Accounting
Art of Accounting: How to end the self-created pipeline problem
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I quit two jobs I liked because of poor raises. I resolved that when I had my own practice, I would not let this happen to my staff. And it never did because I paid the right salaries (and usually on the higher level). Of course there were exceptions. There are always exceptions. But as a rule, I never lost staff because of inadequate salary or a poor raise.
I do not think I was so imaginative, innovative or even too bright. I was using my early experiences as the role model to keep staff that wanted to stay and who I also wanted to stay. As things worked out, I pretty much made the right decisions when I quit since each future firm gave me added experience and opportunities, and the appropriate salaries.
I feel disgusted when I read interviews and articles about the pipeline “problem” when one of the causes cited is the low salaries being paid to entry-level and experienced staff who could earn much more in positions outside the profession.
I, along with my partners, came up with rationales for our higher salaries. I think these are just plain common sense. It was certainly good business for us, and here are some of the things we did and the reasons. This shares my pre-Withum experiences, but from what I hear from colleagues, everything we did is still valid. However, very few firms duplicate it, just as very few duplicated it 45 years ago when I started writing and speaking about this. This is not new stuff.
- For starters, we were a small practice and primarily hired people out of school. Generally, we weren’t competing with the larger firms that had higher starting salaries, so we paid a little lower than “market” to get staff on board. We had a great training program and our staff advanced quite rapidly. What we did was recognize the value they acquired and gave them a raise after six months and every six months thereafter for about two to two and a half years until their steep learning curve leveled off somewhat, and then moved them to an annual raise. We, in effect, paid them what they were worth at the end of every six-month period.
- Many colleagues pointed out to us that we were paying staff for what we taught them at our expense, and they thought we were foolish. The fallacy in this is that our staff owned what we taught them and if they left, we lost what they knew, the relationships they established with clients and the level they were performing at for us at that time. We did what we needed to do to keep them, and since money was a key issue we paid them what they were then worth in the market.
- The result for us was a much lower turnover and greater longevity with us and with our clients. This cut our time recruiting and onboarding and training new staff. Instead, we had added time to bring our staff along to perform at higher levels … and for which we gladly paid them. Our colleagues got mired in a cycle of ongoing staff replacement recruiting and onboarding that we completely avoided. And this accelerated our growth.
- Our accelerated growth also led us to innovate more and provide added services to clients, increasing client satisfaction and our income. Clients also appreciated that we did not have a revolving door of new staff.
- We actually had a revolving door, but it was for controlled growth for staff and more efficient client servicing, without disruption to clients. We realized staff could not grow if they remained on the same clients indefinitely. What we did was have someone who worked on a client start after two years to train a newbie for a year and then step back and become their supervisor. The newbie worked another year by themselves, and then they were ready to train the next newbie on that client. The clients saw continuity and because of our systems there was never a break in the services or deliverables. Depending on the dynamics, occasionally the supervisor remained on that client as the manager and performed many of the services a partner would have performed.
- We trained staff well in the technical areas and also on our systems, methods and culture. Further, because of our systemized approach to training, a one-year staff person was able to train an entry-level person, just as a two-year person was able to train the one-year person, and this worked all the way up the experience ladder. Our managers were trained by us and started their careers with us.
- I recall reading a cartoon showing two older partners talking to each other. One said, “Why should we spend effort training staff who will then leave?” The other said, “Suppose we do not train them and they stay!”
- We trained to have staff perform at the highest level they were capable of as long as they worked for us. If we only got an extra year out of them, it was well worth the effort and expense, but we usually got more than that extra year.
- Another thing we did was pay for overtime hours in the next paycheck. They worked extra, they were paid for it! If we weren’t able to generate added revenue from their added work, we did not deserve to remain in business. Our staff never complained about working overtime, and I was told that some spouses encouraged it because of the added payment.
- As for overtime, we only asked staff to work extra if there was work that needed to be done. This certainly was during the couple or three weeks before March and April 15, but not usually during other periods except if there were special circumstances.
There is a lot more, but the shallow reason that the pipeline is drying up because of low or inadequate salary could easily be remedied. We have it within our power to change this. When will you start?
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The Governmental Accounting Standards Board issued guidance today that will require separate disclosures for certain types of capital assets for the purposes of note disclosures.
GASB Statement No. 104,
The statement requires certain types of assets to be disclosed separately in the note disclosures about capital assets. The intent is to allow users to make better informed decisions and to evaluate accountability. The requirements are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter, though earlier application is encouraged.
The guidance requires separate disclosures for four types of capital assets:
- Lease assets reported under Statement 87, by major class of underlying asset;
- Intangible right-to-use assets recognized by an operator under Statement 94, by major class of underlying asset;
- Subscription assets reported under Statement 96; and,
- Intangible assets other than those listed in items 1-3, by major class of asset.
Under the guidance, a capital asset is a capital asset held for sale if the government has decided to pursue the sale of the asset, and it is probable the sale will be finalized within a year of the financial statement date. A government should disclose the historical cost and accumulated depreciation of capital assets held for sale, by major class of asset.
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