When it Comes to Payroll, Accounting and Human Resources Intersect
An accountant’s role often goes well beyond finances. From acting as a trusted business advisor to recommending software solutions, it’s not unusual for accountants to have more pull with the business owner than outsiders would expect.
One area where accountants can provide some unexpected expertise is in combating employee turnover. Taken at face value, turnover might sound like an entirely HR-related subject, but the truth is pay and benefits have a lot to do with an employee’s willingness to stick around. And, who better to ask about pay and benefits than the payroll experts themselves: the accountants.
Is it Time for a Raise?
It may sound crass, but the results are in: more than a great company culture, a better boss or even more benefits, employees want a pay bump. And, they’re not afraid to leave their current position to get it. In fact, 43 percent of those surveyed said they plan on changing jobs at some point within the next two years.
You might be thinking, “OK, employees want more money. What’s new about that?” What’s different is the timing. Unemployment rates have reached an 18-year low, meaning businesses have to work harder to hire and keep great workers.
While most businesses have learned from their competitors and increased their starting salaries to appeal to new hires, many have forgotten, or simply chosen to ignore, their long-time staff. And, that’s an expensive mistake. According to the Center for American Progress, replacing just a mid-range employee making $30,000 to $50,000 a year could cost employers around 20 percent of the worker’s salary. And, it only goes up from there.
Nevertheless, it’s not uncommon for new employees to make as much or more than their tenured peers. But, while bosses hope their employees will steer clear of the salary comparison conversation, it’s unlikely that truth will stay buried for long, contributing to feelings of inadequacy and resentment that will inevitably erupt into employee turnover and decreased morale.
What’s an Accountant to do?
According to survey respondents, nearly half of employees felt they were underpaid, and 65 percent said their pay had not kept up with cost of living. Worst of all, many employees felt the discrepancy could be intentional, with nearly a third of employees stating they felt their employer used bonuses or benefits to keep base pay low.
So, how can accountants help?
One way accountants can make a difference is by taking a hard look at a company’s financials and seeing if/where there’s room to increase pay. Compare salaries between new employees and tenured employees to track the difference between the two. Then, take note of any employees who have been with the company longer than two years and have not yet received a reasonable raise. While it’s possible a particularly talented and experienced new hire might make more than an existing hire of the same position, these are the kinds of patterns a good accountant should notice.
Finally, take into account those added bonuses and benefits. Small businesses often have a hard time offering competitive employee benefits, but when it comes to bonuses, it’s possible employees might be correct. Could the employer be using bonuses as a replacement for raises, and might that behavior be rubbing employees the wrong way?
Assuming there’s a need to increase pay, the accountant can then look at the company’s budget and see where that money should come from. Only someone of their expertise can say for sure if the company can afford to spend more on payroll and what that expense might do to the company’s profit margins.
Later, when the boss asks for advice, the accountant will have something more to suggest than, “Spend less, sell more.”
Accountants as Trusted Advisors
It’s no secret that accountants are part of the business owner’s inner circle. You can’t have a business without money, and who knows money better than an accountant?
In 2016, the International Federation of Accountants found that 84 percent of accountants provided some sort of business advisory and consulting services as standard. Why shouldn’t that advice extend to payroll and, more generally, to pay and benefits that combat attrition and turnover?