Kula Consulting Blog

 I try to visit Maui at least once a year to pay a visit to the place that inspired me to start Kula Consulting. It’s a small town on Mt. Haleakala called Kula.  This month my wife and I spent ten days on Maui and made a trip not only to Kula, but to the top of Haleakala.  If you haven’t been to the top of this volcano, you are missing a fantastic experience.  Next time we go, I would love to camp out there and just look at the stars.

Eight years ago, I spent a month at Kula, visiting one of my sons and future daughter-in-law.  I wanted to be away from the crowds down by the beaches and enjoy a quiet peaceful visit.  I also wanted to spend some time to figure out what I wanted to do with the remainder of my work-life.  This “contemplation” time led me to start Kula Consulting in May, 2003.  On this trip I took some time to reflect on how things have gone since that visit in 2002.

On a personal note, my son got married (as did my older son) and we now have three grandchildren - Ethan, Julia and baby Claire.  By far, these family events have been the most joyous moments of our lives since that visit to Kula eight years ago. Family truly is the source of what makes life worth living for my wife and me.  We include Kula Consulting as part of our family as well.  In fact, the “new perspective” we use as our Kula tag-line comes from the Hawaiian word “ohana”, which means acting in the spirit of family.  It’s about treating our clients, candidates, and colleagues as we would a family member.  But like “Ozzie & Harriet” rather than Ozzie Osbourne’s family.

What does “ohana” mean in a recruiting business context?  I think it means listening more than talking with the intent to understand what the other person is trying to communicate; offering advice that helps people make decisions that are in alignment with their work and personal goals; facilitating the decision-making process with the goal of making matches that last; and treating our colleagues with respect, honesty and kindness.  Additionally, I think “ohana” means helping people achieve their goals.  But, “ohana” doesn’t mean soft and touchy-feely.  There are times when family members disagree or have conflicts.  It’s how these unpleasant situations are handled that separates functional from dysfunctional families.  More specifically, Kula has strived to treat our own interests behind the interests of our clients’ and candidates’ interests.  We do not try to push people into doing what will make us money in the short-term (such as take a job that isn’t the right fit for them), but rather to work towards meeting both our clients’ and candidates’ goals.  I hope we are achieving the spirit of “ohana” with our actions, but you are the people who know for sure.  I would appreciate your thoughts on how we are doing.

Other Things I Learned From This Trip

Exercise really is important!  I’ve always had a theory that we have a set number of heart beats and that exercise uses up too many of them per hour. This belief has kept me safe from exercise for years.  It’s also, apparently, kept me fat.  Here are a couple of examples:  My wife “induced” me to walk three miles on the beach every morning of our trip to Maui, and I LOST 5 pounds in spite of all the eating and drinking I did on this trip.  And, I found you need to be fit to be able to enjoy ocean sports.  My belly kept getting in the way when I tried to stand up on my Stand-up Paddleboard.  I need to lose it before I can use it!  I finally get it and will start exercising here in Santa Cruz - - - soon.

A great cocktail for those of you on a weight loss diet:  Hana Bay dark rum, lime juice and diet Coke.  Go heavy on the rum and you drink fewer of them.  Also, try any of the Maui Brewing Company beers.  They come in cans, are brewed in Maui and are very “hoppy”.  Enjoy these beverages at any place in Maui with a view of the sunset.  Guaranteed to help you mellow-out and keep the weight down at the same time.

A Couple of Recommendations

Here are a few places and people I recommend if you are ever in Maui:

1. Eskimo Candy at http://www.eskimocandy.com/.  They have a great fish stew, fish and chips, poki, and ribs.  It’s a take-out place that’s also a seafood wholesaler.  Sort of like Phil’s in Moss Landing.
2. Moose McGillicuddy’s at http://www.mooserestaurantgroup.com/.  For a good happy hour and sunset view.
3. Tasty Crust at http://www.tastycrust.com/ for a good local breakfast place.
4. Mama’s Fish house at http://www.mamasfishhouse.com/ for a romantic, great dinner place.
5. Alan or Patti @ http://www.hstwindsurfing.com/ for a great place to learn how to surf, windsurf or Stand-up Paddleboard.  Very nice people and they know what they are doing.  (Even if I didn’t.)

Of course, if you ever want to just get away from the bustle at the beaches in Maui, visit the Kula Lodge for a great place to stay, enjoy the view and enjoy a meal.  You can find out more about them at:  http://www.kulalodge.com/

Have a great Memorial Day holiday and please pause for a moment to remember the people who have served our country.

The Kula blog normally covers the local job market for accounting talent, plus some “how to” tips on hiring or finding a job.  But, today is April 15^th.  Tax Day!  So, I’m taking this opportunity to offer my thoughts on current events.  I will admit up front this blog is editorial, so skip it if you could care less about my thoughts on issues outside of the recruiting business.  Or, please share your views and opinions on what I have to say.

Federal Taxes

98% of US tax payers will pay less tax for 2009 than they did for 2008.  A family of four making less than $50,000 a year will pay no income tax at all. Plus personal income tax rates are the lowest they have been in sixty years.  Good news, right?  Apparently not if today’s and last year’s tax day protests are an indicator.  I’m having trouble understanding why people are protesting paying taxes.  Having to pay taxes means you have income; and, if you are part of a family of at least four, you are earning over $50,000.  Of course, two of the major reasons for the current low tax rates are the tax breaks contained in the economic recovery programs and the lower incomes earned by most of us due to the Great Recession.  Why tax protests?  Our big corporations are doing even better on US tax day - - - hardly any of them are actually paying any federal income tax.  Probably due to their having hired our great tax accounting candidates!

