Kula Consulting Blog

This is yours truly on a trip to France we took in 2005.
My friend, Monsieur Doggie, did not enjoy
a sip of wine - but he devoured pate like Alpo.

Talk about a moving target…I went by Costco last week about 10 a.m. - a gallon of gas was about $4.38. Shortly after lunch, I drove by that same station and gas had jumped up to $4.45 per gallon!

The unthinkable is just around the proverbial corner: $5 a gallon. Would you believe the possibility of $6 a gallon this time next year? Its really not that far-fetched.
Never have so many people attempted to collectively solve a problem. It seems like every one has an answer about why gas is driving inflation: commodity futures, weak dollar, and gouging by big oil companies, to name a few.

Meanwhile, the masses gripe and pump, pump and gripe, and bitch, bitch, bitch, life goes on - with the price of gas doubling during the past year.

Short of abandoning your SUV in an airport parking lot and running for your life, here’s a few common-sense actions that you can take to lighten your heavy-duty gasoline load.

1. Purchase a Prius or motorcycle. Indeed, these two modes of transportation drastically reduce your gas cost per mile by about half. Regular cars use between 20-25 cents of gas a mile to operate. A Prius or motorcycle reduces that cost to about 10-12 cents a mile.
2. Another option is to reduce the distance of your commute. The obvious way (and the biggest hassle) is to relocate closer to work. Keep in mind, however, that no job lasts forever, and you don’t want to live someplace you hate only to lose your job six months after moving.
3. Car pooling is also an excellent way to roll (especially if you’re car pooling in a Prius). The idea of being on other peoples’ schedules may take some gettig used to, but the short-term adjustment is well worth it.

Long term, if you took action to either reduce your commute, or switch to a higher MPG mode of transportation, you could put your gas savings into a 401k plan and have an extra $100,000 in your account by 2028.
At the end of the day, we love our cars. Until we get over this love affair we are all at the mercy of whatever is causing this problem. Your options are limited, but they do exist. I suggest you take a few minutes to write down on a piece of paper how long your commute is, what kind of mileage you get, and who in your office lives near you.

Armed with facts, you can then make a decision - send your kid to college of fill up your tank:-)

Rich

Earlier this month I posted a blog about the globalization of accounting and reporting standards, and how those proposed changes could adversely impact American accountants’ careers.  I have a vested interest in this subject: as an owner of an accounting staffing firm, the future of the profession has an enormous impact on my business.

Since my post I checked in with several CFO’s on this subject and asked for their take on the changes.  I could best describe the CFO’s as being extremely wary. Why, they asked, was there such a rush to make major changes in the accounting profession?

It seems all the rule making and regulatory groups are getting into the act:

- The SEC last fall announced that foreign registrants can use international accounting and reporting standards when they file reports.

- The FASB has a major project underway (since 2001 apparently) to start reconciling international standards with US GAAP.   A fundamental issue will be reconciling the “rules based” and “principals based” approaches to determining accounting standards.

The FASB and the international accounting standards people are working on a joint-project to fundamentally change financial statements.  Will we see the end to Net Income as a line item on
the P&L?

Oh, also throw in the “plain language” initiative before congress and this matter becomes even more interesting.

So, who is pushing for these fundamental changes?

It doesn’t appear to be American CFO’s.  The polls I’ve seen state that CFO’s question the proposed speed and need for many of the initiatives being put forward by the SEC, FASB and the international financial standards people.

Ok, if the CFO’s aren’t asking for these changes, I sincerely doubt that board members or CEO’s are behind the changes. Rank and file shareholders are not likely advocates - they rarely read the financial statements that companies send them now.

The big international CPA firms will certainly benefit from all the changes.  Think of all those fees (whoops, forgot about the law firms) they will collect from training and advising clients.  I would put them close to the top of the list of groups benefiting from these changes.

The best guess for this momentum for change (no – not Obama!) is Wall Street and the SEC.  Stock exchanges are starting to merge and would benefit from uniform, global accounting and reporting standards.  Stock analysts would also benefit from global standards and, perhaps, from new financial statement presentations.  The SEC is pushing for registrants to file reports using the XBLR format with the goal of building a uniform, searchable financial database on the Web.   If all financial reports used the same accounting standards and reporting formats, this database would be a very powerful tool for investors and analysts.

