Career growth opportunities and employee turnover intentions in public accounting firms

This study examines the role of career growth opportunities in explaining turnover intentions of junior auditors in public accounting firms via a survey of them. Prior studies in applied psychology and organisational behaviour argue that employees and their organisations have a social exchange relationship in which employees and organisations provide reciprocal benefits to each other. Extending this research, this paper proposes that career growth opportunities represent a critical benefit to lower level employees in accounting firms. When these employees believe that their firm provides this benefit, they reciprocate with stronger commitment to the firm which, in turn, leads to lower turnover intentions. This study also seeks to identify the causes or antecedents of employee beliefs about career growth opportunities. Two antecedents are proposed: the effectiveness of the firm's training programmes; and, the organisational prestige of the firm. Results of path analysis suggest that both training effectiveness and organisational prestige enhance employee beliefs about the career growth opportunities offered by the public accounting firms, which, in turn lead to higher commitment and lower turnover intentions.     

Winning the talent war for women. Sometimes it takes a revolution

In 1991, Deloitte & Touche got a wake-up call about its efforts to retain women professionals. While it was recruiting almost as many women as men, the company had a much higher turnover rate for women. Many in the firm thought Deloitte was doing everything it could to retain talented women, but when they looked harder, they found otherwise. Most women weren't leaving to raise families; they were leaving after having weighed their unpromising career options in Deloitte's male-dominated culture. CEO Mike Cook led the way in making a business case--not a moral or emotional one--for change. Next, the company held mandatory, two-day, intensive workshops for its 5,000 U.S. managers. Case vignettes and discussions brought out subtle gender-based assumptions about careers and aspirations that had discouraged high-performing women from staying. The workshops were instrumental in convincing a critical mass of partners to join the effort, and the firm began to monitor the progress of women to ensure they received their share of mentoring and premier assignments. Executive compensation became linked to how successfully units implemented a flexible menu of goals. And other policies promoted a better balance between work and life for both men and women. Finally, an external advisory council kept the firm's feet to the fire. Deloitte's gender gap in turnover has now nearly vanished, and the number of women partners and directors is the highest among the Big Five. These cultural changes weren't easy, but they've enabled Deloitte to grow faster than any of its competitors.     

Listening begins at home

Procter & Gamble has long been regarded as a major power of the marketing world and a prime training ground for marketers. But in the summer of 2000, with half of P&G's top 15 brands losing market share and employee morale in ruins, company executives realized that the marketing organization was in trouble. Training programs had been dramatically downsized and in some cases eliminated, employees were being fast-tracked up the career ladder without sufficient time to develop and hone their skills, mentoring had all but disappeared, and the marketing career path had lost its prestige. In an attempt to rebuild P&G's marketing strength, James Stengel, the heir apparent to the chief marketing officer position, began working with University of Cincinnati professors Chris Allen and Andrea Dixon on a new training program to fix the weaknesses in the marketing organization. But when the two professors began interviewing P&G senior executives, they discovered that the plans in motion for mapping out the marketing group's recovery were based not on data but on the intuition of a few individuals at corporate headquarters. So began the most comprehensive internal research endeavor in P&G marketing's history. Using the company's existing process for consumer research, Allen and Dixon shadowed employees, conducted one-on-one interviews, held focus-group sessions, and surveyed 3,500 members of the marketing staff to learn what the company was doing right--and wrong--and what mattered most to its people. The results led to the most sweeping redesign of P&G's marketing organization in 60 years. In this article, the authors explore the value of listening to employees--and truly hearing them. One of their conclusions: A structured research process can show you what's really on employees' minds.     