I don’t see how federal taxes are the problem. They are lower than they have ever been in most of our lifetimes.  I think people are protesting because they are angry and frustrated with how things are going (or not going) in their personal lives, and taxes are easy to get off about. A group called Realty Trac is reporting that one million homes will be repossessed by banks this year. Others report that over a quarter of all mortgages are underwater.  And, unemployment is still very high and not supposed to get better for at least the next two years.  Throw in the rage over bailed out bankers getting new bonuses that exceed the average person’s lifetime earnings and we can all see why people are angry.  But, I don’t see how it has anything to do with taxes.

The Federal Deficit

Another media stated reason for the angry public discourse is the size of our federal deficit.  Hello?  Did anyone take a basic economics class in college?  The way to stop a recession from becoming a depression is for the federal government to spend more money.  In effect:  Be the employer of last resort.  We have been accumulating a deficit for a long time.  Why are we just noticing this?  We spend more than we take in (low tax rates plus spend lots on two wars, etc.).  This action leads to deficits.  Back in the day, the fear was Japan would soon own us because of all the debt we owed them.  Now we are supposed to be afraid of the amount of debt held by China.  Does anyone remember the old financing maxim:  When you owe the bank a little bit the bank owns you, and when you owe the bank a lot, you own them?  It seems to me to be about the same situation.  When the recovery picks up some more juice and the Bush tax cuts lapse in 2011, we will start to see a reduction in the deficit.  When we have the political will to close some of the tax loopholes and, heaven forbid, reduce our spending (drop a couple of wars?), we could potentially start paying down the debt.  If we don’t do any of these things, my three grand kids will get to show how smart they are when it’s their turn to run the country.

Healthcare

I’ve saved this one for last to let my heart rate slow down a bit.  Three weeks ago we received a premium increase notice for our group medical insurance.  Our friends at Blue Shield of California raised our premium by almost 60%.  And they changed the terms of our coverage as well by upping our maximum out of pocket costs by 50%.  Our new insurance premium would now be greater than what we pay for rent, utilities, phones and liability insurance premiums combined.  This is life in a small company.  It’s no wonder that most small businesses do not offer health insurance to their employees.  Now, I’m not sure if the insurance reform laws that were recently passed will help us and other small businesses, but something needed to be done to reform our health care system.

Prior to becoming a recruiter, I worked for companies with international operations.  The health care systems in each of the countries I worked with were much better for our employees than what we offered to our US employees.  And, our benefit plans were competitive here in the USA.  I never received any health care complaints from our Swiss, French, German, Japanese, or Singaporean employees.  But, I sure heard them about our US health insurance providers.  None of these other countries was communist, socialist, or Marxist, or totalitarian, but their health care systems all had a strong government role.

I know from personal experience(s) that our health care system was broken, unfair and too expensive.  I don’t know if the recent health care reforms will solve all of our problems.  But, I do believe the savings to accrue from the changes will help reduce the deficit in the future and will fix some of the issues we have all had with health insurance providers.  By the way, we have been able to reduce our rate increase to “just” 45% by picking a different plan.  Now our medical insurance premiums only equals the total costs of the items noted above!  Such a deal!

That’s it for my, I hope, mild rant on the issues of the day.  I promise to write about the job market next time.  Thanks for listening.

One of the best ways to move this blog up the search results list is to include key words like” Brangelina”, “JLO”, “Brett Favre” or “Tiger” in the text.  March Madness, or Jesse James, would help today as they are at the top of the internet buzz list.  Or I could stoop to throw in phrases like “health care”, Nike, SAP, Oracle, SEC, TARP, or “97-2″ to get people to read this blog.  But most of the people who were tricked into clicking on this blog would be angry with me for wasting their time, and rightly so.  Key words are tricky things.  They can help and they can hurt.  Improper use of key words on a resume, for example, can kill a person’s chances of being considered for a job. A resume is a condensed autobiography of a person’s professional life.  It’s the most important work related document that anyone ever prepares as they are the number one filter for determining who gets considered for a job opening. I’ve been reading resumes for over twenty years; mainly ones prepared by accounting professionals.  We’re talking thousands of resumes here . . . . . of accountants.  In my opinion, less than twenty percent of them properly reflect the skills and abilities of the person they represent.  Let’s talk about how we can improve our resumes. 

What the Reader Wants to Know

Here’s what I want to learn when I read a resume:  1. What has this person done and what are they doing right now? 2. Where have they done it and for how long? 3. Has their career progressed? 4. Education and certifications, awards, etc. 5. What are the person’s core strengths, expertise? 6. How are their systems skills and where have they used them?  7. Who have they worked for, how big, industry, etc.?  8.  What have they done to make a difference during their career?  When I read a resume I’m trying to form a picture of who this person is and what they are good at, plus gave some insight into their growth potential.  I’m trying to determine if the person has what it takes to be hired by one or more of our clients.  This means that my review is much broader than a company’s review for a single opening.