Perhaps having a unified, global set of accounting and reporting standards is a good thing.  But, when accounting knowledge becomes a commodity skill set as have C++ programming skills, will the offshoring/outsourcing of senior-level accounting jobs be the unintended consequence of globalization?

How to Stay Informed on this Issue

In keeping with Kula’s ongoing effort to keep our colleagues up on the accounting field’s latest trends and issues, we’re developing a seminar during which time experts will provide an overview of the major changes taking place in international accounting – including a few that are still “in committee.”

After hearing from our panel composed of representatives from FASB, securities, public accounting and law, you will walk away with an accurate analysis of how these changes will impact you, and what will be required as you account for and report financial information in the near future.

I’ll be sending out invitations as soon as we solidify the exact date. In the meantime, I am including a few links to more detailed information about the initiatives.

From CFO magazine:  http://www.cfo.com/article.cfm/10597001/c_10598910 
To the SEC’s XBLR analysis tool:    http://www.cfo.com/article.cfm/10597001/c_10598910
From Financial Week:  http://www.FinancialWeek.com/apps/pbcs.dll/article?AID=2008492320813

From a blog by PWC:  http://pwc.blogs.com/ifrs/2008/02/improvements-in.html

Another SEC item:  http://www.sec.gov/about/offices/oca/acifr/acifr-ddm-011108.pdf

Please let me know your thoughts about the future of the accounting profession, especially those regarding the impact on the American accounting workforce.

Best,
Rich

I hate to be an alarmist, but did anyone notice that the SEC agreed to let foreign companies file their reports under International Accounting Standards?

Plus, three years from now, US companies will be able to elect to file using international instead of US GAAP.  What happened, why and what could it mean to us accounting-types?

I’m just a poor ole country recruiter, but whenever the “govment” makes a major change I’ve found that it isn’t always a good thing for the governed.  I have started to call some folks I know (that’s what recruiters do), and do some reading to try and find some answers.

Here’s what I’ve learned so far:

Foreign companies should save $3+ billion by not having to conform to GAAP. The savings would come from lower accounting and legal expenses.

The FASB would become a non-entity over time.  If the goal is to have one global set of accounting and financial reporting standards, then the FASB would give way to IFRS.

Most accounting professionals will need to be re-trained.  Understanding international accounting standards will become a significantly valuable skill-set for future employment.

My big question is: Will exempt-level accounting and finance jobs be outsourced?  Will we see a similar scenario within accounting as we saw in software development outsourcing?

The SEC will allow US companies to file reports under international accounting standards within three years.  Since the international standards are “principals-based” versus “rules-based” standards, will we see a return to more creative accounting treatments?  Will lawsuits over accounting treatment issues increase?

And finally, when accounting standards become global will the financial auditing firms (Big 4) face significant competition from offshore accounting firms?  And, if so, what will be the impact on the accounting profession and job market?

I think we are all in for some profound changes in our work lives due to these changes.  Some will be perceived as opportunities and some will be challenges, but, we all will be impacted by this change.

Here are a few links to additional information about this subject, if you are interested in learning more:
1.  The SEC & IFRS:  http://www.cfo.com/article.cfm/10159708/c_3395216
2.  The Dark Side of IFRS & GAAP:  http://www.cfo.com/article.cfm/10131891/2/c_3395216?f=insidecfo

What do you all think?

Oh, and stay tuned for our upcoming teleseminar on this very subject!

Rich

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.

As most of you have probably noted by now, our recent salary/job satisfaction survey yielded some interesting results. If you haven’t read it already, download a copy at www.kulaconsulting.com.

Conducted last November, the survey polled accounting professionals in public accounting and in the private sector. This was our first salary survey and, I believe that it contains useful information for employees and employers.

Of interest is the significant percentage of accounting professionals planning to seek new employment in 2008 - despite the high level of job satisfaction.

