Kula Consulting Blog

A friend of mine called me complaining about the rapid rate of turnover at his mid-sized accounting firm.

He swore he was doing everything right: he paid great salaries and hired only the best and brightest “star” CPAs. Yet still, he was constantly having to fill positions.

First off, I told him, it’s true that the Bay Area has an above-average employee turnover rate. The US average annual rate is 30 percent and the Bay Area is 40 percent, according to Kula’s recent CPA Salary/Satisfaction survey.

At wit’s end, my friend asked if there was anything he could do to hedge this trend.

Well, I said, first off, there will always be accountants coming and going. There’s no way to stop that. Someone will always offer more money or increased benefits. And then there are the less-quantifiable departure reasons such as, perceived lack of advancement opportunities, better training or career development, and personality issues.

The good news is that employers can take strategic steps that will turn them into the kind of employer that people want to work for.

I said let’s break down the turnover issue into two parts:
1. The turnover of “fast-track” employees.
2. The turnover of people who work in order to live, the “normal-track” employees.

Fast-track performers are overly competitive and career oriented. They will stay with an employer for only as long as they are challenged by the work, learn and acquire skills that will help them achieve career progression goals, and progress at a faster rate than their peer-group. When any one of these motivators starts to lag behind expectations, these fast-track employees will move to a new opportunity.

Normal-track performers, generally, are more interested in work/life balance. They want good compensation, a flexible workplace and good benefits, and interesting work. If those items are available at another company, and the commute is shorter, or they offer a company gym or a nicer facility, or a friend works there, it is almost certain they will change jobs. Please take note that I have not listed higher compensation as the primary motivator for making a career change. I agree that it is a factor, but it is rarely the primary factor for making a change.

Now, given these two broad types of employees, I believe turnover may be reduced through a combination of actions that do not require spending lots of money.

Becoming a great employer

My No. 1 rule for reducing turnover is don’t hire a fast-tracker for a normal-tracker position. In other words do not hire a hot-shot for a position that can be learned quickly and offers minimal career advancement opportunity.

Break down the organization chart into two categories (you guessed it): fast-track and every other position. Fast-trackers need to be in visible positions, have people to compete against, be challenged, and get promoted or rotated quickly and often to be happy. If a position doesn’t have all of these attributes then don’t classify it as a fast-track job.

Once the organization chart has been reclassified, seek job applicants that match these profiles as well as match the position description. Hire people who will be happy and challenged by the job and anticipated career path for at least the next five years. Five years per employer over a thirty year career is 20% turnover–a significant improvement over the average.

Anything else, my friend asked?

You bet - all employees want to work for a great employer. A great employer:
1. Listens to employees.
2. Seeks their input and values what they say.
3. Uses their employees’ ideas and suggestions and acknowledges their contributions to the success of the company.
4. Makes sure that employees have the right resources to do their jobs and equipment that actually works.
5. Implements career development programs that help all employees reach their full potential.
6. Places a high value on the employees’ time. This means providing flexible work schedules, tele-work arrangements and job sharing opportunities for all positions.
7. Establishes a real open door policy and promotes an open and supportive communications program.
8. Sets reasonable goals and expectations and reward attainment.
9. Creates a safe, comfortable and pleasing work environment that is free from harassment, threats or demeaning behavior.

Becoming a great employer does not require a lot of money, but it does take hard work and commitment. Becoming a great employer will help reduce turnover and will also build a reputation as a great place to work. This reputation will help a company fill open job opportunities quickly, which reduces the costs associated with turnover. The other action that can be taken to reduce turnover is to make the right hire in the first place.

Oh, and one more  thing…

Other time-tested ways to reduce turnover are to outsource the functions that have the highest turnover rates and use contract and temporary employees to smooth out the peak workload periods and thereby maintain the work/life balance that is important to most of a company’s employees.

Well, my friend asked…so I answered.