The CPA Journal, Jan 2022
By James C. Rich, DBA, CPA and Lauren L. Rich, DBA, Reducing Employee Turnover in Public Accounting
Many CPA firms are losing more than 25% of their staff each year, which is more than double the national average (Carolyn Kmet, “CPAs: Why They Leave, Where They Go,” Insight, Fall 2018). Shockingly, the direct costs associated with replacing a staff member often exceed 50% of the employee’s annual salary (“The Cost of Staff Turnover: $32,500,” CPA Trendlines, 2010). In addition, potentially of greater concern are the indirect costs resulting from the reduced quality of client services and loss of specialized knowledge inherent to high turnover (Hossein Nouri and Robert James Parker, “Turnover in Public Accounting Firms: a Literature Review,” Managerial Auditing Journal, 2020, p. 294). In spite of the significant efforts and resources expended by firms to combat employee turnover, the issue continues to plague public accounting firms and remains one of the most challenging problems facing professional leaders.
Considerable research has identified work engagement as a critical factor in retaining employees. The rationale for this relationship is rather intuitive: employees who feel mentally and emotionally connected to the work they do are less likely to voluntarily leave their current firms in search of alternative, external employment opportunities. Nevertheless, the fact that high levels of turnover continue to plague public accounting suggests that additional research is needed to articulate the firm’s role in cultivating an engaged workforce. To this end, Johnson and Pike (2018) recently presented a unique perspective that identified value congruence as an important component of work engagement and ultimately retention (Steven Johnson and Byron Pike, “Employee Retention: The State of Engagement in Public Accounting Firms and Why It Matters,” The CPA Journal, December 2018). “Value congruence” is a term commonly used in research to quantify how well employees’ values correspond to the values found in their work environment. Although recent evidence suggests that value congruence may be a missing ingredient in managing employee retention, most employee surveys and academic studies involving turnover have largely overlooked its importance, and therefore questions remain. For example:
- Do certain values have a stronger impact on retention?
- How do firms integrate values into their retention strategies to shape the values of existing employees?
This article seeks to provide insight into these questions. Survey data collected from nearly 400 employees across 19 regional public accounting firms reveals that value congruence significantly contributes to employees’ intentions to leave, but only when specific combinations of values are shared between the employee and firm. Specific values that firms cannot afford to overlook are identified below. In addition to recruiting for these specific values, the authors discuss ways that firms can increase value congruence among existing employees across these key values.