Loyalty-based management

Despite a flurry of activities aimed at serving customers better, few companies have systematically revamped their operations with customer loyalty in mind. Instead, most have adopted improvement programs ad hoc, and paybacks haven't materialized. Building a highly loyal customer base must be integral to a company's basic business strategy. Loyalty leaders like MBNA credit cards are successful because they have designed their entire business systems around customer loyalty--a self-reinforcing system in which the company delivers superior value consistently and reinvents cash flows to find and keep high-quality customers and employees. The economic benefits of high customer loyalty are measurable. When a company consistently delivers superior value and wins customer loyalty, market share and revenues go up, and the cost of acquiring new customers goes down. The better economics mean the company can pay workers better, which sets off a whole chain of events. Increased pay boosts employee moral and commitment; as employees stay longer, their productivity goes up and training costs fall; employees' overall job satisfaction, combined with their experience, helps them serve customers better; and customers are then more inclined to stay loyal to the company. Finally, as the best customers and employees become part of the loyalty-based system, competitors are left to survive with less desirable customers and less talented employees. To compete on loyalty, a company must understand the relationships between customer retention and the other parts of the business--and be able to quantify the linkages between loyalty and profits. It involves rethinking and aligning four important aspects of the business: customers, product/service offering, employees, and measurement systems.     

Sources of professional staff turnover in public accounting firms revealed by the exit interview

Employee and employer stated reasons for leaving public accounting were studied together with the conditions surrounding departure and the best and least liked qualities of CPA firm work. Data collected after employee terminations on selected aspects of the work was shown to be a good predictor of whether employees left of their own volition or at the request of the firm and revealed several areas suitable for improving personnel relationship and reducing professional staff turnover.     

How I learned to let my workers lead

In 1980, Ralph Stayer owned a successful, growing sausage company that had him badly worried. Commitment was poor, motivation was lousy, the gap between performance and potential was enormous. Over the next five years, Stayer turned the company upside down, but only by turning himself upside down first. For years he had insisted on his own control, made all decisions, delegated nothing. But when he tried to picture what the company would have to look like to sell the most expensive sausage and still enjoy the biggest market share, he saw an organization whose employees took responsibility for their own work. After several false starts, he finally began in earnest by making himself give up much of his own authority. Stayer turned quality control over to the workers on the production line. Workers also began answering letters of complaint from customers. Rejects went from 5% to 0.5%. Employees thrived on their new responsibility and asked for more. Gradually, people on the shop floor took over personnel functions as well, followed by scheduling, budgeting, and capital improvements. Managers came to function more as coaches than as bosses. Stayer--a little to his own dismay--began to find himself superfluous. In mid-1985, the company faced a watershed decision--whether or not to accept a massive new order that would make huge demands on every employee and strain the company's capacities. Stayer asked the employees to make the decision. They accepted the challenge, and productivity, profits, and quality all rose dramatically. By the late 1980s, Stayer had reached his goal of working himself out of a job.     

The purpose at the heart of management

To succeed, startup enterprises need both passion and good management. But entrepreneurs can be famous for their visionary ardor and still be lousy managers. Traditionally, the key to long-term growth is getting the company founder to step aside so professional management can take over. Sometimes, however, this means abandoning a company's greatest asset in order to improve its procedures. A better solution is for the entrepreneur to learn to manage. Kye Anderson had motivation to spare. When she was 13, her 47-year-old father suffered recurrent shortness of breath followed by a massive heart attack. For her, the result was a single-minded career in medical technology and the development of innovative systems for diagnosing heart-and-lung disease. She had the zeal and determination it took to sell her ideas to investors and doctors, found a company, and grow it. But then, on the grounds that she lacked the financial and managerial expertise to carry her business from exuberant adolescence to profitable maturity, she stepped aside. A year and a half later, Anderson came back. She picked new board members who could act as entrepreneurial mentors. She reasserted certain original core values such as the importance of R&D and the emphasis on the patient as the ultimate customer. She discarded business lines that had strayed too far afield, and she learned how and what to delegate. Most important of all, Anderson realized that a leader's greatest obligation is to preach, and she began to spend much of her time communicating with her own employees about the purpose, mission, values, and strategy that could carry the company into a billion-dollar primary-care market.     