The facts paint a realistic picture of Bay Area accountants

Check out these trends we found in the survey:

In public accounting firms:

- 98% like the content of their job

- 41% are not happy with their work/life balance

- 25% are not happy with their compensation

- 28% plan to make a job change in 2008, with another 6% planning a leave of absence or a return to school

It appears that the content of the job must be out-weighing the distress about a balance between work and “life,” or a greater percentage would be seeking to leave public accounting.

In the private sector:

- 90% like the content of their job

- 90% are happy with their work/life balance

- 21% are unhappy with their commute

- 20% are unhappy with advancement opportunities

- 14% are not happy with their compensation

- 43% plan to seek new employment in 2008

Based on their survey responses, accounting professionals in both public and industry like the content of their jobs. To me, this means that accounting professionals made the correct choice by majoring in accounting. Accounting work is challenging, rewarding and offers accountants a high degree of satisfaction. When combined with good compensation levels, the accounting profession should be attracting a higher number of accounting students than it does. We need better PR!!

The survey confirms many of the issues we hear during our interviews. CPAs in public accounting travel a lot, work long hours (busy season seems to be all year long), feel stressed, and could make more money in corporate accounting. But many of them thrive on the competition to “make partner,” feel part of an elite team, and enjoy the work they do.

Sometimes working long hours is perceived as a badge of honor for being able to do it. The shortage of new CPAs (evidenced by the almost flat number of new CPAs over the past 15 years) and the increasing demand for public accounting firm services, points to a continuation of the job satisfaction trends we found in this survey.

I don’t think we know why there are such a high percentage of private sector professionals planning to change jobs this year. Turnover is a very expensive and disruptive force in any part of business. I live in a very high-turnover profession - new recruiters have a 50+% turnover rate - so I understand the impact on the bottom line.

My next blog will deal with one reason for turnover and my “solution” for it. Meanwhile, I’m going to do more research into why 43% of our industry respondents plan to make a job change, when 90% of them like their job and work/life balance. I’ll write more when I have more information for you.

Don’t forget: Kula has lots of jobs for those looking for a new one!

Finding a job is a job in and of itself. Know that going in, and having realistic expectations removes a layer of stress and uncertainty from the process.

Before going further, I suggest that you read (or re-read) my last posting about whether changing jobs is the right move for you. That post offers a quick overview of what it takes to conduct an effective job search.

Here are the 6 steps to following your career path:

1. Time Commitment

It takes a lot of your time to do a job search. Tasks include, preparing at least two versions of your resume, composing strategic cover letters, writing thank you cards, interviewing, researching, giving and receiving feedback, and staying in touch with potential references and networking contacts.

2. Thick Skin

Prospective employers will all ask you the same or similar questions about your work history. They will probe why you made certain choices in your career, test your technical knowledge, and challenge you to show why you are right for them.

Human resources will ask you to fill out application forms, perhaps take some tests, agree to a background check and want to call your references. Plus, just when you think you’re done, they may ask you to come in for “just one more” interview. The interview process can be stressful. Keep in mind that you are still doing your current job and attending to personal matters. Lots of patience and a “thick skin” are the keys.

3. Be Prepared

You need to have a personal presentation ready to go. Prepare a 30-second “elevator pitch” about your background and work history. Find a peer or family member and practice your presentatino until it’s second nature to you. Why? Because more than half of all  hiring decisions are based on the interviewer’s first impression of a candidate.

You also need to be prepared to make concise, but complete, answers to questions about your skill sets, work ethic, management style, and accomplishments.  You need to bone up on the company your are interviewing for so you can demonstrate how your background fits with their needs.

You also need to be prepared to answer the “what’s  your weakness” question. In other words, tell the prospective employer about an area of your background that you want to improve, and you think you can do that by working with your company. Don’t say, “I work too hard” or “I don’t toot my own horn enough.” Remember the song by Mac Davis called “It’s Hard to be Humble When Your Perfect in Every Way? Don’t be the person in that song!

4. Network

Contact your business contacts and let them know what you’re doing. Ask them for advice and referrals to opportunities they know about that meet your search criteria. The majority of people get their next job from networking with former managers, colleagues, lawyers, or CPAs they know, or from friends and family members that know someone.