A company will have two or more different types of resume reviews.  The first reader is often a recruiter in the H.R. department.  The recruiter’s reading will be focused on comparing the open job req requirements to the resume.  If there are enough hits, the person moves to the next step in the hiring process, if not, then they are rejected from consideration.  The next person reading the resume is the hiring manager; the person with the actual need to be filled.  The hiring manager is looking for directly applicable, current experience doing the job they have open.  The hiring manager will also look for credentials (schools, Big 4 versus local firms, quality of companies worked for) that set the person apart from the rest of the pack.  They may also be looking for common experiences, connections.  Here’s an example of this last point:  I once had a candidate who was a CPA, worked for a Big 4 firm, had a few years of “industry” experience, and was available for a very specific time period between her graduation from Stanford B-School and a trip to Europe.  I presented her background to about ten clients just to see if anyone was interested.  All ten wanted to hire her immediately.  It seems all of them were connected to one aspect of her career - - - - her time spent as a Dallas Cowboy’s Cheerleader.  True story and it has the added bonus of putting the Cowboy’s into my search string!  I’m not a big fan of putting hobbies and such on resumes, but, if you have something very interesting to add (like you played professional basketball in Italy, or came in second on “So You Think You Can Dance”), then do it.  If not, most hiring managers will not care.  In fact, if you list out that you are an avid mountain climber/marathoner/poker player; you may kill your chance for an interview.  When would you have time to work?

Resume Don’ts or Who Cares

Here are some things to avoid putting on your resume:

1. Credentials you do not have.  Do not list that you are a “CPA candidate.” Reader’s see this as a ploy to get through their key word filter.  It makes them angry that you wasted their time. But, it is o.k. to state that you have completed the CPA exam and submitted your application to the State.  Do not get cute with credentials, it doesn’t work. Another thing that annoys readers is:  MBA - In progress.  Put it in your resume when you get it.  In fact telling people you need time off to attend school is a negative.  Companies want you to be working.
2. Credentials no one has ever heard of.  If you have a very specialized credential or certification like “government forensic auditor” perhaps you should have two versions of your resume:  one for companies needing that credential and ones that don’t.  Keep the education and certifications section of your resume as clean as possible.  And never state you have a degree or credential that you do not have!  It’s so easy to check these things out now, so why do it?
3. This one is a personal preference thing for me:  Drop the “Objective” section from your resume.  It’s such a canned piece anyway, it adds no value.  Plus a poorly done objective could kill your chances immediately.  I’m also not a big fan of the “Achievements/Accomplishments” section either.  I would rather see the accomplishments in the relevant portion of your jobs history section.  I think a top of the page “Summary” section is a better way to go.  Just say in a paragraph or two, a written elevator speech if you will, who you are, what your good at and what you are looking for in your next job.
4. Confidential information (or negative comments) concerning a current or former employer should not be listed in a resume nor discussed in an interview.  Accountants do not rat out their home boys!  I’ve seen people put something like this in a resume:  “Left due to ethical issues with CEO of XYZ Company.”  It’s TMI, and shows the writer isn’t real good at keeping secrets.  Think Robert Duvall in “The Godfather”.  That’s how most people feel their accounting people should act.

Here are some things to include in your resume:

1. Information about your current and former employers.  Size, industry, number of employees, stage of development when you worked there, what happened to them.  But, keep it short and to the point.  Something like:  “Ernst & Young- San Jose.  A 300 employee high-tech office of largest accounting firm in the world.” Or, “Wedget.com, Menlo Park, CA.  A pre-IPO internet company focused on the needs of brides and grooms, with 25 employees and $300 million in venture funding.  Merged with Divorce.Com, a division of Match.com in 2007 and accounting operations moved to India.”
2. Projects and systems implementations and upgrades you participated in, with results, and your role in the success of the project.  Put these items in the sections where they happened.  If you ran a project to move from Quicken to Intacct at Wedget.com, put that in the section about Wedgets.com.  Sounds simple, but it’s amazing how hard it is to tie accomplishments to where they happened on the majority of resumes we review.  We deal with hiring managers who are accountants, so things need to tie out.
3. Put down actual dates of employment.  Do not short hand it with just the year started and year you left.  People want to know if you spent two years and nine months at Wedget.com, not “2007-2009″.  Precision is a good thing when it comes to preparing a resume.
4. If there is a hole in your work history, put it down.  If you took a year off in 2008 from, say, February, 2008 to November, 2008 put it this way:  “February to November, 2008, Took three months sabbatical upon closing of Wedgets.com, then focused fulltime on job search.”
5. For those of you in public accounting, provide specific information about your technical accounting skills.  List significant clients, areas of expertise and how you rank compared to your peers.  Or at least compare your career advancement to the “normal” career track at your firm.  Detail is important as all audit seniors or managers have not had the same career experiences.  If your clients are comprised 80% software and 20% telecom, and you are considered the software rev rec guru, state this in your resume.  This is the time for key words.  Now’s the time for the SOP 97-2 stuff to be presented in your resume.

