The future of any business rests largely on its ability to attract and retain high-calibre staff, and accountancy practices are no exception. Smaller firms – some of which are also facing retirement and succession issues – have the added risk of larger firms poaching their home-grown ‘high flyers’ by invariably offering higher salaries.
If firms are to maximise their profitability and secure the future of their businesses, then a more robust approach to recruitment and retention of staff is required.
Motivation and a tangible acknowledgement of effort should be key components of the firm’s remuneration package for senior staff. Highly motivated staff perform better in terms of both speed and efficiency, which will, in turn, impact on the firm’s growth rate.
In the past, any bonus may have been discretionary for the individual, but to encourage teamwork, improve performance and increase profit contribution, it is necessary to bind in everyone who can influence the process. Schemes should, therefore, be departmentally or team based.
The key performance indicators (KPIs) to which each person must relate should be achieved through the collective, not the individual effort. As an extreme example, if a fee target is set and the team fails to meet it by (say) £1, then the bonus would not be paid.
All firms are looking to improve fee recoveries, fee targets, time utilisation, WIP and debtor levels and cash collection, not to mention the amount of new business introduced.
By introducing team bonus schemes you can expect benefits such as improved planning, improved cash collection, delegation and control of work, better billing and smarter pricing, opportunities to add value and cross-sell services and, greater awareness and communication in the staff team.
A corollary of this is that every firm should decide as part of their HR strategy what benefits are important, either to enable them to compete in the marketplace or to assist the firm in the delivery of its overall business objectives.
Whatever the policy adopted, it is important to communicate the real rewards to staff so that they are aware of the true value of their remuneration package.
The biggest problem with benefits is that employees tend to view their package in terms of base salary and do not take account of benefits provided by and paid for by the firm, such as the provision of a car, pension contribution or medical insurance.
The partners must clearly set out the timing of bonus payments. A delay on paying quarterly or annual bonuses can help with retention, as can a process of part payment of bonuses on a deferral basis. Where staff are always due payment for a bonus earned, it can make them think twice about leaving if their reasons are primarily financial.
Experience shows that the introduction of bonus and incentive schemes will result in increased profitability, lower staff turnover and better morale.
Phil Shohet and Andrew Jenner are directors of Kato Consultancy.
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