5. Outsource Some Work

Work with a couple of recruiters who specialize in your field (like Kula, wink-wink). Recruiters have access to opportunities that are not advertised, have knowledge about most companies, hiringmanagers, work environments and current compensation and job market information. A good recruitier will help you find opportunities that fit your criteria and will help you with ever step in the job change process - for free!

6. Stay True to Yourself

You decided to make a job change because there are issues that cannot be resolved by your current employer. You have determined where you want to be in three years and have developed a plan to get there. Stick to your plan when evaluating a job offer. It’s hared work making a job change, so only accept the offer that meets  your criteria and moves you closer to your three-year goal.

You’re working countless hours, and not real happy with your current position. But the thought of changing jobs is so daunting that you remain mired in your current accounting slot.

It doesn’t have to be this way.

Yes, making a job change is a time-consuming and often-disruptive process. That’s a given. However, my clients who approach this task with military-like precision and preparation find they can effectively streamline the process and garner success.

First Things First

Try and fix your current situation.

Give your employer a chance to solve the issues that are prompting your decision to seek another job. Talk to your manager about the types of issues they can fix:

• Promotion or advancement opportunities.
• Compensation issues.
• Work/Life balance issues.
• Chance to learn new skills.
• Issues with co-workers or management issues.
• Performance evaluations.

Keep in mind that there are things your employer cannot fix. These items include commute issues, being a take-over target, and the company’s cash flow or growth issues (at least not in the short term.)

If this approach fails, take the next step. It’s time to take action on your own.

Here are some things you can do to make your search more effective:

Prepare a baseline of your current situation. List out the following information:

• Current salary and projected date and amount of next raise.
• List all bonuses and benefits, with amounts and costs to you.
• Compute total cash compensation for the last 12 months (TTM) and project your expected cash compensation for the next 12 months for your current employer.
• Determine if and how much money you will “leave on the table” if yo change jobs before any bonus vesting dates, 401-k matching amounts, etc.
• Review stock option, stock purchase, or other equity-type plans to determine vesting periods and your exercise options upon termination of employment. In effect, know your complete financial situation with your current employer.

Commute Issues:

• How long is your current commute?
• What’s your ideal time and maximum acceptable time?

Start Listing Potential References

• List your current and former managers, peers, direct reports, project team members, clients, suppliers, lawyers, accountants, and anyone else who knows you and your work.
• Then call them and let them know your plans and ask them for permission to use them as a reference.
• This is also a good time to ask them for their thoughts on what they think about your plans.

Determine Your Career Goal for the Next 3 Years

• List what you know about the skills and achievements required t reach this goal.
• Do some research to verify and/or add to your list.
• Compare your skill sets and achievements to your goal an determine what you need to add to your experiences to reach your goal.
• This list of needs should become part of your check-off listing to evaluate different opportunities.

Talk to Your Spouse or Significant Other About This Change

Prepare a Short List of the Must Haves for Your Next Job

• Compensation, benefits, commute time, work schedule, job content, industry, growth potential, work environment and learning potential.

Take Out a Calendar and Pick a Date You’d Like to Start

• Check your personal work calendar to determine if anything would prevent you from meeting your goal.
• Move two-three weeks backwards and make this date as your resignation of employment date.
• Move four or five weeks back from this date and mark this period as your interview and job offer period.
• The period of time from the date you prepare your schedule to the beginning of your interviewing period is the time you have to research the job market, contact a recruiter or two, network with your former colleagues, managers, professional contacts, and friends to let them know you are ready to make a career change.

Prepare a Resume

• Review it as though it was someone else’s.
• Thing about the questions you would ask if you were the interviewer.
• How would you rate your performance level compared to peers?
• Does your resume show what you offer a new employer?

When you know what you want in your next job, understand why you want to make a change, know what your offer a new employer and have profiled the type of company you want to work for, you are ready to begin your job search.

If you need any help getting to this point, please call us. We’ll be glad to review your resume, offer assistance in researching companies/industries, and help you further define your career path.