Other Points

A great resume should flow from the current situation to the past.  Be chronological.  Tell the reader this is what I’m doing now and here’s how I got here. Start with your current position and work backwards.  Tell the truth, be concise, but be complete.  Please forget the one page resume rule, but don’t write a novel.  Two to three pages should be enough space to describe and detail your career.  Remember that one of the biggest, most frequently listed “things” on most job descriptions is “great written and verbal communications skills”.  Your resume is your first chance to prove that you have these skills.  Have your friends review a draft of your resume and provide you with feedback.  Work it until you feel comfortable that your resume presents a true and complete picture of who you are, what you can do, and your potential to do even more.  When you are happy with it, you’re ready to hit the job market.  If you get stuck, Kula will help you finish it.

Back in September, 2009 we started seeing an up-tick in new search assignments.  Not a huge number, but enough to brighten our days.  Many of the new assignments were for controller-level people for V.C. funded companies looking to build a finance organization.  We had not seen many of these search assignment since Q1 in 2008.  Then in December we started seeing an increase in demand for assistant controllers, accounting managers and senior consolidations specialists.  And, the demand for start-up company controllers continued to be strong.  Something was happening in the job market.  Would it continue, or was it just a blip?  The Third Sign of an improving job market appeared after New Year’s:  Companies started asking us for help finding FP&A people!  The canary in the coal mine for the accounting placement business is what’s happening in the planning departments.  When they start reducing headcount business is not good; but when they hire then things are on the mend.  Things are clearly on the mend.  If we aren’t in a double dip recession cycle (a 20% - 30% chance per the economists) then the job market for accounting professionals should be good in 2010.

Other Signs of an Improving Job Market

Here are a few signs/trends that lead me to believe in a stronger 2010 job market:

1. Temps are turning down temp opportunities for better ones.  This didn’t happen anytime in 2009.  It’s happened to us twice this week.  Once because the candidate would rather go to Vegas for St. Patrick’s Day than start a three month assignment and the other because the candidate had two other opportunities that were temp-to-perm versus a three month assignment.  I can understand the Vegas thing, but, still?
2. Clients call us back quicker than in 2009!  This usually means they are serious about hiring someone.  In 2009, there was a lot of tire-kicking going on.  Now there is a sense of urgency in the market.
3. Candidates are seeing multiple job offers again.  Very rare in 2009.  And it seems to be happening at all levels.  I have a good friend who was laid off from his CFO position last year (his company was acquired and the “synergy” part of all these deals seems to be consolidating all the G&A functions) just received two job offers with fast growing companies.  He had a choice and didn’t have to move out of the area.
4. Reference sources are now hiring people when they learn they are in the job market!  If you are thinking of making a career change, call your list of references first as they may have a need or know someone who does.  Plus it is always a great idea to stay in-touch with your referral network.  They know you best and love you best.
5. Many of the people we spoke with last year who didn’t feel comfortable seeking a job change in poor economic times are now actively looking to make a change.  Some studies that I’ve read recently (I never keep them as proof) say that 40%+ of exempt-level employees are dissatisfied with their current job and will consider a job change in 2009.  People working for Big 4 firms, in particular, are not happy.  2010 should be a great year to add staff from the financial audit and tax groups from Big 4 firms.  Even some of the larger regional CPA firms will experience increased staff turnover this year.
6. And finally, we have seen a doubling of new orders so far in Q1 – 2010 compared to the same period in 2009.  And the order rate is trending up from the September to December, 2009 order rate.

Sure glad we planned for an up-turn in 2010!  Kula now has a recruiting staff of nine experienced recruiters plus me.  So, nine experienced recruiters and one old warhorse to keep them in line are a phone call away.  We are currently working on a great mix of search assignments and are ready to take on more.  The job market is starting to heat up – does it feel warm in here to you too?

My last posting discussed my job market forecast for 2010.  Once again I was swamped with responses - - - thanks Mom, for reading!  But, the beauty of blogging is believing you have something valuable to say, and that someone else will think so as well.  But, I digress.  Let’s start with a premise that I think we will all agree with:  There has been, is and will be a shortage of top accounting and finance talent in the San Francisco Bay Area.  Do you know any CPA’s or MBA’s with strong academic background and strong career progression who are worried about their jobs or prospects for getting the next big thing in their career?  Note:  If you do know one, please send them to me and I’ll place them.  The people who make up the 12% unemployed in the Bay Area are primarily comprised of folks who formerly worked in construction, retail, financial services, and non-high tech manufacturing.  Not many of the unemployed are experienced technical accounting and tax professionals.  Of course, in the past eighteen months many accounting professionals did lose their jobs due to mergers (thanks Oracle), failed start-ups, and down-sizing.  Most of these people were not out of work very long.  So, are we in agreement on my main premise?

Going back a few blogs, I presented a macro view of the local population of accounting professions who are CPA’s.  That blog showed that the market is not producing enough CPA’s to meet the market demand.  In fact the number of new CPA’s licensed in California has been pretty steady at round 3,000 a year for the whole state.  This means we are not growing the pool of highly skilled technical accounting and tax professionals required to meet both public accounting and corporate needs.  The supply of world-class accounting talent is even smaller when you, rightfully, limit your searches to the top twenty percent of this talent pool.  The talent pool is limited and the most talented are mainly employed.  Incidentally, if you feel this blog is not applicable to you because you are “set” for 2010, think one word:  Turnover.  People on board who appear “happy” until they learn there are great opportunities just waiting to be explored.  And, I do know they will listen.  Last year, we probably heard this a hundred times a week in response to our recruiting calls:  “I’m waiting for the economy to pick-up before looking.”  We kept all their contact info and are calling them now.

