Reprinted with permission from Accounting Today.
There is no greater challenge facing the accounting profession today than that of recruiting and retaining high-quality professionals. In this talent squeeze, employees — particularly young, rising stars — have no shortage of options.
Effectively drawing these talented young professionals to your firm demands that you refresh and revitalize your firm culture, so firms are changing. They're investing in building hybrid cultures and revamping their office spaces to fit the ways employees want to use them. They're making strides toward bold diversity, equity, and Inclusion targets. And they're investing in health and wellness programs, employee training, and other initiatives that promote a better workplace.
All of these are valid and go a long way toward making your firm a better place to work. But the reality is that all successful firms are investing in these kinds of activities. To truly differentiate your firm and stand out from the crowd, you need more than just a winning culture.
Instead, perhaps the answer to the hiring and retention challenges of today lies in another form of employee incentive: new financial benefits that have the potential to create powerful incentives for employees to commit their career to your firm.
At my firm, SS&G Inc., we started a pretty innovative financial incentive program back in the 1990s. For us, it turned into a powerful tool that we leveraged to attract and retain top talent that ultimately helped us grow into a Top 50 Firm.
Here's a simplified explanation. We established a mechanism whereby our employees could take their own money and invest it into our firm. We didn't give our employees real equity as the compliance challenges were too prohibitive. Instead, our employees essentially loaned the firm money that would fuel growth and acquisitions. Every quarter, the employees would get an interest check, and when the firm performed well, they'd get bonus interest.
If an employee left, they cashed out. When the firm was sold to BDO in 2015 we were able to return millions of dollars to our employees, ultimately delivering them a great return on their investment with us.
This was pretty unique when we kicked it off in the 1990s and it remains pretty unusual today. At Winding River Consulting, we interact with a lot of accounting firms and few have comparable initiatives. But for us, it was a huge differentiator: a unique, extremely attractive benefit we offered that none of our competitors did. It also served as a powerful motivator for our employees to go the extra mile, focus on business development, and drive real growth across every practice area.
Today, the time is ripe for firms to be considering similar programs. The execution doesn't have to be identical — you might grant phantom stock instead. But the goal is the same: engaging prospective and current employees in the growth and success of the firm at a deeper level. Programs like these have the potential to be true differentiators, enabling firms to deal with hiring and retention challenges head-on.
Simply throwing money at the hiring and retention challenge doesn't solve it. Before you can start an effective financial incentive program for your employees, you need to foster a culture that's attractive to the high-performing employees you're seeking to attract and keep.
Culture is primary. And in terms of developing your employees, it's the first and most important piece of the puzzle.
Alone, though, even the best workplace culture is not a differentiator. Practically every firm has a beautiful office and a thoughtful hybrid work policy. So, how can firms develop an employee incentive program that's financially led?
The first step lies in crafting an effective plan that can handle all the challenges running a firm will throw at it. You need clearly defined policies that specify what happens when an employee leaves, or when individuals want to pull their loans to fund their kid's college tuition, or when your firm is acquired. Document all of this. Make sure it's watertight.
Following that, your focus should shift to communication — both internal and external. Back when we started our program at SS&G, it was so unique that The Wall Street Journal ran an article on it. For us, that was a great recruitment tool. Today, with the speed the digital world moves, there's no reason your announcement of a similar program can't make similar waves.
In executing the program, it's important to align expectations with your employees and lean on those with experience to help. Your marketing department should help with consistency in messaging, and your firm's HR department should be an indispensable partner in implementing and measuring it.
It's important to note that this isn't a prescriptive approach — this is just what worked (extremely) well for us. The world is different today, and we certainly suggest a comprehensive exploration of your options before you launch any new initiatives.