Big 4 Firms Propose Early Raises to Retain Employees

While many Big 4 firm leaders spent last year fearing that continued lean staffing during the recession would burn out employees and spark turnover once the job market improved, few made an effort to financially back their retention efforts.

This year, however, things have changed.  Signaling growing confidence in the current financial climate, several firms have joined other U.S. companies in getting more aggressive about spending money to retain current talent and attract new prospects.

This is according to industry consultants and executives, who note that some firms are taking this a step further by accelerating the distribution of raises and awarding bonuses to certain employees.  In most cases, this is an attempt to preempt defections and respond to increased hiring by competitors. 

In fact, a recent survey of 459 human resource executives by Towers Watson revealed that 15 percent of respondents have found that retaining key talent in the U.S. has already become more difficult than it was before the financial crisis.  Further, 51 percent said that by January 2011 they expect retention will be even more difficult.  Many industry experts expect the same to be true for accounting firms, especially the Big 4 and larger regional firms.

As a result, the rumor mill is filled with news that the Big 4 accounting firms—PricewaterhouseCooper, Ernst & Young, Deloitte and KPMG—are all planning to step up raises and retention bonuses.  For example, Going Concern reports that E&Y Americas Managing Partner Steve Howe reassured employees that they would, indeed, be receiving merit increases, although rumors also limit those raises to “high performers.”

PwC has also gone on record that it will bump up its compensation adjustment timeframe from September to July. 

“We want to offer the best quality of service to those that helped us weather the storm and helped us—and our clients—through the tougher times,” said PwC Human Capital Leader Jim Walsh in an interview with Consulting Magazine.  “In the last six months, we’ve started to see things rebound in certain sectors. And there’s no question that as the job market unfreezes a bit, our staff are in higher demand.  Our top talent is getting more inquiries from headhunters.”

Going Concern also reports that Deloitte CEO Barry Salzberg has stated that his firm’s employees will not only be receiving raises and bonuses this year, but that they will be larger than last year and distributed to more employees.  He also is reported to have noted that raises, while higher, are unlikely to return to “pre-recession” levels any time soon.

If all goes as planned, these raises will not only demonstrate appreciation to current employees but instill a level of confidence in where their firm is going.  In addition, companies hope that they will send a positive message to prospective hires, and further persuade top talent already considering leaving their current organization.

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Healthcare Reform Legislation Increases Tax Reporting Burdens with New 1099 Mandate

New Joint Standard for Revenue Recognition Proposed