PASA Industry Notes:
From time to time the editors of the PASA News page will post accounting industry observations in an “editorial” style. The PASA Industry Notes are meant to spark a dialogue as well as inform others about the comings and goings in the industry.
According to a recent informal poll, PASA discovered that the top five reasons public accountants leave their firm are:
MONEY, MONEY, MONEY
Hours–“The Work/Life Balance”
Work environment
Complete career changes
Office/Client location
Today we will explore in-depth the “Money” aspect of high turnover. Here are some basic facts we discovered through interviews and other research:
Fact #1: Leaving your firm = More $$$$
This is true in most cases. Especially if you switch to another accounting firm. The public accounting industry is very concerned with paying salaries to their employees that are in line with the rest of the market. This means that for the most part, seniors make about the same money (in their geographical area) no matter what firm they work for.
One of the only times a senior or manager can get an above market “bump” is when they switch firms.
Accounting firms are very competitive. If they think they can steal an experienced, well trained public accountant from another firm, it is in their best interest to use any weapons at their disposal. This includes money.
Fact #2: The money you receive is a short term fix.
Firms love to entice experienced hires by throwing money at them. What is often left unsaid is that this quick money fix is only temporary. Experienced hires inevitable receive lower bonuses and raises than their new peers. This enables firms to let their other employees catch up. After all, it’s bad for morale to have the new guy make substantially more money throughout his entire career.
Fact #3: There is a way to play the system. But it isn’t pretty.
Throughout our interviews we came across an interesting PASA member who really understood the whole “bump” theory. For various reasons this member had worked at 5 different accounting firms over an 8-year period. After all that time, she was still only a senior at her current firm.
But, she made a whopping $20K more than any other senior. Why? Well, it makes sense when you consider that she received pay increases at every firm she went to.
I guess if your goal is to make money in the short term, her career path makes sense. There are obvious downsides though too. Bouncing around like that is not very fulfilling.
Fact #4: From a long-term perspective, the real money is in staying put
One of the greatest things about public accounting is that it is a merit based profession. If you are good, you will move up. If you move up, you will make more money. All the real cash is at the top. For those that switch to the private side, there will usually be a nice bump in salary. The problem is that after that bump, there is a significant plateau effect. Public accounting consistently gives larger salary increases per year than private industry.
