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In business, results matter
THE ANNUAL INSIDE PUBLIC ACCOUNTING
NATIONAL BENCHMARKING REPORT
EXECUTIVE SUMMARY
The independent report on the profession since 1990.
THE ANNUAL INSIDE PUBLIC ACCOUNTING
NATIONAL BENCHMARKING REPORT
2013 survey and analysis conducted by: The Platt Group / INSIDE Public Accounting The Independent Gold Standard of Accounting Firm Benchmarking Since 1990.
Published by: The Platt Group 4000 West 106th Street, Suite 125-197 Carmel, IN 46032 (317) 733-1920 P (317) 663-1030 F www.insidepublicaccounting.com
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Phone: (317) 733-1920 Fax: (317) 663-1030 Web: www.insidepublicaccounting.com
E-mail: survey@plattgroupllc.com INSIDE PUBLIC ACCOUNTING – (ISSN 0897-3482)
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TABLE OF CONTENTS
Page(s)
PREFACE ..................................................................................................................................................... i REPORT HIGHLIGHTS ...............................................................................................................................iv INCOME / REVENUE
Net Income ............................................................................................................................................ 1 Net Income Change Excluding Mergers ................................................................................................. 1
Net Income Change Including Mergers .................................................................................................. 1 Net Income as Percentage of Net Revenues ......................................................................................... 1 Net Income Per Partner All .................................................................................................................... 1 Net Income Per Equity Partner .............................................................................................................. 1 Graph: Net Income Per Equity Partner Best of the Best Firms .................................................................... 2 Gross Revenue ...................................................................................................................................... 3 Net Revenue .......................................................................................................................................... 3 Net Revenue Change Excluding Mergers .............................................................................................. 3 Net Revenue Change Including Mergers ............................................................................................... 3 Net Revenue Per Charge Hour .............................................................................................................. 3 Revenue Per Equity Partner ................................................................................................................... 4 Revenue Per Partner (All) ...................................................................................................................... 4 Revenue Per Professional ...................................................................................................................... 4 Revenue Per Employee ......................................................................................................................... 4 Revenue from Something Other than Charge Hours ............................................................................. 4 Graph: Net Revenue Per Equity Partner ...................................................................................................... 5 Graph: Net Revenue All Partners ................................................................................................................. 6 Graph: Net Revenue Per Employee ............................................................................................................. 7 Graph: Net Income Per Equity Parnter Best of the Best .............................................................................. 8 NET REVENUES BY PRACTICE AREA Accounting and Auditing ......................................................................................................................... 9 Tax ......................................................................................................................................................... 9 Other ...................................................................................................................................................... 9 Business Valuation ................................................................................................................................. 10 Business Advisory .................................................................................................................................. 10 Computer Consulting .............................................................................................................................. 10 Fee-Based Financial Services ................................................................................................................ 10 Commission-Based Financial Services .................................................................................................. 11 Health Care ............................................................................................................................................ 11 Litigation Support ................................................................................................................................... 11 Merger and Acquisition ........................................................................................................................... 11 Employee Benefits ................................................................................................................................. 12 Human Resources Consulting ................................................................................................................ 12 All Other ................................................................................................................................................. 12 MERGERS / ACQUISTIONS Number of Mergers ................................................................................................................................ 13 Number of Staff and Partners Added ..................................................................................................... 13 Revenue Added ..................................................................................................................................... 13
OFFICES, SEC CLIENTS Number of Offices .................................................................................................................................. 14 Change in Number of Offices ................................................................................................................. 14 Number of SEC Clients .......................................................................................................................... 14 Change in Number of SEC Clients ......................................................................................................... 14 Percentage of International Clients ........................................................................................................ 14 Percentage of Revenue from International Clients ................................................................................. 14 BILLING RATES Partners .................................................................................................................................................. 15 Managers ............................................................................................................................................... 15 Seniors ................................................................................................................................................... 15 Entry-Level Staff ..................................................................................................................................... 15 Paraprofessionals .................................................................................................................................. 15 Administrative ......................................................................................................................................... 15
Excerpted from the 2013 INSIDE Public Accounting National Benchmarking Report
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Expected Rate Increases ....................................................................................................................... 15 Graph: Rates – Equity Partners ................................................................................................................... 16 Graph: Rates – Partners / Managers / Seniors ............................................................................................ 17 FIRM UTILIZATION ..................................................................................................................................... 18 HOURS – NON-PARTNER STAFF Firmwide Charge Hours ......................................................................................................................... 19 Firmwide Charge Hours ......................................................................................................................... 19 Work Hours per Professional ................................................................................................................. 19 Percentage Billable Professional Staff ................................................................................................... 19 Charge Hours, All Other Proffessional Staff ........................................................................................... 19 Work Hours, All Other Professional Staff ............................................................................................... 19 Charge Hours, Staff Years’ Experience .................................................................................................. 20 Work Hours, Staff Years’ Experience ..................................................................................................... 20 Percentage Charagable by Professional Staff Levels ............................................................................ 21 Charge Hour by Professional Staff Levels .............................................................................................. 21 Work Hours by Professional Staff Levels ............................................................................................... 21 Percentage Billable by Professional Staff Levels ................................................................................... 21 Work Hours by Professional Staff Levels ............................................................................................... 21 Percentage Billable by Other Professional Staff Levels ......................................................................... 21 Charge Hour Other Staff ........................................................................................................................ 21 Work Hours Other Staff .......................................................................................................................... 21
PARTNER ISSUES HOURS Managing Partner, Dollar Volume Managed .......................................................................................... 22 Managing Partner, Charge Hours .......................................................................................................... 22 Equity Partners, Charge Hours .............................................................................................................. 22 Equity Partners, Work Hours .................................................................................................................. 22 Percentage Billed Per Equity Partner ..................................................................................................... 22 Percentage Total Firm Charge Hours by Equity Partners ...................................................................... 22 Total Hours Managed Per Equity Partner ............................................................................................... 22 Graph: Charge Hours Per Equity Partner .................................................................................................... 23 Percentage of Firms That Have Non-Equity Partners ............................................................................ 24 Non-Equity Partners, Charge Hours ....................................................................................................... 24 Non-Equity Partners, Work Hours .......................................................................................................... 24 Percentage Billable Per Non-Equity Partner .......................................................................................... 24 Percentage of Total Firm Charge Hours by Non-Equity Partners ........................................................... 24 Graph: Charge Hours Per Non-Equity Partner ............................................................................................. 25 COMPENSATION Newly Admitted Equity Partners ............................................................................................................. 26 Newly Admitted Non-Equity Partners ..................................................................................................... 26 Compensation All Partners ..................................................................................................................... 26 Compensation Equity Partners ............................................................................................................... 26 Compensation Non-Equity Partners ....................................................................................................... 26 Highest Equity Partner Compensation ................................................................................................... 27 Lowest Equity Partner Compensation .................................................................................................... 27 Managing Partner Compensation ........................................................................................................... 27 Ratio of Highest-to-Lowest Compensation. ............................................................................................ 27 Graph: Equity Partner Compensation .......................................................................................................... 28 Graph: Equity Partner Compensation by Firm Size (Revenues) .................................................................. 29 Graph: Ratio of Equity Compensaton to Professsional Staff Compensation ................................................ 30