Surviving your new CEO

Almost 50% of the largest American firms will have a new CEO within the next four years; your company could very well be next. Senior executives know that a CEO transition means they're in for a round of firings, organizational reshuffles, and other unwelcome career changes. When your career suddenly depends on the views of a person you may not know, how worried should you be? According to the authors--very. They investigated the 2002-2004 CEO turnover rates of the top 1,000 U.S. companies and interviewed more than a dozen CEOs, each of whom had taken over at least one very large organization. Their study reveals that when a new CEO takes charge, remaining top managers are more likely than not to be shown the door. Those who leave often land in a lower position at a new company, work in a much smaller firm, or retire altogether. The news is not all grim, however. The interviewees offer some pointers on how to create a good impression and maximize your chances of survival and success under the new regime. Some of that advice may surprise you. One CEO pointed out, for instance, that "managers do not realize how much the CEO is looking for teammates on day one. I am amazed at how few people come through the door and say, 'I want to help. I may not be perfect, but I buy into your vision:" Other recommendations are more intuitive, such as learning the new CEO's working style, understanding her agenda, and helping her look good in her new position by achieving positive operating results--and soon. Along with the inevitable stresses, the authors point out, CEO transitions can provide opportunities. Whether you reinvigorate your career within your company or find fulfillment elsewhere, the key lies in deciding what you want to do--and then doing it right.     

Employee turnover likelihood and earnings management: evidence from the inevitable disclosure doctrine

We present evidence that managers consider employee turnover likelihood in their accounting choices. Our tests exploit U.S. state courts’ staggered recognition of the inevitable disclosure doctrine (IDD), which reduces employees’ ability to switch employers. We find a significant decrease in upward earnings management for firms headquartered in states that recognize the IDD, relative to firms headquartered elsewhere. The effect of the IDD is stronger for firms relying more on human capital and for firms whose employees have higher ex-ante turnover likelihood, confirming the employee retention channel. Overall, our results support the view that retaining employees is an important motive for corporate earnings management.     

Every employee an owner. Really

Surveys indicate that when new rules on expensing stock options take effect, many companies are likely to limit the number of employees who can receive equity compensation. But companies that reserve equity for executives are bound to suffer in the long run. Study after study proves that broad-based ownership, when done right, leads to higher productivity, lower workforce turnover, better recruits, and bigger profits. "Done right" is the key. Here are the four most important factors in implementing a broad-based employee equity plan: A significant portion of the workforce--generally, most of the full-time people--must hold equity; employees must think the amounts they hold can significantly improve their financial prospects; managerial practices and policies must reinforce the plan; and employees must feel a true sense of company ownership. Those factors add up to an ownership culture in which employees' interests are aligned with the company's. The result is a workforce that is loyal, cooperative, and willing to go above and beyond to make the organization successful. A wide variety of companies have recorded exceptional business performance with the help of employee-ownership programs supported by management policies. The authors examine two: Science Applications International, a research and development contractor, and Scot Forge, which shapes metal and other materials for industrial machinery. At both companies, every employee with a year or so of service holds equity, and employees who stay on can accumulate a comfortable nest egg. Management's sharing of financial information reinforces workers' sense of ownership. So does the expectation that employees will accept the responsibilities of ownership. Workers with an ownership stake internalize their responsibilities and feel they have an obligation not only to management but to one another.     

Employee sentiment and stock option compensation

The use of equity-based compensation for rank-and-file employees is a puzzle. We analyze whether the popularity of option compensation may be driven by employee optimism, and show that optimism by itself is insufficient to make option compensation optimal. The crucial insight is that firms compete with financial markets as suppliers of equity to employees and that employees’ access to the equity market restricts firms’ ability to profit from employee optimism. Firms must be able to extract some of the implied rents even though employees can purchase company equity in the financial markets. Such rent extraction becomes feasible if employees prefer the stock options offered by firms to the equity offered by the market, or if the traded equity is overvalued. We provide empirical evidence that firms use broad-based option compensation when boundedly rational employees are likely to be excessively optimistic about company stock, and when employees are likely to strictly prefer options over stock.     

Do companies compare employees’ salaries? Evidence from stated-owned enterprise group

The mechanism by which enterprises set salaries is vitally important to employees and is especially relevant to the reform of state-owned enterprises (SOEs). This paper investigates the effect of comparing employee compensation based on a sample of A-share SOE groups from 2008 to 2018. We find that when employee compensation at one company sharply increases, the employee compensation of other companies controlled by the same group will increase sharply in the following year. Further analysis shows that when employees’ sense of unfair compensation is stronger, when employees are less replaceable and when enterprises’ ability to pay is stronger, the effect of employee pay comparison is stronger. Increased employee salary does not improve enterprise performance, however, suggesting that such salary adjustment is ineffective. This paper expands the research on employee compensation and provides useful insights for optimizing the design of compensation contracts and promoting compensation reform in SOEs.     

