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How CPAs can help to advise SMEs on compensation plans

A CPA perspective can add value for clients trying to meet evolving employee expectations and stay competitive

Four businesspeople sit at a tableWhen sitting in on compensation discussions, CPAs can help SME clients weigh out the long-term impact of any potential policy changes (Getty Images/Morsa Images)

Balancing the retention pressures brought on by “The Great Resignation” with the business needs of COVID recovery requires a thoughtful approach. Employee expectations are unprecedented and, as a result, compensation packages are being reconsidered.

For CPAs working with SMEs, there are a few key ways to add value for clients exploring potential changes to their comp-packages, to help ensure a stable—and thriving—workforce.

IMPLEMENT QUANTITATIVE AND QUALITATIVE ANALYSIS

First off, having a seat at the table to discuss any changes to compensation plans is important, says CPA Jennifer Mazzarolo, president of Ancaster-based recruitment, transition services and coaching firm, Maverick Consulting Group.

“CPAs understand how the money spent on compensation will hit the P&L (profit and loss statement), the balance sheet, other financial statements and the magnitude and complexity of that,” she says. “They’re going to be looking in totality to understand how what is implemented impacts the financials.”

It’s also important to bring a data-driven mindset into those discussions, to take into consideration other metrics that help drive decisions around these plans, notes CPA Matt Petrow, CFO for Coconut Software, a Saskatoon-based appointment scheduling queue management software solutions company.

“With compensation being the largest expense for any organization,” he says, “We put data and deliverables at the forefront to make sure that they’re considered in the plan.”

For example, CPAs need to encourage clients to harness and analyze any data gathered from inside the organization through their employee surveys and externally in the form of industry reports and guides, adds Mazzarolo.

NAVIGATE DIFFERENT PERSPECTIVES WITH CARE

When they’re advising, it’s important for CPAs to consider the full picture, including what they’re hearing about the needs of individual employees as well as the requirements of organizations in their industry, says Mazzarolo. “We’re able to sit around the table and listen to different departments talk about what’s important for their employee base.”

Depending on who influences decision making for a client, such as executive leaders, human resources or other departments, says Petrow, expect varying perspectives. For example, he notes, as a CPA you’re seeing the financial implications of a proposed compensation package on the entire organization, while someone else is maybe viewing it through a recruitment and talent retention lens.

“There may be disagreement but put yourself in the shoes of the leader you’re working with,” he says. “Weigh the objectives they’re trying to achieve against your financial objectives to find the common ground.”

USE A BIG PICTURE PERSPECTIVE

Going into the discussions, CPAs should bring a holistic view of the client’s organization and whether compensation changes align with its business goals, says Petrow.

“Compensation packages must be reflective of what the business is trying to do,” he says. “Make sure that the details fit in with those broader goals.”

You also need to “bring the intellectual horsepower to the conversation,” says Mazzarolo. “Be that sounding board or reality check, while at the same time thinking about dollars and cents.”

This includes the way you approach questions about the financial impact for new policies, such as permanent remote work and four-day work weeks. CPAs can provide a lens on how these changes would use resources differently and impact an organization’s overall financials and metrics.

Petrow knows this first-hand, as Coconut Software switched to a four-day work week in August 2021. Monetary compensation was kept the same for all employees with the work week structured around four, eight-hour days. Their policies also support a hybrid work environment allowing employees to choose to work from home, at the office or a combination.

“These changes have enabled us to grow our employee count by 70 per cent over the past nine months, during a period when others are struggling to fill roles and retain staff,” says Petrow.

“The mindset is that, if we take care of our employees, they’ll take care of themselves and, in turn, be better positioned to take care of our customers and our business.”

MORE ON WORKPLACE TRENDS

Read about the best ways to retain staff, what to know if your employees work in another jurisdiction and the important things to consider for a four-day work week.

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