COMPENSATED FOR… Meeting Charge Hour Budget ................................................................................................................. 31 Excess Billable Hours ............................................................................................................................. 31 Goals and Objectives Met ...................................................................................................................... 31 Management Responsibilities ................................................................................................................ 31 Marketing Initiatives ................................................................................................................................ 31 Originating Work .................................................................................................................................... 31 Realization ............................................................................................................................................. 31 For Soft Skills ......................................................................................................................................... 31
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Teamwork / One Firm Efforts ................................................................................................................. 31 For Technical Skills ................................................................................................................................ 31 Training / Mentoring Staff ....................................................................................................................... 31 Open Compensation System ................................................................................................................. 32 Closed Compensation Sytem ................................................................................................................. 32 Formula-Based System .......................................................................................................................... 32 Partner Group Decides Compensation. .................................................................................................. 32 Compensation Committee ...................................................................................................................... 32 Managing Partner Decides Compensation ............................................................................................. 32 Number of Equity Partners ..................................................................................................................... 33 Partners Working Part-Time ................................................................................................................... 33 Partners Working Alternative Schedule .................................................................................................. 33 Ownership Percentages / High to Low ................................................................................................... 33 Percentage of Firms with Non-Equity Partners ...................................................................................... 33 Optimum Ratio of Equity to Non-Equity Partners ................................................................................... 33 RETIREMENT Retirement Plans .................................................................................................................................... 34 Plan Types ............................................................................................................................................. 34 Cap on Payments ................................................................................................................................... 34 Current Obligations ................................................................................................................................ 34 Average Age of Partners ........................................................................................................................ 34 Mandatory Partner Retirement / Stated Retirement Age ........................................................................ 35 Number of Partners Retiring ................................................................................................................... 36 Number of Partners Terminated ............................................................................................................. 36 NEWLY ADMITTED PARTNERS / OTHER ISSUES Number of Equity Partners Admitted ...................................................................................................... 37 Percentage Larteral Hires ...................................................................................................................... 37 Number of Non-Equity Partners Admitted .............................................................................................. 37 Percentage Lateral Hires ........................................................................................................................ 37 Capital Requirements for New Partners ................................................................................................. 37 Average Time from Entry-Level to Partnership ...................................................................................... 38 Percentage of Firms Admitting Non-CPA Equity Partners ...................................................................... 38 Number of Non-CPA Equity Partners ..................................................................................................... 38 Eligibility Requirements / Training / Reviews .......................................................................................... 39 Agreements ............................................................................................................................................ 39 Code of Conduct .................................................................................................................................... 39 MANAGING PARTNER Ages ....................................................................................................................................................... 40 Term Limits ............................................................................................................................................ 40 Newaly Named ....................................................................................................................................... 40
FIRM GOVERNANCE ISSUES Upward Evaluations ............................................................................................................................... 41 360-Degree Reviews .............................................................................................................................. 41 Partner Performance Reviews ............................................................................................................... 41 Strategic Plan (Firmwide and Departmental) .......................................................................................... 42 Disaster Recovery Plan .......................................................................................................................... 42 Marketing Plan ....................................................................................................................................... 42 Succession Plan ..................................................................................................................................... 42 Firm Vision ............................................................................................................................................. 43 External Advisory Board ......................................................................................................................... 43 Formal Client Acceptance Guidelines .................................................................................................... 43 Core Values ........................................................................................................................................... 43 FIRM ADMINISTRATION Facilities ................................................................................................................................................. 44 Net Revenue Per Square Footage ......................................................................................................... 44 Average Square Foot Per Person (Total Personnel) .............................................................................. 44 Graph: Net Revenue Per Square Footage ................................................................................................... 45 Personnel Costs ..................................................................................................................................... 46 Malpractice Costs ................................................................................................................................... 46 Marketing Costs ..................................................................................................................................... 46
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Technology Costs .................................................................................................................................. 46 Recruiting Costs ..................................................................................................................................... 46 Training Costs ........................................................................................................................................ 46 Firm Capital ............................................................................................................................................ 47 STAFFING Average Number of All Partners ............................................................................................................. 48 Equity to Non-Equity Partner Ratio......................................................................................................... 48 Number of Professional Staff by Experience Levels .............................................................................. 49 Professional Staff / Administrative Ratio ................................................................................................ 50 Professional Staff / Equity Partner Ratio ................................................................................................ 50 Turnover ................................................................................................................................................. 50 Tenure .................................................................................................................................................... 50 Graph: Professional Staff Turnover .............................................................................................................. 51 PROFESSIONAL STAFF SALARIES Staff Salaries by Levels .......................................................................................................................... 52 Graph: Average Professional Staff Salary.................................................................................................... 53 Graph: Average Entry-Level Staff Salary ..................................................................................................... 54 PROFESSIONAL STAFF RECRUITING AND TRAINING Diversity Recruiting Plan ........................................................................................................................ 55 Mentoring Program for Professional Staff .............................................................................................. 55 Training Program for Professional Staff ................................................................................................ 55 Training Program for Emerging Leaders ................................................................................................ 55 CPE per Professional ............................................................................................................................. 55
FIRM ADMINISTRATIVE STAFF Business Development Director ............................................................................................................ 56 Chief Financial Officer ........................................................................................................................... 57 Chief Information Officer ....................................................................................................................... 58 Controller ................................................................................................................................................ 59 Information Technology Director ............................................................................................................ 60 Human Resources Director Salaries ...................................................................................................... 61 Non-Traditional CEO .............................................................................................................................. 62 Training / Learning Director .................................................................................................................... 63 Marketing Staff and Fee Growth ............................................................................................................ 64 Marketing Directors’ Salaries ................................................................................................................. 65 Marketing Coordinators’ Salaries ........................................................................................................... 66 Firm Administrators, Net Income Percentage .................................................................................... 67-68 Graph: Ratio of Professional Staff to Firm Administrative Staff .................................................................... 69 FIRM MEMBERSHIPS ................................................................................................................................ 70 BENEFITS .............................................................................................................................................. 71-73 APPENDIX I INSIDE Public Accounting August 2013 Issue – The IPA 100
INSIDE Public Accounting September 2013 Issue – The IPA Best of the Best and The IPA 200 INSIDE Public Accounting October 2013 Issue – The IPA All-Star Firms APPENDIX II The 2012-2013 INSIDE Public Accounting Annual Survey and Analysis of Firms Questionnaire
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PREFACE
The INSIDE Public Accounting (IPA) National Benchmarking Report is one of the most
complete, independent, up-to-date sets of economic and management statistics available about
the accounting profession.
“Whenever you find yourself on the side of the majority, it is time to pause
and reflect.” – Mark Twain
The 2013 IPA National Benchmarking Report, based on fiscal year 2012-2013 data, contains
information representing more than 20,000 partners and more than 230,000 staff. The firms that
participated in the IPA 23rd Annual Survey and Analysis of Firms represent an aggregate of
$54.6 billion in net fees.
Methodology: Each survey is thoroughly
examined. If any data appears to be incorrect or
questionable, a team member from The Platt
Group resolves questions with the firm. While
IPA does everything possible to ensure
accuracy, firms bear the ultimate responsibility
for providing the most accurate data.
Questionnaires are completed by participants in
individual Excel spreadsheets (Appendix II). The
Platt Group compiles the data into a master spreadsheet. Data is presented by ranges of firm
sizes and geographic regions. We do not provide data on individual firms, as The Platt Group
guarantees confidentiality.