员工薪酬竞争力与上市公司员工持股

基于员工持股相关理论,本文考察了员工薪酬竞争力对我国上市公司是否实施员工持股的可能影响。实证结果显示,员工薪酬竞争力越弱,企业越可能实施员工持股;且员工薪酬竞争力越弱,员工持股的锁定期限越长、覆盖人数越多以及员工股比例越高。进一步研究发现,员工薪酬竞争力与实施员工持股可能性的负相关关系,只在外部劳动力市场流动性高和内部人力资源成本较高以及融资约束较为严重的样本中显著。上述研究发现表明,上市公司的员工持股在一定程度上是企业在面临外部劳动力市场流动性压力和内部较高人力资源成本以及融资约束时,缓解员工薪酬竞争力不足的现实途径。本文的研究结论为完善上市公司员工持股制度提供了经验证据支持,同时拓展了员工持股、职工薪酬及收入分配等领域的相关研究文献。     

A stake in the business

When Chris Sullivan and three friends opened the first Outback Steakhouse in March 1988, in Tampa, Florida, they were hoping it would be successful enough to spawn a few more and maybe some other kinds of restaurants as well. Since then, their chain of Australia-themed restaurants has grown to some 900 locations and counting-plus another 300 or so "concept" restaurants that operate from under Outback's corporate umbrella. Growth like that doesn't happen accidentally, Sullivan says, but it certainly wasn't part of the original plan. In this first-person account, Outback's chairman describes the organization's formula for growth and development, which is consciously rooted in the founders' belief in putting people first. They've created an organizational model in which field managers make most of the decisions, garner the rewards, and live with the consequences. Specifically, the founders believe that the most effective way to make customers happy is to first take care of the people who cook for them, serve them, and supervise operations at the restaurants. Outback servers have fewer tables to worry about than those at other restaurant chains; the cooks have bigger, cooler, better-equipped kitchens; and the supervisors work their way up the ranks toward an equity stake in the restaurant or region they run. There are no administrative layers between field managers and the executives at headquarters. Giving employees good working conditions and the chance to become owners has proved to be good business: Turnover among hourly employees is low, and Outback and its subsidiaries opened 120 restaurants last year, increasing sales by 20.1%. The company must grow in order to keep offering career opportunities to its workers; in turn, those opportunities ensure that Outbackers remain committed to making customers happy and the company successful.     

When an executive defects

The news that one of the company's senior managers is leaving comes as a complete surprise to Paul Simmonds, CEO of Kinsington Textiles, Inc. Ned Carpenter, KTI's vice president of operations for three years, writes in his resignation letter than he is leaving for a better opportunity. Simmonds soon learns that Carpenter's new job is at Daltex, one of KTI's main rivals in the intensely competitive carpet industry. Hiring Carpenter had helped Simmonds establish his reputation as a topnotch manager. Carpenter came to KTI with lots of ideas and put his enthusiasm to good use. Three years into a five-year change program, Carpenter had turned KTI's operations from one of the worst in the industry to one of the best. He also had helped develop and plan the upcoming launch of a new fiber coating--KTI's first breakthrough in years. In this fictitious case study, Simmonds, along with the company's counsel and vice president of human resources, must figure out how much and what sort of damage control they need. What are they going to tell the company's employees and the media? Should they immediately replace Carpenter with John Brady, the second-in-command of operations? What if Carpenter is taking KTI employees--and strategic information--with him to Daltex? Should Simmonds ask all his managers to sign noncompete agreements-something Carpenter was never asked to do? Should KTI sue Carpenter? Five experts offer advice about communicating with KTI's employees, the media, and Carpenter himself, and about protecting the company's confidential information.     

