Planesi & Walters. The trio had been with Damore, Hamric and Schneider Inc. CPAs on Arden Way near Morse Avenue. The three tax specialists made the move to be able to offer a more personal touch to clients and for flexibility.

All of the partners live in Elk Grove. By opening their office at Folsom Boulevard and Watt Avenue, they have ready access to Sacramento and far less of a commute back home, which comes in handy since all the partners have school-age children.

“When you run your own business, there is a comfort level in taking off for an hour for a family matter. You don't feel guilty about it,” Walters said, adding that their office was set up for flexibility, so the partners can take work home and work remotely on their laptop computers. During tax season, she said, she still works 75 hours a week, but much of that work is done from home.

That flexibility is now at the big firms too.

“Absolutely, we have flexible scheduling. That is a huge component of our human resources operation,” said Amy Rinaldo, spokeswoman for KPMG LLC in New York City.

But there are limits.

“Ask any entrepreneur, and they will tell you they work the amount of time it takes to get the job done,” said Thomas Gilbert, managing partner of Gilbert Associates Inc. in Sacramento. To a great extent, he said, that same work ethic goes for accounting professionals, too.

Gilbert knows the drill. He worked for a national firm before starting his own firm, and he worked long hours, he said. “Nobody requires you to do that. The culture forces you to do that. It is your peers and your own desire for compensation.”

These days he's doing the hiring, and his first preference is to hire full-time people, and he prefers to get an average of about 10 percent overtime from them, but he's willing to work around schedules. Two of the managers at Gilbert are part-time, both having taken that schedule to spend more time with children.

“Those are good choices. They are people with balance in their lives, and you want those kind of people,” Gilbert said.

Turning down work: Retaining employees has even taken precedence over taking on new clients — especially clients who require out-of-town travel.

“I'm more concerned about the cost of staff turnover. I might be able to charge a premium by having someone work out of town for four weeks, but that doesn't do me any good if the employee comes back after four weeks and quits,” Gilbert said.

“We're not going to grab every opportunity at the cost of our people,” said Jeff Rogers, senior manager with Perry-Smith LLC in Sacramento.

“Our approach to staff and work/life issues does not change based on the job market. We're driven by two primary goals: serving our clients and maintaining our people,” he said. “We are looking for long careers for our people, and a career is a long path. We don't want to burn people out in their first years. … We try to find creative ways to work with people, creative schedules and flexible schedules.”

More important than flexibility is communication, he said. The employees have to know what is expected of them and what the mission of the company is so the employees understand the value of the effort they are putting into the work.

“And, quite honestly, there are going to be times when you do have to make the extra effort,” Rogers said. “We hope that we can work with people to help them find where their passion is in this work. If you are passionate about the work, working some extra hours isn't such a big deal.”

© 2004 American City Business Journals Inc.

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