EDITORS NOTE
Over the last few years, the IPA National Benchmarking Report has grown significantly in
participation, with more than 500 firms participating this year. Because we have always had a
significant portion of the Top 200 firms in the country participating, new firms are primarily being
added in the under-$14 million revenue category. As such, any “Non-Big 4” averages that are
presented in graphs have a higher percentage of smaller firms than in previous years, which
may contribute to a level of complexity on year-to-year comparisons. The most accurate
“apples-to-apples” comparisons will always be in the Benchmarking Report Tables, which
segments all firms by net revenues, thereby eliminating any dilution of more general averages
because of the participation of a larger number of smaller firms.
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TERMS AND DEFINITIONS
Non-Big 4: This category includes all participating firms and includes all national firms. Averages: The averages reported in this report are averages of data supplied by survey participants. In some instances, the averages may not appear to total correctly; this is a function of rounding. As participation continues to grow, IPA is collecting data from a larger number of firms under $5 million than ever before. This provides a rich and robust data set that is fully presented and analyzed in the IPA National Benchmarking Report, in the tables. All data excludes the Big 4.
>$75 Million: Includes all participating national firms.
THE IPA 100 AND THE IPA 200
Information gathered from the IPA Annual Survey and Analysis of Firms (Appendix II) is used
to develop the IPA 100, a list of America’s 100 largest firms, which is highlighted annually in the
August issue of INSIDE Public Accounting. In September 2013, IPA named the IPA 200, those
firms ranking Nos. 101-200 in the U.S. (Appendix I)
THE IPA BEST OF THE BEST AND THE IPA ALL-STAR FIRMS
Following analysis of all participating firms’ survey data, IPA names “Best of the Best” and
“All-Star” firms. Articles detailing these designations, regional breakouts and additional
analyses appear annually in the September and October issues. Appendix I.
THE IPA NATIONAL BENCHMARKING REPORT
The IPA National Benchmarking Report offers a more detailed presentation of results from all
survey participants. Data in the report may differ slightly from that previously reported in IPA’s
newsletters due to the fact that firms continue submitting data and clarifications past each of the
monthly newsletter deadlines.
To be most useful, the report must provide relevant, timely information. The Platt Group invites
you as a reader and/or participant to call or write us with your candid critique, suggestions and
questions at (317) 733-1920 or kplatt@plattgroupllc.com.
The IPA National Benchmarking Report is published annually. It is one of the longest-running,
most up-to-date, independent reports on the accounting profession.
MAIL: The Platt Group - 4000 W. 106th St., Suite 125-197, Carmel, IN 46032-7730PHONE: (317) 733-1920 FAX: (317) 663-1030
E-MAIL: info@plattgroupllc.com WEB: www.insidepublicaccounting.com
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Raising The Bar For The Profession
Dear Readers,
First, The Platt Group extends its gratitude to the more than 500 firms that participated in the 23rd
annual Survey and Analysis of Firms. We recognize that this is a voluntary, but critical, effort that
offers the opportunity for benchmarking against hundreds of CPA firms across the country. We
are grateful for your continued participation, input and suggestions for improvement each year,
and we appreciate your willing cooperation when we’ve come back to you to ensure accurate and
timely submissions.
Second, keeping your data both confidential and secure is a
responsibility we take very seriously. That uncompromising commitment
is the foundation of our business, and we appreciate the trust you have
placed in us.
Third, a big thank you to the firm administrators, controllers, office
managers and others who had a hand in gathering the required data for
the survey. We appreciate your efforts and your flexibility when
clarifications were needed.
We hope you will find significant value in this resource. This report and the optional Operational
and Financial Report Card for participants combine to create two powerful tools to measure your
firm’s performance against others around the country. Whether you are comparing against other
firms your size, other firms in your part of the country, or the IPA Best of the Best firms, we hope
you maximize the value of the data available to you in these pages.
Please remember the Platt Group can also be a resource to you as you
gather your management team to review benchmarking and performance
improvement opportunities. Consider inviting Mike Platt to make a
customized presentation at your partner retreat. He will not only delve deeper
into the macro trends, but also provide detailed information on areas of
specific interest. Feel free to contact us at mplatt@plattgroupllc.com or
kplatt@plattgroupllc.com to see how the lessons learned at hundreds of
other firms can be used to improve performance at your firm.
We look forward to continuing to serve you and the profession,
Mike & Kelly Platt
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EXECUTIVE SUMMARY HIGHLIGHTS Editorial Note: Unless otherwise noted, all commentary relates to non-Big 4 firms, but includes all participating national firms. Not all participating firms chose to answer all survey questions. Percentages cited in the following pages/tables are based on firms that answered those specific questions. Number of responses indicated on many of the tables/graphs relates to one or more metrics discussed on that page. The terms “Fees” and “Revenues” are interchangeable.
OVERVIEW
Organic revenue growth across the profession
averaged 3.9% for all non-Big 4 firms – up from 2.8%
last year and 0.9% from the previous year. While still
significantly below the double-digit growth rates pre-
recession, little by little the engines of growth are
gaining momentum.
The Big 4 had strong gains, growing $3.5 billion in
revenues this year, or 10.5%, for a total of $37.2
billion. Last year’s numbers showed an 8.7% increase
of $2.7 billion after a down year. The current snapshot
for both the Big 4 as well as overall growth among the
IPA 100 of 5.2% may indicate that clients are seeking
more services since the economic downturn.
Platt’s Perspective: Five Years After The Lehman Brothers Collapse
Shortly after the 2008 Lehman Brothers bankruptcy led to the world financial system almost going
over the edge, futurist David Pearce Snyder told an audience at the AICPA that “this is not your
father’s recession,” and “it will be five more years before the economy returns to a new ‘normal.’ ”
So now, five years later, the obvious question is, “Are we there yet?” The quick answer is, “Not quite,
but we’re making progress.”
The profession has made adjustments. Initial belt-tightening and layoffs occurred early and led to
preservation of income for the firm. “Right-sizing” and getting rid of underperforming staff came next.
Leaders learned how to calm a nervous team – they offered open, honest dialogue, and a plan for
going forward. Stepping up accountability came next, leading to elimination of some under-performing
partners. Mergers became the quickest method of growth, with many firms in the “buy” mode. This
coincided not only with paltry growth among smaller firms but also the pending retirement of a
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generation of Baby Boomers, which fueled even more acquisition activity. Strategic business
development efforts took hold in many firms, supplementing “opportunistic” growth with “intentional”
growth. Sales training for partners re-emerged and recruitment efforts stepped up to staff for the
expected additional work, which has started in a number of areas around the country.
What we don’t yet know is how strong the comeback will be, and what a new normal will look like.
Temporary employment agencies are reporting a surge in part-time and temporary positions in the
marketplace, leading many to question whether there is confidence that growth is sustainable or
concern that it is fleeting.
Firms that have institutionalized a “do more with less” mentality as well as a culture of making tough
decisions and acting on them are showing strong growth and profitability. One in eight firms reported
organic revenue growth of over 10% this year – that number was 63% in fiscal year 2007. Almost
one-fourth of firms are reporting double-digit income growth this year – that number was 55% in 2007.
Now, as then, one-third of participating firms show profitability above 35%. Revenues per employee
among the IPA 100 – after all the adjustments in staffing – are now about $15,000 higher than they
were in 2007. After the mega-mergers of the last few years, minimum revenues to get into the IPA
100 are still hovering around $30 million, as they were in 2007, showing the next group among the
IPA 200 continuing to grow and rebound.