The effects of employee stock option plans on operating performance in Chinese firms

As a part of the ongoing liberalization of the marketplace, Chinese regulators adopted the guideline called “Regulation of Equity Incentive Plans (trial)” to allow firms to provide employee incentives through employee stock option plans. Firms began initiating the plans in 2006. We investigate the impact of these plans on firm performance by comparing option-award firms with similar non-award matching firms. The change in ROE for the option-award firms is significantly higher than the matching firms. This is primarily due to their performance holding up better during the global financial crisis while the matching firms’ performance deteriorates. The stock price of these firms shows a positive reaction to the announcement, but no long-term abnormal returns. The better ROE performance for option-award firms is strong for subsets of the sample that are likely to benefit more from incentivized employees; specifically, privately owned firms, firms with higher board independence, and smaller firms. After various robustness tests, we conclude that the higher performance comes from the employee incentives, rather than earnings manipulation, a replacement of cash compensation, a binding of employees to executives, or gaming vesting periods.     

Betriebliche Altersversorgung durch Direktversicherungen: Eine finanzwirtschaftliche Analyse aus Arbeitnehmerund Eigentümersicht

Corporate pension schemes are part of the total remuneration of employees. In this paper we analyze the?Direktversicherung“ — a life insurance on behalf of the employee paid for by the employer — from the viewpoints of shareholders and employees alike. Firstly we examine, what implications this life insurance contract has on the cash flows to shareholders and employees. Social security payments and tax payments on individual and company level are accounted for. Secondly, we deduce possible substitution quotas q: We ask, what insurance premium the employer can afford to pay at most in place of a given amount of salary, without penalizing his shareholders. Next we deduce the minimum insurance premium an employee has to ask for to replace a given part of his salary in order not to worsen his financial position. From the findings, we conclude that a corporate pension scheme via the?Direktversicherung“ has the potential to lead to a win-win situation, with both parties better off than before. Our findings are also interesting for insurance companies offering those contracts to employers.     

The Impact of Position Difference on Employees’ Organizational Commitment After the Merger of Life Insurance Companies

We investigate the impacts of job position and survey time period on employee’s organizational commitment of insurance company after the merger. Our results show that both job position and survey time period are significant determinants to employee’s organizational commitment. Results also show that there is no interaction effect between survey time period and job position. For each year, during the survey time period, the mean of organization commitment of agent employees is significantly higher than staff employees. The mean difference of organizational commitment between agent and staff employees shrank year by year during the survey time period.     

The case of the hidden harassment

The past year has seen a growing public awareness of sexual harassment in the workplace. The question of what constitutes sexual harassment and how to recognize it has been debated in the news, the courts, and Congress. This HBR case study is less concerned with defining it than with examining what a manager should do about it. When Filmore Trust manager Jerry Tarkwell found out one of his employees was being sexually harassed on the job, he thought he knew exactly what to do. Following company policy, he immediately notified the bank's equal employment office. Then he called Jill McNair, the employee being harassed. Her response dumbfounded him. "You had no right to call EEO before talking to me," McNair said angrily. Do you have any idea what could happen to me and to my career if people find out about this?" Tarkwell didn't understand; McNair wasn't to blame. He believed the only person who should be worried was the harasser. Tarkwell tried to spell out the procedure for her. "All you have to do is write a letter and ..." McNair cut him off. "If this gets investigated by EEO, everyone in the building could be questioned. I'll probably get transferred, and then I won't have a chance at promotion. And who'd want to work with me? Every man in the company would be afraid I'd report him if he so much as opened a door for me."(ABSTRACT TRUNCATED AT 250 WORDS)     

Financial Reporting and Employee Job Search

We investigate the effects of financial reporting on current employee job search, that is, whether firms' public financial reports cause their employees to reevaluate their jobs and consider leaving. We develop theory for why current employees use earnings announcements (EAs) to inform job search decisions, and empirically investigate job search based on employees' activity on a popular job market website. We find that job search by current employees increases significantly during EA weeks, especially when employees are more mobile and when their information frictions are greater. We also find that employees use EAs to update their expectations about their employers' economic prospects, consistent with learning, and some evidence that positive announcements elicit less search. Our paper contributes to the burgeoning labor and accounting literature by providing among the first evidence closely linking financial reports to employee learning and job search.