In the past year (2018), have you noticed any trends in practice at your firm/organization? For example, changing workloads; challenges in recruitment, retention, training, promotion, exiting; the outsourcing of accounting services; shortages of staff; difficulty recruiting experienced professionals; tapping into retirees?
Our firm has made major changes, as we have for the past few years. Staff recruiting and retention is a continuing issue. We have accelerated training for entry-level staff, which we aggressively recruit. We have also increased our in-house CPE courses for our more experienced staff, with particular focus on the issues that they will encounter. This has led to specialized programs tailored for smaller numbers of staff, with greater emphasis on providing them with the skills they will need when they service clients.
We also have firmwide introductory programs on new initiatives. For instance, earlier this year we had a day-long, firmwide conference presenting introductions to over a dozen advisory services we now provide to clients. The practice leaders and key specialists in each of these areas gave presentations on the benefits to clients and introductions to the go-to people. We also created a position of Chief Utilization Officer so we can have better firmwide coordination of scheduling and staff/resource utilization. Our specialty industry niches have increased their internal promotion through newsletters that make staff aware of capabilities and opportunities to offer greater services to existing clients. Our marketing department has been sending out a firmwide monthly update on activities that now includes links to articles written by or citing Withum people.
A new partner, Nina Chmura, heads a new Withum work flow department that offers bookkeeping and bill-paying capabilities to clients. This has grown rapidly and there are already five people in that department. A reason for the growth has been close coordination between Nina and the marketing and business development staff. It’s funny that when I started my practice, I primarily did write-ups and was embarrassed to say I did. Today, our firm and many other large firms are aggressively promoting and going after this business.
Our wealth management firm added an associate with highly specialized expertise in alternative investments. This area is going through a vigorous exploratory phase, looking for the right type of products to present to the clients.
Besides firmwide CPE, various service niches offer mini-updates on changes in processes, procedures, and software. These are handled in small group seminars or videoconferencing. Also, our internal use of podcasts and webinars has expanded.
We have been a member of the HLB International Association of Accounting and Advisory firms for many years. With the growth of our international work, however, we have just completed a rebranding that includes showing this affiliation in a more prominent manner. We also added to our international tax staff and created a transfer pricing group.
Our marketing group continues to grow, with greater coordination between marketing and partners to quickly generate proposals that are more relevant and focused on the client. We are also sponsoring more trade conferences, with full representation that includes marketing and business development personnel as well as niche members and leaders.
Staff workloads remain the same as they have been the last few years, but there has been a realignment to recognize that different departments have different busy seasons. People in our not-for-profit and employee benefit plan service groups do not work longer hours during the traditional tax season, but do so in the periods coinciding with those busy seasons. Likewise, we are utilizing staff who want to work part time, with flexible hours, or from home year round to fill in on the various busy seasons. This works well for them and us. It also permits many new moms to remain active with less than a full workload, if they wish, and to set their own schedules. You should be aware that we promoted a part timer to a partnership position over a dozen years ago—well ahead of the current trend—and we have many full-time moms and part-time accountants in our firm.
According to the 2018 Rosenberg Survey, the accounting profession is aging—how does this impact your practice? How have you seen it impact colleagues, other firms, or clients?
I do not think the accounting profession is aging. I think the management and leadership of many firms is aging. More than half of our firm is composed of millennials. We are a young firm made up of young people. Our management committee is made up of older people, but we have been drifting toward including younger partners. We have a succession plan, as we have had since before I joined Withum 14 years ago. It has changed as the firm has changed, but the commitment to sound and seamless succession has not. As older partners retire, newer and younger partners are replacing them, and as younger partners step up, it provides opportunities for younger staff to also step up. Some recent partners have been in their early thirties.
I see many of the older practices or practices with older partners merging upward to maintain their staff and client base, and to provide a more secure payout to the retiring owners. This has impacted the profession in that the larger firms are getting larger. When we merged with Withum 14 years ago, Withum had 250 people and was the 27th largest U.S. accounting firm. Today, Withum has over 1,000 people, and we are still the 27th (or thereabout) largest accounting firm. The larger firms are getting larger, with more centralized and professional management and with resources to invest in new technology and service.