How To Attract Top Talent

Top Talent is often in the eye of the beholder.  What Google considers a top person may not be what a telecommunications start-up considers top talent.  But, every company seeks people who are:  technically strong, hard working, good team mates, creative (well, maybe not in accounting.  Perhaps “think on their feet” is a better way to put it.), self-motivated, good communicators, and meet deadlines.  And please don’t forget, they stay for a while when hired.  Top Talent people are career mindful.  They care about their results and the results of their team and company.  They are the people who are often classified as “passive” candidates.  Actually, I think they should be viewed as poised to look at better opportunities.  Top Talent are definitely not passive people.  But they are the seller’s in a seller’s market.  Here are a few tips for attracting them to your opportunity:  1. Make the job opening a compelling learning and/or career advancement opportunity, 2.  Be prepared and prepare others for the interview cycle, know what you want and make sure other stakeholders are in agreement with you, 3.  Let the candidate know who you are and make a case for why people work on your team, 4.  Share the dream with the candidate,  5.  If possible, hire when you find them not by a staffing plan (see New York Yankees/LA Lakers for examples), and 6.  Respond quickly with offers or rejections.

All six of these points are key, but the most key are numbers 2. 5., and 6.  I am a believer in preparation before execution.  Preparing a job or position description that is compelling and attractive to the “poised” candidate is step one in attracting them to your opportunity.  Make sure the people involved in the interview and evaluation agree with the job description and share your views on the attributes that define an ideal candidate for the position.  Without such preparation and buy-in, I’ve seen flame-outs after four or five rounds of interviews due to basic differences of opinion between stakeholders.  It’s always best to get these issues addressed prior to the start of a recruiting effort. 

When you find a “star” hire them.  In sales the number one maxim is “ABC”, always be closing.  In a seller’s job market, the mantra should be “ABR”, always be recruiting. When you see or hear or learn about a person who may be a “star”, bring them in and evaluate them.  If they meet your criteria, hire them immediately.  They will not be around when your staffing plan, or unforeseen need arises.  I hate to bring up this point, but, I think it’s important to “always be upgrading” your workforce. Top talent always increases the bottom line.  Yes, even accounting people impact the bottom line.  How much more money would a company make if they were able to close the books in two days versus ten?  How much more money would a company make if inventory turns were increased by 15%?  Or cash collected 15% faster?  Or, the daily dashboard was more useful? Or the revenue accounting team and sales were working towards the same goals? Top accounting talent make bottom line impacts, and the more of them you have, the more money your company makes.

A Few Other Points

I could write a book on how to attract and retain accounting professionals, and might someday when I find a good ghost writer, but will just offer a few other points to consider in this job market.  Check these out if you have a few more minutes to spare.

Don’t let H.R. take two weeks, or two months to “try to recruit” for a critical position before selecting a good recruiting firm or two to work on the assignment.  Everyone with a job board subscription and a LinkedIn account thinks they can recruit for any position.  While some H.R. departments actually can recruit top accounting talent, most cannot.  The time you spend waiting for candidates gets noticed by the passive candidate pool.  When jobs are on a company website, job boards or discussion groups for a month or more, red flags go up in the candidate community.  Stale jobs grow hair, and who wants a hairy job?  To avoid going stale, select a recruiting firm or two to compete with your internal resources from the beginning of your search.  You will get better performance from all your recruiting resources when they all leave the starting gate at the same time.

Take time, even during the monthly close, to interview top talent as they are identified or introduced to you.  Informational meetings are good for both the interviewer and the interviewee.  Let your staff, colleagues, H.R. and trusted recruiters know about the kinds of people you would like to hear about.  Often your best new hire will come from just being open to learning about people who are interested in your company, or industry.  If you don’t hire them, your competitor might.

Finally, think about trying to fill some of your openings with contractors who are open to regular fulltime employment.  The market for good contract accounting people is also on the rebound, but there is a window of opportunity right now to find some great talent who would start now and convert to employee status when both parties are confident that the match is a strong one.  Try before buying is a great way to go. We are here if you need us!

 A major part of a recruiter’s success is knowing what’s going on in the job market and getting in front of trends in the local market.  Since we talk to hundreds of people every week we get an opportunity to ask them what they think about business trends in the Valley and how they are feeling about their own career prospects.  We also read lots of articles, blogs and tweets about technical developments, V.C. funding, professional publications (ours and the accounting profession), economic reports, earnings releases, job postings, etc. to stay informed about our local business market.  One of my jobs is to evaluate all this information for its potential impact on the job market for accounting professionals.  What I’ve learned recently leads me to believe that the following two trends are emerging in the job market for accounting talent:  1. Valley firms will increase their use of contract and/or temporary services significantly in 2010, and 2. Regular full-time hiring will be stronger than 2009, but will not be as strong as the pre-Great Recession levels. 

