Reading the MAP: 3 planning insights
Benchmarking can add perspective to your firm’s strategic plan.
December 17, 2012
When you and your staff have a broader view of how you compare to your peers, you gain critical perspectives on the issues in front of you. CPAs can find indispensable insights in the results of the recently released 2012 National Management of an Accounting Practice (MAP) Survey from the AICPA Private Companies Practice Section and the Texas Society of CPAs.
The profession’s largest benchmarking study, which surveyed nearly 2,400 accounting firms this year, allows practitioners to compare their results with those of other firms of the same size or in the same region. Firm leaders can identify data points that compare favorably with peer firms and also identify areas for improvement.
The survey results can help CPAs spot opportunities to consider in short- and long-term planning. Here are three trends to watch:
A new scramble for top-quality staff may be coming
Every CPA firm’s success is built on the quality of its people, which is why staffing is always a top priority for firms. The intense competition for talent early in the last decade eased considerably after the 2008 economic crisis and subsequent recession, but there are signs the tide is turning.
The MAP Survey found that while turnover remained essentially flat among accounting firms of all sizes, there was a much higher percentage of staff choosing to leave as opposed to being let go. Specifically, the voluntary turnover rate jumped 50% while involuntary turnover was significantly less than half what it was in 2010, when the biennial survey last was conducted. It might be fair to conclude that underperforming staff were let go during the recession and that in an improved economic environment, firms in 2012 were not only more likely to hold on to their talent going forward, but staff also were finding more chances for employment elsewhere.
Because human resources are always a key concern, firms should consider taking proactive steps to hold on to the best performers. For ideas, practitioners can turn to free AICPA resources including the PCPS Human Capital Center Toolbox Series, which offers an overview of many staffing related issues, among them compensation and hiring and retention. In addition, the 2011 PCPS Top Talent Study, also available to all AICPA members, offers insights into the attitudes of firms’ most promising young CPAs.
Succession should be a hot topic for all firms
Sometimes, clues about trends in the profession can be found in unexpected places. Despite flat to modest increases in firm revenues, overall client fees rose at many firms. However, per-partner fees fell at multi-owner firms—probably because new partners were admitted at medium and large firms even though senior partners have not yet retired.
“We’re starting to see the impact of retiring Baby Boomers, as emerging partners join the ranks and firms prepare for the exit of their senior owners,” said Mark Koziel, CPA, CGMA, vice president–Firm Services & Global Alliances with the AICPA.
Sole practitioners, on the other hand, have not embraced succession planning. Only 7% of firms with less than $500,000 in revenues, a group made up predominantly of single-owner firms, had practice continuation agreements, roughly the same percentage as in 2010. And no more than 4% of these firms had formal succession plans at all. Practice continuation agreements would seem critical for sole owners, because they can ensure a firm’s survival or smooth transition to new ownership if the owner dies or is disabled. These survey findings should be a wake-up call for the many solo owners who plan to sell their firms at retirement, because the indications are that a majority of other solo owners have the same idea, creating a buyer’s market in the next decade or so.
In that light, advance preparation could give practitioners a competitive advantage or help them secure their exit plan now. Practitioners who want help addressing their succession needs have free access to commentaries that review the findings of another valuable survey, the 2012 PCPS Succession Survey, offer practical advice. There is one commentary for sole practitioners and one for multi-owner firms.
Planning is more important than ever
The MAP survey’s partner compensation data show that owners have begun recouping some of the financial rewards they had sacrificed when the 2010 survey was conducted. That’s an indication that partners have moved past the survival mode of recent years. That’s good news, but it would be a mistake to assume that your practice environment will look the same going forward as it did before the recession. As a result, it’s important to ask questions such as these:
With a brighter future apparently ahead, now is the perfect time for firms to reassess their strategies and priorities.
Get started on your own planning
How’s your firm doing? The 2012 PCPS/TSCPA National MAP Survey covers a broad range of issues, including financial results; compensation; realization, utilization, and billing rates; staffing and more. The survey commentary, which CPAs can access free, includes an action agenda that firms can use in their own strategic planning. Get started today to gain a better perspective on your own firm’s best path to future success.
About the survey
The survey, which is jointly conducted every two years by the AICPA Private Companies Practice Section and the Texas Society of CPAs, is the largest practice management benchmarking poll available. Almost 2,400 CPA firms across the country took part this year.