Working for one of the Big 4 CPA firms offers money, prestige and an upwardly mobile career path. Right? Not so fast. As it turns out, unless you are one of those rare chosen few who makes partner, staying too long at one of these powerhouses can actually harm your earning power and career choices over the long term.

Consider the preliminary results of our recent survey of accountants working with prior public accounting experience. More than half of the respondents worked less than four years in public accounting before moving to a corporate job.

There must be a reason. Let’s begin by entering into our Way Back Machine.

When I first joined one of the Big 4 it was common knowledge that you needed to progress toward partner every year or you’d be gently nudged out the door.

We called it Up or Out…

The first four or five years were focused on building technical accounting and financial reporting skills, passing the CPA exam, and learning how to effectively lead a team. If you did well, and could work the hours required to be a “star,” you’d be promoted, and keep your spot on the partner track. It was a competitive environment, but competition is good!

Once you made manager, business development and practice management skills began to be added to the list of talents required to become partner. You needed to be able to plan engagements, review the work of subordinates, exceed your profit goals, and interact with clients and the business community. The competition became more focused during this phase, and CPAs quickly realized that accounting is a business, as well as a profession.

Not much has changed over the years.

The good news is that if you enjoy developing new clients - and can still bill big hours - you have a shot at becoming partner. Keep in mind that the competition is even tougher at this level (10-15 years at a Big 4 firm).

Here’s the harsh reality. If you have determined, or the firm as determined, that making partner isn’t for you, it’s time to move on…

The $64,000 Question is at what point has a person stayed too long at a Big 4 firm?

My clients’ actions tell me that there is an optimal time frame to move to the corporate world. Two years of Big 4 work experience is still the minimum. Less than that raises questions about skill sets and work ethic.

However, more than 10 years of Big 4 experience may present issues when making a move (except for tax people, who get another two or three years). The “Sweet Spot” seems to be three to seven years of Big 4 experience.

Please post your thoughts about:

1) The Up and Out nature of Big 4 firms.

2) Is there an optimal time to make the transition from public accounting to private?

3) Is the competitive nature of public accounting a good thing, or not?

If you want to improve your odds of reaching your career goals, you need a knowledgeable support team.

Lance Armstrong didn’t just buy a bike, ride it a lot and show up for the Tour de France. The race was the icing on the cake. It simply demonstrated the committed team supporting his efforts.

Closer to home, one of our recruiters set a goal: begin rigorous training to reduce her chance of developing diabetes. Within six months, she reached her aspiration of completing a marathon as part of a group called Team in Training.

Her team is comprised of: her doctor, personal trainer, dietitian, running coach, team leader and other runners and walkers with the same goal. Although she had to do the hard work, it was easier with the help, guidance and support of Team In Training.

We all will get closer to our goals if we have a strong team helping us reach them.

The question then becomes, who should be on your career team?

• A mentor or two. A mentor is someone who has been there and done that; knows you well and agrees that your goals are realistic.
• A career “entourage” comprised of friends who are honest and frank with you, former workmates and colleagues who are making the “right” moves in their own careers. These people are your sounding board and feedback loop on ideas and career options.
• Professional references who will provide a 360 degree view of your job performance. Develop a listing of managers, peers, subordinates, and project team members who know you well and are able to articulate who you are and what you have accomplished. Call and recruit them and ask them to be a part of your team. Keep in touch with them throughout your career.
• Family and significant others are important members of your team. They may have work/life balance concerns that you should listen to before making a career move. These are the people who will be personally impacted by your career choices.
• Here’s a shameless plug for Kula Consulting: You need a combination of Jerry Maguire and a career coach. This role may be filled by a recruiter you trust. And, no, that isn’t an oxymoron. A good recruiter listens to you, gives career advice, AND can show you the money. A good recruiter knows the job market, has access to great career opportunities, understands how to chart a career path, and is a good negotiator during the job offer phase of a career change.

Jot down a list of people you know who could be part of your career team, and call them.

Feel free to call me or my staff if you have further questions about the benefits of a supportive team. To learn more about Team In Training visit: www.teamintraining.org