Finders keepers: it's the little, and less expensive, things your firm can offer that attract good people - and keep

California CPA, Dec, 2003 by Jerry Ascierto

Your firm has an opening, so you advertise on an employment website or run an ad in a local newspaper. Within days, you're inundated with resumes. You spend weeks wading through the talent pool, but your firm is in a high-cost area of California. And after several rounds of interviews and reference checks, you are no closer to filling the position.

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Welcome to a California CPA firm's human resources department. While the talent pool has improved over the past few years, recruiting those people to your firm--and retaining current employees--hasn't gotten easier.

The high cost of living in certain metropolitan areas of California--think San Francisco Bay Area and portions of Southern California--has made recruitment and retention difficult for many companies, including CPA firms. In a recent survey conducted by Forbes magazine, dubbed "Most Overpriced Places," San Jose was the nation's least affordable city, with San Francisco in second and Los Angeles ninth out of a sample of 150 cities.

But California CPA firms are not alone in their recruitment and retention challenges. In the national 2003 Management of an Accounting Practice "Top Five Issues" survey, "finding and retaining qualified staff" was identified as the most pressing issue facing CPA firms, followed by a similar topic, succession planning.

So, how can California CPA firms attract and retain the best and brightest? The answers range from the extreme--helping an employee with a down payment for a house--to the intangible, such as a focus on work/life balance.

HOME IS WHERE THE HEART IS

When recruiting potential employees from out of state, the No. 1 deal killer is often California's housing market, which ranks among the nation's most costly.

"Housing is really a heart-stopper," says Mary Richardson, a senior consultant at San Anselmo-based Herrerias & Associates, specializing in human resources. "The rest of the cost of living is not significantly different [than in other parts of the nation]. When it comes to persuading people to come to California, you're going to have to do a whole lot more in terms of housing."

Three years ago, San Ramon-based Armanino McKenna LLP decided to take that extra step.

It was during the Internet craze when accountants were being wooed by the promise of instant dot-com riches and stayed away from traditional firms. With the local talent pool shrinking, Armanino McKenna had a difficult time attracting potential employees to the expensive San Francisco Bay Area.

"When we instituted the program, it was almost impossible to find people and attract them," says Joe Moore, managing partner at Armanino McKenna. "The high cost of housing was one of the issues that came up repeatedly. I hear that more and more from other businesses, too, that people are much less inclined to transfer here because they take such a beating on housing."

The firm's answer: provide a low-interest loan of up to $50,000 for a down payment on a firm manager's primary residence. A state program that sells bonds to help teachers live in the communities where they work inspired the firm, Moore says.

Both a recruitment and retention tool, the program uses the federal applicable interest rate at 3.65 percent for the loans, an improvement over the prime rate of 4.25 percent.

"We have a relationship with the Bay Bank of Commerce; they loan us the money and we discount the rate to our employees," Moore says. "Typically, we would repay the principal over seven to 10 years, out of the employee's bonuses."

The program has helped three Armanino McKenna managers pay for housing, especially since the firm moved its headquarters to San Ramon in 2002 and some employees had a hard time relocating from the Walnut Creek and San Leandro offices.

"Without the program, I couldn't have afforded to move minutes from work," says Josh Nevarez, a manager at the 120-person firm. Had it not been for the program, Nevarez says he might have considered looking for a new job.

But others believe there are simpler ways of compensating employees. Human resources consultant Anne Pasley-Stuart, president of Pasley-Stuart Consulting in Boise, Idaho, believes a cost of living differential is far easier to understand and administer than housing loans. Aside from its relative simplicity, the differential--a calculation that adjusts an employee's pay based on the local cost of living--is also fair, and can be administered across the board, regardless of title or position.

"It's a very good recruitment tool, and a good retention tool, too, since it keeps people in the area," says Pasley-Stuart, who also is a spokeswoman for the Society of Human Resource Managers. "It's a fairly common practice. I've seen different kinds of subsidies, but the cost of living adjustment is by far the fairest."

The differential can be updated annually through a variety of cost-of-living differential calculators and software that can take into account an area's cost of living and area base pay, multiple earning levels and geographic differential data.