Words like “normal” are fairly subjective, and we’re still too close to determine if things have
completely settled into the “new normal” as Pearce Snyder suggested. But signs of growth are
encouraging and more consistent than in the recent past, and the future looks bright for those who
make bold, intentional decisions and refuse to settle for the status quo.
Net Income As A Percentage Of Net Revenue
Among all firms in the survey this year, average profitability (net income as a percentage of net
revenue) was 30.4%. One-quarter of all firms turned in results of more than 35%.
Among the 200 largest firms in the U.S., the 10% with the highest net income as a percentage of
revenue are moving more than 40 cents of every dollar to the bottom line. Thirty-five percent of this
group is among the IPA 100, and 65% are from the IPA 200.
What do we know about this “Over 40%” group? Partners are charging more hours in these firms
(1,206 versus 1,028). They tend to be heavier in the tax area (43.4% of net revenue comes from tax
services versus 36.5% for other firms.) Half of the group reports revenue from a litigation support
practice, which relies heavier on partner-level expertise and commands premium rates. When
looking at who is producing the hours, partners on average produce 14.1% of all charge hours of
the firm, versus 10.0% for the top 200 firms. Half of the firms have CFOs on staff, half have a
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controller, and 59% have a firm administrator – so someone is constantly closely watching the
bottom line. This group also experienced less staff turnover last year (11.8% of professional staff
versus 14.6% for the top 200), so staff replacement costs were minimized. Current retirement
obligations are also only two-thirds as much as their peers among the top 200, again providing
additional opportunities to distribute or reinvest in the firm.
Average Partner Age Continues To Rise
We’ve all seen the statistic that 10,000 people turn 65 every day in the U.S. As Baby Boomers
reach retirement age, the economy as a whole, and the accounting profession along with it, are in
transition.
This year, the average age of all equity partners is 52.1 years compared to 48.5 years five years
ago. While this increase in age of 3.6 years may not seem significant, it’s important to look inside
your firm for the reasons. It may indicate that not as many younger partners are being admitted to
maintain the age balance.
Tracking average partner age is a very important performance indicator and the increasing partner
age may be a cause of concern over time if philosophies of succession are not well thought out,
and adequate planning procedures are not in place. Many firms are comfortable with an average
partner age of 50, which produces a mix of experienced and seasoned partners with younger
partners being prepared to take on even greater leadership rules in the future.
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3%6%
25%
41%
25%
1%
8%
29%
41%
21%
4%
12%
26%
34%
23%
0% 0%
23%
59%
18%
< 8 8-10 10-12 12-15 >15
Average No. of Years To Partnership for Entry‐Level Staff
Average Years To PartnershipSource: INSIDE Public Accounting
IPA 100
IPA 200
< $14M
Best of theBest
Another trend uncovered through the survey is the increasing number of non-equity partners being
admitted in lieu of equity partners. When that happens, the equity partner average age increases.
One must challenge the reason for the spike in non-equity ownership. If one of the attributes
differentiating equity versus non-equity ownership is “entrepreneurship,” (as many firms believe)
then perhaps the age increase is a sign that over time the entrepreneurial quotient of your firm is
being diluted.
A closely related matter, the average age of Non-Big 4 CEOs/MPs has increased over the past five
years, from 53.3 years to 55.1 years. While this increase may not be a concern in the firms that
have defined succession plans, it could be an indicator in others that the next leader has not been
chosen, is not in the pipeline, or is not ready to take the helm. This metric is one to monitor as a
reminder that leadership development is an essential element of the succession planning process. Path To Partnership Challenges Those Eager For Quick Promotions
Hard and satisfying work, coupled with long hours and financial rewards, are the hallmarks of a
career as an equity partner. While not everyone in the firm wants to or can become a partner, for
those who strive to do so, two questions come to mind: “Is there an opportunity here?” and “How
long will I have to wait for the opportunity?”
For fiscal year-end 2012-13, one of every three people who were admitted to equity partnership
came in as lateral hires. At best, only two out of every three openings were available to “home-
grown” seasoned staff/managers. Additionally, 87% of firms indicated the path from entry-level staff
to equity partnership to be at least 10 years, 60% expect at least 12 years, and 23% expect the wait
to be at least 15 years.
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13%
29%
19%
10%
28%
15%
38%
14%
14%
18%
8%
26%
23%
12%
31%
15%
27%
22%
6%
30%
14%
26%
14%
9%
37%
<1.0 1.0-1.9 2.0-2.9 3.0-3.9 > 4.0
No. of Equity Partners for Every Non‐Equity Partner
Ratio of Equity Partners to Non-Equity Partners Source: INSIDE Public Accounting
All Firms With Non-Equity Positions IPA 100 IPA 200 $5M-$14M <$5M
For women looking to become partner, the survey shows that on average, regardless of whether
they are in an IPA 100 firm or a smaller firm, five out of six owners are male, and that number hasn’t
changed dramatically over the years.
Ratio Of Equity Partners To Non-Equity Partners
Today, 59% of survey participants indicate that they have at least one non-equity partner in the
firm. As the number of non-equity partner positions continues to grow, firms are beginning to ask,
“What is the right ratio of equity to non-equity partners?” As you would expect, answers vary widely.
Below we show the breakdown in different sized firms. Percentages represent the proportion of all
firms in the given revenue band who report various ratios.
Revenue Outside Of “Dollars Times Hours”
“Dollars times hours” has been the dominant formula governing the accounting profession since its
inception. But as firms continue to evolve, a small but growing percentage of their revenue is
coming from something other than hours. Whether it is success fees, commissions, percentage of
assets under management, or retainers, non-traditional sources of revenue for accounting firms
continue to grow.
An average of 8.4% of total revenues is derived from something other than charge hours among the
42% of firms that have some form of an alternative revenue model. This figure represents revenues
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of $385 million, with one-third of that coming from just five IPA 100 firms that have found strong
revenue-generating alternatives to the standard revenue model.
Equity Ownership Increasing Among Non-CPAs
As professional business management positions proliferate across the profession, firms continue to
find ways to incentivize those (traditionally) non-CPA professionals. Non-equity partner positions
have existed for this group for some time, but we are seeing a growing number of firms offering
equity partner positions to these non-CPA professionals in the firm.
One-quarter of all firms indicate their partner agreements allow for non-CPAs to become equity
owners in their firm, and five out of six of those firms currently have at least one non-CPA equity
owner.
Who Allows For Equity Ownership among Non-CPAs?
66%...of IPA 100 29%...of IPA 200
12%...of $5 million to $14 million 4%…of < $5 million
The Maister Formula For a number of years, IPA has turned to the model of professional services management
consultant David Maister to dissect net income per equity partner (NIPEP) into its component
pieces to help firms get a better understanding of the various factors that can influence partner
income. Every firm should know their Maister Model numbers, and should track them regularly.
We start with the equation: NIPEP = Professional Staff x Total Charge Hours x Gross Revenue x Net Revenue x Net Income Total Eq. Partners Total Prof. Staff Total Chg. Hrs. Gross Revenue Net Revenue Which provides the following individual measurement of NIPEP: Leverage x Utilization x Billing Rate x Realization x Margin
Shown on the following page are comparative metrics for each quartile (based on net income per
equity partner) of all non-Big 4 survey participants, aggregated AS IF all firms in the quartile were
one firm. Best of the Best are also shown as if they were combined into one firm.