Contract Services

The January 8^th edition of Forbes magazine had a great article about employment and its corollary, unemployment.  The article stated that a recovery in the temp services business is a leading indicator of a rebound in employment.  Nationally, temp services added 166,000 new jobs from July through December, 2009.  47,000 of those new jobs happened in December.  The use of temps is trending up, and indicates that fulltime hiring will begin to increase in 2010.  Kula is also seeing an increase in temp/contract orders and a decline in the number of candidates currently available to take these assignments.  The demand for exempt-level accounting temps/contractors is increasing and the supply is starting to tighten.  For Kula, this means we need to spend more time recruiting temp service candidates to be able to meet the needs of our clients.

Regular Full Time Hiring

My twenty plus years of staffing industry experience tells me that hiring will improve in 2010.  As I mentioned earlier, temp services have always led the jobs recovery in the Valley, and I believe the same will happen again in 2010.  Our new order flow began to pick-up in the Fall of 2009 and is continuing to grow.  The year end survey we made of 200+ financial executives shows that the business climate is much improved compared to a year ago particularly in technology.  While the mood is much improved it is still a cautious optimism.  There are still some clouds in the sky:  The record high unemployment, the budget crisis in California, two wars going on, and the unresolved commercial and residential mortgage problems come to mind.  Any of these issues could spark a “W” economic trend (another dip before “final” recovery).  In spite of these issues, about thirty percent of Valley firms expect to add staff this year.  When you add normal staff turnover to the mix (and historically we have seen that turnover is higher after a recession), over three-fourths of Valley firms will need to hire accounting staff in 2010.

These hiring trends bring me to my last point:  The job market for technical accounting and tax professionals will turn from a buyer’s to a seller’s market.  The talent pool has not grown much from pre-recession levels while demand continues to increase.  Take a look at the San Jose Business Journal’s Book of Lists published this month.  Unless they forgot to update the numbers, the Top Twenty-Five Accounting Firms listing shows very little movement in the number of accounting professionals and the sub-set of those who are CPA’s.  For example, the Big 4 firms have a total Silicon Valley headcount of 3153 and about 1050 of those are CPA’s.  These numbers are identical to the numbers listed in the January 2009 Book of Lists.  2009 was not a great year to work for one of the Big 4.  Almost every one of them had a workforce reduction (or two) in 2009.  Most of the Big 4 moved out promotions and elected fewer partners than in past years.  The recession took its toll on the accounting profession.  At their current staffing levels, I’m predicting that less than 400 of these Big 4 CPA’s will enter the job market in 2010. I posted a blog a month or so ago about the number of CPA’s in the San Francisco Bay area.  If you haven’t read it, please do as it will give you a more complete picture of the size of the talent pool.

So what does all this mean?  The longer companies put off adding technical accounting or CPA talent the harder it will be for them to attract “A” talent.  My advice for 2010 is to always be looking for top talent and hire them when they are available.  Think like the Yankees do and go get the best people, even if that means stockpiling a couple for future needs.  Plus, the IFRS/GAAP convergence issue (and others) will begin to be a big deal in 2010, and big deals mean more work for finance and accounting departments.

Next week I will post a blog about how to hire in a seller’s market.  Of course, I’ll recommend using Kula to help you attract the talent you need to succeed in 2010!  That’s part of my job, too. Like Mr. Good Wrench (before GM went BK), pay us now (and beat the rush) or pay us later (and be one of many seeking the same “A” players).

 Since my last posting we have been in contact with over 200 senior financial executives to get their thoughts on the economic climate for 2010.  This wasn’t a scientific survey, as we contacted people we knew and have done business with over the past two to three years.  So, it’s not a random sample of Bay Area CFO’s, but we trust the people we spoke to and feel the information is pretty reliable.  Here are the questions we asked and the responses we received.

1. How do you feel about the economic climate compared to this time last year?  The overwhelming response was better than last year.  Only a few people feel things are the same or worse than last year. 
2. During 2009 did your company do any of the following:
   1. Have a RIF or hiring freeze?  Less than 15% did either of these.
   2. Cut employee pay or reduce work hours?  Less than 15% Yes.
   3. Freeze pay, promotions, or reduce or eliminate bonuses?  About 25% did one or more of these things to get through the downturn.
   4. Cut back on the use of or eliminate temp or contract workers?  About 25% did.  But most of these firms are starting to use temp services again.
   5. Experience a tightening of credit from your firm’s financial institutions?  A very surprising less than 5% felt this.

3. How are you feeling about economic prospects for the Valley for 2010?  Over 90% of respondents feel the Valley will be stronger in 2010.
4. Most respondents feel their own firm’s prospects for 2010 will be stronger than 2009.  But none of them see 2010 as a boom year, but a definite improvement over the past year.
5. Close to 40% of respondents plan to increase staff in 2010.  Less than 10% feel they will reduce staff.  The remaining half believes they are adequately staffed for 2010.
6. When asked if they think the Great Recession is over, over 75% responded that it is over.  But, several qualified their response.  There is still some anxiety about the overall economy, but most feel the worst is past.
7. Our last question was:  What’s your biggest remaining economic concern?  Over half of the respondents are concerned about the future of California. The recent budget mess, and sales tax increases were a frequent concern.  Next on the list was the high level of unemployment in the Valley and the USA.  No one mentioned healthcare or China, which surprised me.

The overall mood is much more upbeat than this same time last year.  We are also feeling good about 2010.  We are seeing an increase in search assignments and an up-tick in contract activity as well.  Please accept our best wishes for 2010!

