There’s a particular issue that is probably challenging your firm – and others in the industry: retaining a high-performance workforce. What’s worse, research shows that it’s usually after peak season that top performers resign… due to widespread burnout, lack of growth opportunities, or an absent organizational culture.
The result? Realizing you’ve invested your time and resources into top-performing people who then leave the company and take your investment with them.
Play the long game with your top performers
According to Workest by Zenefits, US employers spend $2.9 million daily ($1.1 billion a year) searching for replacement staff. So, you’re basically spending 20% of a salary on replacing someone good – while risking a bad hire.
No company wants to hire, train, and upskill employees into rockstars, only to lose them to competitors or industries with more or better development opportunities.
But more pressing for many of our clients at Makosi is the long-term effect of losing high-quality performers. For any firm to continue growing, it must retain its talent to increase profitability and ultimately, enjoy a solid succession plan.
Wayne Kaplan, Makosi’s Advisory Board Member, cautions against allowing culture building and succession planning to fall by the wayside.
A former managing partner at Grant Thornton, Wayne has accounting, firm leadership, and strategic planning expertise and is well-versed in audit firms’ workforce challenges. And, after discussions with hundreds of clients worldwide, he is able to point to top performer retention as a common problem.
While there’s still work to be done during the off-season, the top performer who has worked tirelessly through a busy season needs not just a ‘breather’ during summer, but also a real opportunity to hone practice development, professional networking, and coaching and mentoring, and to boost management business skills.
Wayne believes that using on-demand workforces during the summer months can really go a long way towards yielding long-term benefits for audit firms.
What the numbers say:
In a recent Indeed study, 52% of respondents felt burned out and 67% believed the pandemic increased their levels of burnout. According to The American Upskilling Study, 48% of US workers would take a new job for better training opportunities.
New research on 600+ US businesses reveals that 63.3% of companies believe retaining employees to be more challenging than hiring new ones, and that hiring and onboarding a replacement is the third-highest cost factor in employee turnover.
Granted, these are predominantly US-based statistics, but we at Makosi have seen these trends manifest for many of our clients across the globe.
Turn top performers into future your leaders
Giving your superstars a breather during the summer doesn’t necessarily mean sending them away until the next busy season. In fact, there are several highly effective strategies for providing leeway after the busy season, while promoting the career development they so greatly value.
Here’s one of our favorites: Build practice development skills.
That’s right: Send your top performers out into the business community, so they can get the experience and guidance they need to excel in practice management. This way, they’ll learn to sell and they’ll understand how to run a successful organization. Position them to become the next generation of partners at your firm and be reassured that they’ll drive future growth and profitability.
Mediate the catch-22 that comes with ‘time poverty’
Obtaining, retaining, developing, and promoting are the four vital ingredients needed to develop talent in the long term.
So what’s stopping firms from offering these growth opportunities?
The short answer is this: time poverty. There’s not enough time for practice development, coaching, or breathing for that matter, never mind organizational culture development and upskilling.
Advance the top performer, and you’re left with a gap that could cost you money and clients. Leave the top performer working tirelessly through busy and off-seasons, and risk losing them due to better growth opportunities or burnout.
But if you replace the top performers with a variable workforce, you can jump-start practice development at your firm while filling the performance gap with specialized on-demand talent.
The survey data agrees:
According to a Journal of Accountancy article, Attributes of top-performing firms revealed, firm size, longevity, and delegating billable work are some of the biggest differentiators between top-performing firms and their peers.
In fact, top-performing firms that push more billable work down significantly increase their average chargeable hours; more specifically for interns (1164 vs 1000) and professional subcontractors (1584 vs 1416).
In the 7th annual 2021 NYSSCPA-Rosenberg Survey analyzing national CPA trends, Managing Partner of Rosenberg & Associates, Charles Hylan, attributes increased firm profitability to practice development and introducing resources to train staff, among other things. The survey outlines a few benefits of distributing billable hours:
- Leverage increases income per partner
According to The CPA Journal’s State of the Profession article, there’s a close correlation between a firm’s staff-to-partner ratio (leverage), income per partner, and overall firm profitability. It reveals that staff-partner ratios greater than 10:1 have 92% more income per partner than ratios of 3:1 or less.
A recent 2021 National Management of an Accounting Practice (MAP) survey from the AICPA Private Companies Practice Section (PCPS) reveals that when you double the revenue per partner, you double the profit per partner, which ultimately doubles the compensation per partner.
- Spreading work increases profitability
Gone are the days where CPA firms merely offer compliance-related services. Instead, firms are focusing more on advisory-led relationships, leading to a decrease in annual billable hours during tax season. As a result, firms experience higher profitability due to happier staff, increased service levels, higher realization, and higher utilization.
But there’s a loophole.
When you have subcontractors handling the compliance work, you can still increase your billable hours and have enough resources to focus on advisory-led relationships and training.
How to retain top talent and increase profitability
The pandemic did a number on the employment rate. Labor is shifting and firms are grasping at straws to retain their talent. Whether it’s stay bonuses, raises, promotions, or new lists of perks, firms have only one option: think outside the box.
In The Growth Partnership and the Rosenberg Survey, Hylan notes five strategies to tackle the labor shortage, retain top talent, and increase profitability:
- Go the non-traditional hiring route with subcontractors and graduates.
- Funnel more resources into staff development.
- Manage succession issues and gain more resources via mergers and acquisitions.
- Employ more administrative staff and adjust their responsibilities.
- Build a dedicated internal team to focus on recruiting more top talent.
Use Makosi as your success engine
EBP and NFP busy seasons
Makosi has its own arsenal of specialized high performers and onboarding strategies that cater to Employee Benefit Plans (EBP) and Not for Profit (NFP) audit busy seasons.
Leveraging recurring on-demand talent for off-seasons gives you the real-time opportunity to evaluate individual contractors for the next busy season. The high-performing Makosi consultants that your firm used during the commercial busy season are uniquely qualified to drive the summer and fall planning process for your clients that they’ve already rolled off. So leveraging new on-demand talent gives you the time and resources to upskill your top performers while reviewing new contractor candidates in a less pressurized environment.
Makosi offers flexible pricing to protect your margins during busy and off-seasons. This means not spending the same amount on your off-season variable workforce as you do during busy seasons.
Full-Time Equivalent (FTE) Recruitment
Makosi’s FTE recruitment strategy involves creating pathways to making full-time hires. If you have identified an on-demand consultant that would make a great fit for your firm, we will work with you to find a way to retain them year over year, and potentially take them on full time after multiple years of service.
This will give your firm the time to upskill or promote your existing top performers, introduce a new top-performing Makosi consultant into your organizational culture, and help you benefit from the consultant’s work.
More resources mean more room to grow
It may seem risky to take your top performers partially out of the “charge hour environment” during the summer, but with on-demand support, there is more time and resources to develop skills, build culture, and avoid burnout. Let Makosi help you maximize your top performer potential, retention strategies, and term profitability.
Contact us for more.
Makosi has offered on-demand resources to audit firms worldwide for the last 15 years. We’ve specifically designed a variable workforce model that transforms workforce strategy, helping clients break through growth ceilings. Our quality consultants, dynamic teams, attention to culture fit, service support, and talent preparation combine to make Makosi a place where THERE’S ROOM TO GROW.