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The Maister Formula
2013 INSIDE Public Accounting Survey Data Leverage Utilization Billing Rate Realization Margin NIPEP
Top 25% NIPEP 9.1 1,469 $195.18 85.4% 32.5% $726,303
2nd 25% NIPEP 7.1 1,384 $212.61 80.2% 27.0% $454,459
3rd 25% NIPEP 6.1 1,397 $164.05 85.2% 28.1% $336,954
4th 25% NIPEP 5.2 1,349 $157.35 83.2% 24.2% $222,171
Average Non-Big 4 7.3 1,417 $191.93 83.4% 29.3% $485,757
Best Of The Best 10.7 1,476 $203.18 88.1% 32.2% $909,363
Source: INSIDE Public Accounting / Copyright © 2013 The Platt Group / INSIDE Public Accounting
What carries the top 25% this year is increased leverage, higher utilization and a much healthier
profit margin than the other quartiles. As was the case in previous years, realization percentage
doesn’t materially shift from one group to the next. It is important to remember that it is the
COMBINATION of all five factors that drive net income per partner, so we encourage you to not get
hung up on just one factor to the exclusion of all others.
A number of common metrics spin off from this model including:
Net fee per charge hour = B * R
Net income per charge hour = B * R * M
Charge Hours Managed per Partner = L * U
Net Income per Professional Staff = U * B * R * M
The last metric, Net Income per Professional Staff (U * B * R * M), provides a glimpse (assuming
everything else is equal) of how much is contributed to the bottom line by each professional staff
person, which includes all partners. This shows the following…
…$79,480 Top 25%
…$63,661 2nd 25%
…$54,867 3rd 25%
…$42,770 4th 25%
…$66,467 All Non-Big 4
…$85,074 IPA Best of the Best
How Much Is An Hour Worth In Your Firm? Every firm looks at their net revenues per charge hour to determine what their realized rate is, and
every firm looks at its profitability to determine how much moves to the bottom line. But combining
these two into one metric (B*R*M) offers a good idea of how much net income every hour of charge
xi
1%
4%
13%
21%
25%
17%
9%
5%3% 3%
< $10 $10-$20 $20-$30 $30-$40 $40-$50 $50-$60 $60-$70 $70-$80 $80-$90 > $90
Per
cent
age
of F
irms
Net Income Per Charge Hour
Net Income Per Charge HourSource: INSIDE Public Accounting
time provides. In the IPA survey this year, the number ranges from a low of $6 to a high of $128 of
net income generated by the firm for every hour charged. The graph below shows the distribution
among all non-Big 4 firms. The Best of the Best firms range from $20 to $117 and average $62. IPA
100 firms range from $19 - $104 and average $49.
Net Income Growth Among IPA Survey Participants
Firmwide net income continued to make slow and steady progress as firms in positive territory
outpaced firms with negative growth by a factor of 2-to-1, with 8.5% of firms showing no movement
at all. In total, firms experienced a 5.1% average organic net income growth rate. When including
the effects of mergers, overall firms grew net income by 6.3%.
But if you look at the median growth rate – the “center” number of the distribution – half of the firms
grew net income by 2.4% or less, which is somewhat lower than last year. Sustainable growth in net
income has become challenging, but this year – as was the case last year – saw significantly more
firms in positive territory than in negative territory.
Among the firms that reported a merger last year, eight out of nine (of those who provided
information on both organic income growth and “all” growth – including effects of the merger)
xii
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Distribution of Net Income Growth Rate - All FirmsFY 2011 to FY 2012
Source: INSIDE Public Accounting
Median = 2.4%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Distribution of Net Income Growth Rate - All Firms FY 2010 to FY 2011
Source: INSIDE Public Accounting
Median = 4.4%
reported the merger boosted net income. On average, these firms enjoyed income growth 11.5%
higher than all others as a result of their merger activity.
Excerpted from the full IPA National Benchmarking Report The 2013 IPA National Benchmarking Report / Copyright ©2013 The Platt Group / www.insidepublicaccounting.com
PARTNER COMPENSATION (continued)
Partners receive compensation credit for…
Meeting Charge Hour Budget
Excess Billable Hours
Goals/ Objectives
Met Mgt. Duties
Marketing Initiatives
Originating New Work
Realization Rate
Soft Skills
Teamwork / One Firm Efforts
Technical Skills
Training Mentoring Staff
FIRM SIZE (Net Revenues)
All Non-Big 4 67% 52% 67% 75% 62% 79% 59% 48% 55% 53% 58%
>$75 Million 88% 75% 88% 92% 88% 88% 88% 83% 79% 88% 92%
$50-$75 Million 78% 61% 94% 94% 83% 89% 67% 78% 89% 89% 94%
$30-$50 Million 83% 69% 89% 94% 71% 86% 80% 71% 77% 74% 78%
$20-$30 Million 83% 66% 78% 88% 73% 90% 73% 68% 73% 68% 78%
$15-$20 Million 73% 56% 85% 85% 76% 93% 71% 61% 68% 66% 63%
$10-$15 Million 74% 53% 76% 82% 73% 87% 62% 52% 58% 55% 67%
$5-$10 Million 52% 43% 61% 70% 57% 83% 51% 30% 47% 39% 50%
$3-$5 Million 63% 47% 36% 59% 39% 58% 43% 21% 29% 30% 25%
< $3 Million 30% 24% 24% 38% 24% 40% 22% 22% 22% 27% 21%
IPA Best of the Best 88% 88% 84% 88% 80% 96% 84% 72% 80% 72% 84%
REGIONAL DATA
Southeast 69% 50% 64% 73% 61% 78% 61% 53% 59% 57% 61%
Great Lakes 67% 58% 68% 78% 67% 82% 61% 47% 56% 51% 55%
Northeast 74% 50% 75% 81% 68% 84% 66% 50% 59% 58% 61%
Great Plains 66% 53% 69% 80% 69% 80% 59% 54% 59% 56% 61%
West 60% 50% 61% 68% 53% 72% 48% 38% 46% 46% 51%
Excerpted from the full IPA National Benchmarking Report The 2013 IPA National Benchmarking Report / Copyright ©2013 The Platt Group / www.insidepublicaccounting.com
EQUITY PARTNER HOURS
No. of Responses
Dollar Volume Managed by MP*
MP Charge Hours*
Equity Partner Charge Hours
Equity Partner Hours
Worked**
Equity Partner Percent Billable
Percentage Total Firm Charge Hours By Equity
Partners
Average Total Charge Hours Managed Per Equity Partner
FIRM SIZE (Net Revenues)
All Non-Big 4 426 $1,136,902 773 1,086 2,243 48.4% 14.0% 9,962
>$75 Million 24 $1,731,669 440 1,044 2,377 44.1% 8.7% 12,560
$50-$75 Million 18 $1,262,474 422 958 2,295 42.5% 7.4% 17,626
$30-$50 Million 34 $971,566 479 1,030 2,314 44.4% 9.1% 13,389
$20-$30 Million 40 $1,204,836 522 1,017 2,275 45.1% 10.0% 11,129
$15-$20 Million 36 $1,289,497 702 1,085 2,212 49.3% 12.0% 10,138
$10-$15 Million 81 $1,079,650 704 1,038 2,208 46.9% 12.1% 9,620
$5-$10 Million 83 $1,301,048 870 1,109 2,219 49.9% 13.8% 9,177
$3-$5 Million 59 $1,001,409 993 1,137 2,241 50.7% 15.8% 8,394
< $3 Million 51 $718,827 1,158 1,225 2,210 54.9% 27.4% 6,213
IPA Best of the Best 25 $2,167,965 712 1,119 2,234 50.5% 7.8% 16,597
REGIONAL DATA
Southeast 113 $1,131,147 764 1,082 2,220 49.0% 13.4% 10,319
Great Lakes 69 $992,618 758 1,073 2,281 47.0% 13.8% 9,312
Northeast 86 $1,310,507 796 1,138 2,249 50.7% 15.2% 9,974
Great Plains 62 $1,176,969 758 1,046 2,270 45.9% 12.0% 10,447
West 96 $1,074,244 783 1,080 2,221 48.5% 14.7% 9,719
*MP = Managing Partner / CEO. Does not include a non-traditional CEO. **A change in definition this year: Hours worked excludes all paid time off.