Please forgive me for posting this number crunching blog, but I cannot help it!  I spent about fifteen years in accounting before getting in the placement business, and always seem to be the person in this business that takes on the “number” tasks.  Hopefully, some of you reading this also appreciate knowing the facts and figures I’m about to relate.  If you just want to cut to the chase, skip down to the last two paragraphs!  I did the following analysis in an attempt to quantify the supply of CPA’s for the San Francisco Bay Area market.  Since the sole purpose of Kula Consulting is to place technical accounting and tax professionals (CPA’s) with Bay Area companies and firms, it’s important for us to know where and how many CPA’s there are.

In California

From November 1, 1999 to November 30, 2009, the California Board of Accountancy has issued about 28,500 CPA certificates.  That’s for the whole state, and for “A” and “G” licenses and for transfers from out of state.  In the past year the State issued about 3,500 certificates. So, in ten years we have produced 28,500 CPA’s in California.  This means that when a client asks us to find a CPA with three to five years experience, we have about 9,000 possible candidates, maximum, in the whole state to recruit.  If the client also wants candidates with a tax background, the recruit pool drops to about 4,500.  With Big 4 firm experience?  Drop it to less than 2,000 possible choices.  Take out the “happy” people who are not looking for new opportunities and the total talent pool drops to less than a thousand people in the state.  If the client wants time in both Big 4 and “industry”, the talent pool who might be interested in making a job change drops even further.  Let’s not even talk about adding a Master’s in Tax requirement, as the talent pool is really going to be shallow.

In the Bay Area

Let’s look at the talent pool for CPA’s with less than twelve years and at least two years experience who currently work in the San Francisco Bay Area. To do this we need to take out the CPA’s in San Diego, Orange, Los Angeles, and every other non-Bay Area counties from the 28,500 CPA’s in California (check it out on the state board of accountancy website).  My calculation came up with roughly 10,500 to 11,000 people who fit the profile. Obviously, the total number of CPA’s is higher when the years of experience level is raised, but the Bay Area grand total is less than 30,000 CPA’s when the time frame is expanded to thirty plus years.  So, let’s break down the11,000 people in the two to twelve year segment some more:

1. At least 3,500 of them are working for a CPA or professional services firm.
2. The split between tax and audit professionals is 35% to 40% tax and 60% to 65% audit/technical accounting backgrounds.  That works out to be roughly 4,100 tax and 6,900 audit/technical people by primary discipline.
3. About 5,100 of the 11,000 total have a combination of public accounting and “industry” experience.  About 1,800 tax professionals and 3,300 technical accounting people.  Almost half of this group have between nine to twelve years experience, most are manager level and above.
4. Roughly 30% to 35% of accounting professionals change jobs per year (about a three year per job average).  This means that AT MOST 1,450 tax and 2,450 technical accounting professionals with two to twelve years of work experience will change jobs in a year.  Of these totals, 650 tax and 1,175 technical accountants have a combination of public accounting and “industry” experience.
5. The numbers go even lower when only the top 25% of these people are considered acceptable.  There will be about 200 tax and 300 technical accounting “stars” with a combo background making a job move in 2010.
6. CPA’s in the Bay Area work lots of hours.  Most work in excess of sixty hours per week.  Most do not have time to actively look for a new job.  Most are looking for a combination of the following:  A better work/life balance; an increase in compensation; better benefits; an increase in job responsibilities; and/or a stable or growing company.  They rely on their professional and social networks to learn about new job opportunities.  And, they enlist the help of a specialized recruiting firm (Kula Consulting, maybe?) to help them find their next job.

Next To Last Paragraph

I must admit to you that my breakdowns between all of California and the Bay Area should not be considered to be precise.  There’s a reason I’m no longer an accounting professional!  My definitions of materiality have always been a little on the high side, shall we say, but the breakdown in this posting have got to be within plus or minus 5%.  Close enough for my business.  The point is:  We are still a short supply market.  Our clients still need us to recruit tax and technical talent for their openings, even in this economy.  For the past six plus years, Kula has been calling, recruiting and getting to know as many CPA’s in the Bay Area as will take our phone calls or read our emails.  We know dozens of CPA’s who want to make a move before the “busy season”/ “tax season” starts in January, 2010.  Now’s the time to add CPA’s from Big 4 firms - - - with a January 5^th start date.  Otherwise, they are tied up until May, 2010.

Last Paragraph

Given the shortage of CPA’s in the Bay Area, think about ways to change job requirements to widen the talent pool.  Changing a job spec from ten to twelve years of experience to nine to twenty years, for example, might double the number of qualified people for the job.  A CPA with twenty years experience might cost five percent more; but also might stay longer than the three to five years that is the norm.  And be prepared to move quickly when a highly qualified CPA candidate is available.  They will still be going fast in 2010. We recruit and keep in touch with a very high percentage of the total Bay Area talent pool of CPA’s.  We know how and who to contact when our clients engage our placement services.  Let us help you get your unfair share of the CPA’s in our market.