According to the 2018 Rosenberg Survey, the percentage of women partners continues to grow very slowly (especially at large firms), and continues to lag behind the percentage of staff. Anecdotally, what evidence have you seen of this (or that contradicts this)? What explains the challenges the profession faces in achieving greater gender parity?
I am not aware of women leadership declining in the profession or at clients, and I am seeing more women intertwined in areas I am involved in. I am getting more frequent calls for practice management assistance from younger woman partners across the country. Our firm has been actively promoting women to partnership, including some that work part time; the NYSSCPA and NJCPA have woman presidents; the AICPA’s immediate past chair is a woman; women fill many committee slots at the AICPA, NYSSCPA, and NJCPA; and it seems that our firm is continually hiring women to fill new technical area positions, as well as interns and recent graduates for staff positions.
My informal observation, which includes my firm as well as others of similar size, is that women are promoted to partnership as they earn that promotion. I was in on some of these decisions, and the primary criteria were merit and ability, not gender. I also know that approximately half of our new hires are women; sometimes a grouping has more women than men and other times less.
This brings up a number of questions that need to be answered:
- What percentage of accounting graduates are women?
- What percentage of these women take jobs with public accounting firms, versus private firms and elsewhere? I would ask the same question of the men graduates, and compare them.
- Of the two groups (men and women), how many are still in public accounting after five or ten years?
- Is the proportion of women in public accounting similar to the proportion of women who have been promoted to partner over the last five or ten years?
Assuming that there are indeed fewer women remaining in public accounting, then it would appear that special efforts need to be made to retain them. Based on my discussions with hundreds of accountants a year from all over the United States, I have two suggestions:
- Reduce busy season hours. The tax season hours (and for the Big Four, the year-round hours) are not reasonable and are the primary reason people leave.
- Introduce a “work when and how you want” policy. Withum has it for women with children, and I have seen it work extremely successfully.
On a personal note, two women very close to me left public accounting—not from Withum, but from separate Big Four firms—to go into private practice. The reasons were the hours and the family-averse attitude of the firms. Both liked public accounting. One had much more experience than the other and wanted to remain on her career track, but when presented with a “conciliatory” proposal when she returned after her maternity leave, she felt she had no work/life balance choice and left.
According to the Rosenberg Survey, revenue per partner and equity per partner are increasing. What do you think some of the reasons for that might be?
Accounting firms are adopting AI more aggressively, reducing the need for staffing in certain areas and reducing the number of bodies at work. Individual workloads haven’t decreased, but the type of work has become less tedious and repetitive and more interactive, innovative, intuitive, and creative. This has the effect of increasing revenues while maintaining a more stable workforce. Also, advisory services is a fast-growing area, and those fees tend to be less competitive and more profitable. Furthermore, the demand for accounting services, from what I can see, is growing, and the sophistication of clients is also growing. They more fully recognize the value-added benefits we provide, and that decreases pressure on fees.
Could you talk about what you’ve seen in the past year (2018) in terms of new practice areas, new regulation, legislation headaches, and new emerging areas of growth?
Advisory services seem to be growing rapidly. AI that accountants employ can be “lent” to clients at high average fees, but with much lower cost to the client than if they did it in house. That’s a win-win.
The tax law changes created a headache to absorb the new information, respond to clients, and get up to snuff. I see this pushing aside growth in some other compliance areas. The frequent changes in accounting pronouncements have further exacerbated this situation. Clients need servicing, and absorbing changes takes a certain—and in many cases fixed—amount of time. A close second in time requirements is adopting new technology. This hasn’t left much time for anything else. At some point this should normalize, but probably not for at least the next six months.
What concerns do you have about the professional marketplace? Do you think there has been a dilution of the profession, or of the value of the CPA license?
In spite of the major changes by some of our professional organizations and credentialing bodies, I do not think there has been any dilution of our profession. If anything, I have seen it broaden our thinking and expand our internal expectations. I think the predictions of doom and gloom and disaster for our profession are in the minds of many accountants who readily and willingly share their thoughts at every opportunity in discussion forums. I suggest they might better put that energy into trying to expand their services and abilities. I have many professional designations and initials that can be appended to my name; the only one I show on my business card and at the top of my bio is “CPA.” That is a proud accomplishment and is well regarded by everyone I come in contact with.