xiv
$210,997
$217,544
$230,908 $227,435
$233,117 $237,962
$243,089 $242,937
2006 2007 2008 2009 2010 2011 2012 2013
Net Revenue per Professional - IPA 100Source: INSIDE Public Accounting
Right-Sizing Continues To Push Revenue Per Professional In The Right Direction, Poised For Additional Growth Next Year
Net revenue per professional among the IPA 100 is generally the same as 2012, at $242,937 per
professional. That number is diluted slightly by a 10% increase in professional staff numbers,
rebuilding capacity for an expected increase in demand.
However, a look back over the past nine years shows a steady increase in net revenues per
professional despite the downturn in the economy.
The following graph highlights that continuous right-sizing of professional staff over the last few
years, based on market conditions, has produced steadily increasing revenue per professional – a
clear indication of effective staffing models among the IPA 100.
Association Membership: Among The IPA 100…
The vast majority of the IPA 100 recognize the benefits of membership in an accounting association
– whether for marketing purposes, taking care of client needs internationally, practice management
advice and assistance, providing services and resources to smaller firms. This year, the IPA 100 are represented in 22 international CPA associations, with each firm seeking
out the strategic advantages of belonging to the association it is a member of. Mergers among the
IPA 100 not only are leading to consolidation in the profession, but ultimately also lead to attrition
among the ranks of associations.
xv
IPA Best Of The Best Comparison Of Profit Indicators
2013 BEST OF THE BEST COMPARISON OF PROFIT INDICATORS
Source: The 2013 INSIDE Public Accounting Annual Survey and Analysis of Firms
THE BEST OF THE BEST NON-NATIONAL FIRMS 100 LARGEST AVERAGE MEDIAN AVERAGE MEDIAN FIRMS
Growth & Practice Mix Revenue Growth 7.0% 7.0% 2.8% 2.4% 5.3% Income Growth 9.6% 10.6% 4.9% 4.5% 7.5% Net Income as Percentage of Revenue 33.9% 35.1% 30.6% 29.6% 29.1% Realization Percentage 93.8% 96.0% 91.4% 94.0% 92.0% Attest Revenue Percentage 36.6% 36.5% 44.0% 43.7% 42.8% Tax Revenue Percentage 42.% 38.6% 40.5% 39.1% 35.3% Other / Nontraditional Revenue Percentage 21.2% 24.9% 15.5% 17.2% 21.9% Revenue & Income Net Income per Equity Partner $852,360 $831,770 $440,948 $388,190 $600,730 Net Fee per Charge Hour $187.35 $180.75 $153.98 $150.79 $171.91 Revenue per Equity Partner $2,582,371 $2,450,553 $1,524,243 $1,379,507 $2,094,897 Revenue per Professional $264,836 $258,233 $213,990 $209,896 $235,987 Revenue per Employee $216,828 $212,835 $171,020 $167,638 $189,227 Average Partner Compensation (Equity) $787,917 $705,000 $388,362 $347,167 $533,794 Average Partner Compensation (Non-Equity) $280,565 $269,579 $199,490 $184,000 $236,056 Average Managing Partner’s Compensation $1,370,832 $1,137,718 $566,714 $434,469 $1,072,928 Partner Information Average Partner Age 50.0 50.0 51.9 52.0 51.1 Professionals per Equity Partner 9.9 9.7 7.2 6.5 9.0 Managing Partner’s Charge Hours 645 520 736 704 392 Charge Hours per Equity Partner 1,060 1,111 1,058 1,058 1,013 Work Hours per Equity Partner 2,465 2,469 2,432 2,433 2,489 Percentage of Chg. Hrs. by Equity Partners 8.1% 8.2% 13.3% 11.4% 9.8%
Billing Rate Information Average Partner Rate $395 $400 $316 $305 $372 Average Senior Rate $183 $180 $157 $154 $177 Projected Rate Increase 4.2% 4.0% 3.5% 3.0% 3.9% Selected Staff Issues Average Turnover Percentage 15.1% 15.6% 13.1% 12.3% 15.0% Average Years with Firm per Professional 4.9 4.8 6.1 5.6 5.7 Professionals per Administrative Staff 6.6 4.9 5.1 4.4 5.5
Editorial Note: Best of the Best columns include only the top 25-scoring Best of the Best Firms. The 100 largest firms column exclude the Big 4 and national firms and may include firms not listed in the IPA 100.
Copyright ©2013 The Platt Group / INSIDE Public Accounting / (317) 733-1920 / www.insidepublicaccounting.com
FINANCIAL & OPERATIONAL PERFORMANCE REPORT CARD
INSIDE Public Accounting is offering firm leaders a new tool to
quickly and easily compare their firms with others across the nation.
The IPA Financial / Operational Performance Report Card ranks 22
metrics to help firms identify areas for needed improvement.
COMPARE Net Revenue – Operational – Net Income – Compensation Metrics
Each of the metrics provides you with a quick and easy snapshot of your overall
rankings. Broken out by Top Quartile, Middle and Bottom Quartile, these rankings
provide you with a visual snapshot of your firms overall performance in specific
areas.*
The report card is also customized to firm size based on your firm’s revenues (IPA
Top 100 firms - $30-million and above, $10 million-to $30 million, $5 million to-$10
million and $2 million-to $5 million.)
Benchmarking is a systematic process for identifying and implementing best
practices. Knowledge gained through the benchmarking process can be adapted
and incorporated into your firm’s processes. Therefore best practice benchmarking
involves the whole process of identifying, capturing, analyzing, and implementing
best practices.
*Your firm must have participated in the IPA annual survey in order for IPA to provide you the needed data (metrics).
More detailed findings are available in INSIDE Public Accounting’s National Benchmarking Report,
considered the gold standard for accounting firm benchmarking since 1990.
Contact our office for more details or to order your custom Report Card.