This past week I’ve spoken to several people who have been doing contract/temp assignments for at least a couple of years.  I asked them why they worked contract instead of regular fulltime, and what they liked and disliked about contract work.  Their responses are very similar to the ones I’ve heard over my twenty plus year’s in the accounting staffing business.  But, I did ask one question that I’ve rarely asked:  Why did you consider contract work in the first place?  The staffing industry “spin” on why people choose temp/contract work is for the flexible lifestyle it provides, and the variety of assignments provide new learning opportunities.  While this may be true for a very small portion of the people “working temp”, I don’t believe it’s the main reason.  The main reason is:  they needed to earn a living.

What I’ve learned is that most people take temporary assignments for one of two reasons:  1. they need an income and are out of work, and/or 2. they hope the assignment becomes a “permanent” job.  A third reason for doing contract/temporary work is more complicated.  Many seasoned finance and accounting professionals become independent consultants and/or temporary workers because they feel there is no other alternative left for them.  I know many people in this category.  At one time they were the pre-IPO controllers, smaller company CFO’s, or big company accounting and finance managers whose firm was either acquired or went bust.  Their networks were unable to help in their job searches; the bankers and V.C.’s they knew weren’t able to help either.  Since job opportunities were not available to them, their only options then were to teach at a community college, or start their own one-person consulting firm.  Or do both.

There are many very successful “single shingle” independent contractors in the Bay Area.  Many make the same as or more than they made as a regular fulltime, corporate accounting manager.  But they need to hustle all the time to keep their pipeline full of assignments.  Many of the people doing this type of work tell me they love it and would only go back to a traditional job if it was too fantastic to pass up.  It’s a great lifestyle if you are good at networking, and are able to sell your services well.  It also helps if you have a great skill set such as revenue recognition, mergers and acquisitions, or SEC reporting and you are able to stay fresh in it.

But, as I said above, for most people working temporary assignments is the best option available to earn a living or have a chance at a “permanent” job.  Doing the work is the easy part of being a temporary employee.  You win the assignment because you have the closest skill set match to the job requirement and you are the best value available. In fact, feeling good about job performance is the number one thing people like about temporary work.  They feel great that they are able to provide good quality work.  They also like seeing how different companies are run; learn about new products and services and be able to expand their professional networks.  What isn’t so nice about temporary work is:  knowing its temporary and knowing the assignment can be terminated at any time for any reason.  The other major issue with temporary work is not being treated as part of the team.  Even long-term temporary employees often feel left out. 

I once placed a person on a temporary assignment that was expected to last for three months.  The assignment lasted eight years!  Not once did the client have a birthday lunch for this person, or invite him to the company holiday party (he came to my company’s party).  I tried every six months to get him converted to regular fulltime, but the client would tell me that he didn’t fit the regular employee profile for the job!  When the client did offer to “convert” him (six years later), he turned it down and stayed on as a “temp”.  Good for him!  One needs to grow a thick skin to do temporary work, and be great at budgeting one’s personal finances.  On the other hand, I have had many clients treat temporary workers the same as their regular fulltime people.  It’s all in how a company defines “employee”.

Now that the economy is showing a stronger heart beat, the employment market will begin to expand.  In prior downturns, temporary employment leads the way.  Right now there are many highly-qualified accounting professionals available for or currently doing temporary assignments.  Most of them would like the opportunity to show what they can do and be considered for a permanent assignment.  All the ones I know perform their job functions at the same or higher levels than the regular fulltime employees they work beside.  Our clients’ next great hire may be the temporary employee we placed with them.  Thanks for all the hard work.

With our national unemployment rate at 10.2 percent and the broader measure of unemployed and under-employed’s at 17 percent, it’s not easy being optimistic about the future.  Throw-in global warming, a continuing global banking crisis, two wars (with just USA involvement) and the collapse of both the Niners and Raiders and having a positive outlook begins to look ridiculous.  When the good news is “Home prices only declined 10% in October” and “The H1N1 vaccine seems to work” it’s easy to slip into depression.  But, I am not depressed and see only clear sailing ahead.  I’ve been feeling this way since February when I learned my son and daughter-in-law were going to have their third child.  I’m feeling even better as Claire Elizabeth Williams was born at 1:30 a.m. today!  The future is bright for baby Claire, and her sister and brother.  My son and daughter-in-law must be optimistic people.  They must believe there is a bright future for their children; a future with educational opportunities, meaningful jobs and a place to raise a family.  Many of us felt that way when we started our families, and most of us still believe in a bright future.

While it is possible that we could experience another economic aftershock in the next year or so, it is more probable that we are at the beginning of an economic expansion. We have already seen an increase in hiring in the third quarter over the first half of 2009.  We expect hiring to continue to grow in 2010.  I’ve read forecasts that housing prices are close to the bottom, but could drop another ten percent over the next year. While this seems to be bad news, it is much better than it has been. Interest rates are also expected to stay low throughout 2010.  Here in the Bay Area, we have many reasons to be optimistic:  we live in California, the best place to live I’ve ever seen; we have a strong innovative workforce; we have great colleges and universities; and we have growing “industries” that lead the world in all tech areas; and we have the attitude and skills to work our way out of any difficulty.  We are all blessed to live and work in the Bay Area.

So, we have a number of good reasons for be optimistic about 2010.  For you long-term thinkers (my son Karl, for example), 2031 will be a great year to graduate from college, and I hope to be around to attend Claire’s graduation!  Please accept my best wishes for a wonderful Holiday season and a great 2010.