(317) 733-1920 survey@plattgroupllc.com
ARMANINO
Averages All
Firms
Averages All
$5M-$10M
Firms
Averages '13
Best of the Best
NET REVENUE Your Firm SAMPLE DATA SAMPLE DATA SAMPLE DATA
Net Revenue Growth Rate (Organic Only) 2.8% 195 of 402 2.8% 29 of 70 2.3% 7.0%
Net Revenue per Charge Hour $136.30 247 of 378 $153.70 45 of 70 $153.61 $187.35
Net Revenue per Equity Partner $2,319,332 49 of 398 $1,530,386 5 of 70 $1,478,580 $2,582,371
Net Revenue per Professional $194,629 243 of 397 $214,583 43 of 70 $212,704 $264,836
Net Revenue per Employee $164,686 210 of 397 $171,173 38 of 70 $172,844 $216,828
Net Revenue per Square Foot $422 264 of 374 $541 56 of 68 $551 $749
OPERATIONS SAMPLE DATA SAMPLE DATA SAMPLE DATA
Firmwide Utilization 68.4% 130 of 364 64.8% 23 of 66 64.8% 1,450
Charge Hours per Professional 1,473 157 of 377 1,426 28 of 70 1,418
Percentage Billable for Professional Staff 65.2% 156 of 374 64.0% 31 of 70 63.6% 64.1%
Percentage of All Charge Hours by Professional Staff 79.3% 241 of 376 80.2% 44 of 70 80.1% 87.3%
Personnel Costs as Percentage of Revenue 48.2% 254 of 383 45.3% 49 of 70 45.4% 43.9%
Professional Staff : Administrative Staff Ratio 5.5 110 of 384 5.1 23 of 70 5.2 6.6
Professional Staff : Equity Partner Ratio 11.9 36 of 395 7.2 5 of 70 7.1 9.9
A/R Management - Days of Production Locked Up 42.2 47 of 399 58.6 18 of 70 55.3 46.8
WIP Management - Days of Production Locked Up 15.6 50 of 399 26.4 16 of 70 27.0 22.1
NET INCOME SAMPLE DATA SAMPLE DATA SAMPLE DATA
Net Income as Percentage of Revenue 31.5% 150 of 368 30.4% 30 of 66 31.1% 33.9%
Net Income Growth Rate (Organic Only) 4.0% 189 of 366 5.0% 30 of 66 3.9% 9.6%
Net Income per Charge Hour $62.33 35 of 369 $49.50 5 of 66 $47.20 $61.55
Net Income per Equity Partner $730,176 35 of 369 $442,484 5 of 66 $433,721 $852,360
COMPENSATION SAMPLE DATA SAMPLE DATA SAMPLE DATA
Average Equity Partner Compensation $723,600 21 of 358 $388,942 3 of 67 $389,683 $787,917
Average Non-Equity Partner Compensation $111,000 211 of 358 $256,000 22 of 67 $140,000 $306,000
Average Professional Staff Salary $76,600 155 of 380 $75,048 31 of 70 $76,918 $87,739
KEY =
Ranking Among
$5M-$10M Firms
Prepared for
Your Firm Name Here
Source: 2012 INSIDE Public Accounting National Benchmarking Report
MIDDLE 50% of
Responses
BOTTOM 25% of
Responses
TOP 25% of
Responses
*Total response numbers will change due to the fact that not all respondents provided the requested data, and data excludes the Big 4. More than 500 firms participated in the 2013 IPA
Annual Survey and Analysis of Firms.
Ranking Among All
Firm Responses*
THE IPA 2013 FINANCIAL AND OPERATIONAL REPORT CARD
The Platt Group LLC / INSIDE Public Accounting
4000 W. 106th St., Suite 125-197, Carmel, IN 46032
Phone: (317) 733-1920 Fax: (317) 663-1030
Web: www.insidepublicaccounting.com
SAMPLE DATA
xvii
Who’s Doing The Work? What Does The Pyramid Structure Look Like Today?
It’s always helpful to check in every few years to determine if the pyramid staffing structure is still in
place and to take a snapshot of the shape of that pyramid.
The table below identifies the percentage of total staff that each staffing level represents, and also
the percentage of total charge hours that each staff level delivers.
2013 PROFESSIONAL STAFFING STRUCTURE Source: The 2013 INSIDE Public Accounting Annual Survey and Analysis of Firms
Percentage of
Total Staff Percentage of Total Hours
Average Bill Rate
Average Charge Hours
Average Work Hours
IPA 100 Equity Partners 12.1% 8.6% $391 1,017 2,329
Non-Eq. Partners 6.2% 4.7% $356 1,052 2,220 9-10 Years 21.6% 20.0% $256 1,318 2,069 6-8 Years 18.0% 19.6% $187 1,513 2,127 3-5 Years 17.0% 19.4% $154 1,591 2,156 0-2 Years 18.2% 18.7% $127 1,415 2,010
IPA 200 Equity Partners 15.4% 11.2% $340 1,037 2,256
Non-Eq. Partners 6.4% 4.7% $318 1,022 2,107 9-10 Years 19.6% 18.8% $222 1,352 2,089 6-8 Years 16.6% 18.5% $173 1,541 2,071 3-5 Years 16.6% 17.9% $143 1,528 1,988 0-2 Years 17.2% 17.0% $120 1,403 1,931
$5 - $14 Million Equity Partners 16.7% 13.1% $303 1,092 2,212
Non-Eq. Partners 8.0% 6.6% $280 1,188 2,152 9-10 Years 20.3% 19.4% $202 1,349 2,064 6-8 Years 17.3% 18.4% $159 1,506 2,041 3-5 Years 16.5% 17.4% $133 1,515 2,027 0-2 Years 14.9% 15.2% $110 1,434 2,005
< $5 Million Equity Partners 24.7% 21.3% $258 1,185 2,243
Non-Eq. Partners 11.6% 9.7% $246 1,137 1,901 9-10 Years 20.3% 19.2% $182 1,381 1,997 6-8 Years 18.8% 19.5% $142 1,428 1,958 3-5 Years 19.7% 21.2% $121 1,493 1,972 0-2 Years 16.6% 16.8% $97 1,397 1,945
Editorial Note: Staff = Professional Staff and are averages.
Copyright ©2013 The Platt Group / INSIDE Public Accounting / (317) 733-1920 / www.insidepublicaccounting.com
xviii
2013 Regional Professional Staffing Trends
Staff Are On The Move Once Again
Staff turnover is costly. While it may appear as if turnover is decreasing, the staff wars are actually
starting to heat up again. To understand turnover, it’s important to dive into the numbers and
differentiate between voluntary (initiated by staff) and involuntary (initiated by firm) turnover.
Overall, turnover for the past three years was 15.5% in 2010, 14.9% in 2011 and 14.8% in 2012. At
first glance, it might appear as if fewer professionals are leaving. However, a deeper analysis
indicates that the ratio of voluntary to involuntary turnover increased as follows…
WEST
GREAT PLAINS
2013 PROFESSIONAL STAFFING TRENDS BY REGION Source: The 2013 INSIDE Public Accounting Annual Survey and Analysis of Firms
Staff Turnover Turnover Ratio* Staff Tenure Staff Salary
NORTHEAST IPA 100 13.1% 2.2 6.0 $88,878 IPA 200 14.3% 2.4 5.9 $91,381 <$14 Million 11.2% 3.1 6.6 $84,050 <$5 Million 7.8% 1.9 8.7 $67,485
SOUTHEAST IPA 100 15.1% 2.6 5.2 $86,365 IPA 200 14.1% 3.1 6.1 $75,537 <$14 Million 11.9% 2.1 6.2 $75,223 <$5 Million 12.8% 1.6 8.6 $62,186
GREAT LAKES IPA 100 14.9% 2.8 6.4 $72,957 IPA 200 11.4% 2.3 6.4 $73,169 <$14 Million 10.5% 3.9 8.2 $72,308 <$5 Million 10.2% 3.7 7.5 $64,429
GREAT PLAINS IPA 100 15.1% 3.0 5.0 $71,387 IPA 200 14.3% 4.3 6.3 $84,199 <$14 Million 15.9% 2.3 5.5 $71,662 <$5 Million 9.3% 5.4 6.4 $64,142
WEST IPA 100 16.1% 3.3 4.9 $85,994 IPA 200 13.8% 5.0 6.0 $79,385 <$14 Million 13.8% 2.3 4.9 $75,143 <$5 Million 16.3% 3.4 6.0 $73,172 Editorial Note: All reference to staff = Professional Staff and are averages. *Number of professional staff who left voluntarily for the
number of professional staff that were let go ‘involuntarily.’
Copyright ©2013 The Platt Group / INSIDE Public Accounting / (317) 733-1920 / www.insidepublicaccounting.com
xix
…in 2010, 1.9 staff voluntarily left for every 1.0 staff fired by the firm.
…in 2011, 3.0 staff voluntarily left for every 1.0 staff fired by the firm.
…in 2012, 2.7 staff voluntarily left for every 1.0 staff fired by the firm.
This indicates that staff are initiating more moves out of firms, presumably staff that the firms do not
want to lose. Most likely, there are numerous reasons for the increase in the ratio, and each firm
should review its own reasons for the turnover. Some may be obvious though: …in 2010, firms continued to “get lean” by purging staff to match declining work levels brought on
by the economic downturn.
…in 2011 and 2012, firms employed fewer under-performers due to prior purging. Plus, the
economy experienced a slight upturn.
…in 2011 and 2012, as the economy began an upswing, clients sought out more services and firms
increased the tempo of their recruiting efforts. The result is more outside opportunities for staff to
pursue.
At What Point Is Professional Management Warranted Within Firms?
The 2013 IPA 200 firms face management issues and
organizational needs that often require them to think more like
their IPA 100 peers to prepare for continued growth and
development.
Partner accountability becomes a bigger issue as firms migrate
from a partnership culture to a more corporate mindset. For
instance, 10% of IPA 200 firms report terminating an equity partner
last year – below the 16% of IPA 100 firms, but above the 6% of all
other participating firms that are below the $14 million mark.
The profession continues to embrace professional managerial staff to run and manage accounting
firms. A full 30% of the IPA 200 embrace non-CPAs as equity owners, compared with two-thirds of
the IPA 100, providing rich, rewarding careers for non-CPAs inside public accounting firms.
The table below highlights the percentage of firms employing professional management positions
that oversee operations, management, marketing, human resources, information technology,
business development, accounting and staff training.
xx
The Platt Group
4000 W. 106th St., Suite 125-197, Carmel, IN 46032-7730
Phone: (317) 733-1920 Fax: (317) 663-1030
Web: www.insidepublicaccounting.com
E-mail: survey@plattgroupllc.com
INSIDE PUBLIC ACCOUNTING – (ISSN 0897-3482)
2013 IPA PROFESSIONAL FIRM MANAGEMENT PROFILE Source: The 2013 INSIDE Public Accounting Annual Survey and Analysis of Firms
Administrative
Position
% of IPA 100 Firms
Employing the Position
% of IPA 200 Firms
Employing the Position
% of $5 Million to $14 Million Firms
Employing the Position
% of <$5 Million Firms
Employing the Position
% of IPA Best of the Best
Firms Employing the
Position
Human Resource Director 93% 76% 39% 5% 80%
Marketing Director 86% 59% 37% 10% 68%
Information Technology Director 73% 78% 68% 21% 92%
Chief Financial Officer 67% 25% 14% 3% 52%
Controller 66% 54% 32% 11% 56%
Firm Administrator 49% 60% 62% 51% 64%
Training and Learning Director 43% 20% 5% 1% 40%
Business Development Director 33% 21% 14% 8% 36%
Chief Information Officer 29% 9% 2% 0% 4%
Non-Partner CEO 11% 10% 7% 1% 4%
Copyright ©2013 The Platt Group / INSIDE Public Accounting / (317) 733-1920 / www.insidepublicaccounting.com
Excerpted from the full IPA National Benchmarking Report The 2013 IPA National Benchmarking Report / Copyright ©2013 The Platt Group / www.insidepublicaccounting.com
MANAGING PARTNER ISSUES
No. of Responses
Average Age of MP/CEO
Percentage of MP/CEOs Over 55
Percentage of Firms Reporting Term Limits on
MP/CEO
Percentage of Firms Reporting
Naming a New MP/CEO in the Past Year
FIRM SIZE (Net Revenues)
All Non-Big 4 424 55.1 50% 20% 9%
>$75 Million 25 57.1 64% 28% 12%
$50-$75 Million 17 58.2 59% 12% 24%
$30-$50 Million 36 55.3 53% 44% 11%
$20-$30 Million 39 54.4 54% 30% 17%
$15-$20 Million 39 54.6 54% 28% 10%
$10-$15 Million 84 54.3 42% 24% 7%
$5-$10 Million 84 55.7 50% 17% 6%
$3-$5 Million 57 55.5 51% 3% 6%
< $3 Million 43 53.7 47% 2% 5%
IPA Best of the Best 24 56.0 54% 24% 8%
REGIONAL DATA
Southeast 107 55.1 49% 24% 8%
Great Lakes 71 55.7 51% 17% 12%
Northeast 81 56.0 58% 21% 11%
Great Plains 64 54.6 45% 20% 12%
West 101 54.2 49% 17% 6%
IT IS A VIOLATION OF FEDERAL COPYRIGHT LAW TO REPRODUCE ALL OR PART OF THIS PUBLICATION WITHOUT CONSENT. COPYRIGHT ©2012 THE PLATT GROUP/INSIDE PUBLIC ACCOUNTING. ALL RIG RESERVED.
TThhee 22001133 IIPPAA NNaattiioonnaall BBeenncchhmmaarrkkiinngg RReeppoorrtt
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Phone Email
Name Badge Dietary Restrictions
Alt. Contact_ Alt. Contact Email_ Firm Size < $10M $10M-$20M $20M-$40M $40M-$75M $75M-$150M >$150M
PLEASE SELECT YOUR PRIME SYMPOSIUM PARTICIPATION OPTIONS
Each attendee must complete a registration form. Payment for more than one firm member may be made on the 1st attendee’s payment option.
1st attendee for the Nov. 4-6 Workshops and PRIME 1 @ $1,895 $________________
No. of additional attendees from same firm ______ @ $1,595 $________________
1st attendee for the Nov. 5-6 PRIME Symposium 1 @ $1,495 $________________
No. of additional attendees from same firm ______ @ $1,295 $________________
No. of attendees for the Nov. 4 Workshops ______ @ $695 $________________
TOTAL REGISTRATION FEES $______________
PLEASE SELECT A PAYMENT OPTION Check Enclosed Charge my Visa / MasterCard (Sorry, we do not accept AMEX)
CREDIT CARD PAYMENT
Card # – – – Exp. Date /
CVV Code Name on Card
Billing Address
City State Zip
Please make checks payable to: The Platt Consulting Group
4000 West 106th St., Ste. 125-197, Carmel, IN 46032-7730
P (317) 733-1920 F (317) 663-1030 EMAIL: prime@plattgroupllc.com WEB: www.primesymposium.com
Guest Registration Form
Symposium Package Fee: $1,895 first attendee, $1,595 additional attendee from the same firm.
Symposium Only Fee: $1,495 first attendee,
$1,295 additional attendee from the same firm.
Workshop Only Fee: $695 per guest.
Each registrant must complete the registration form.
November 4-6, 2013
Indianapolis
NOV. 4-5-6 PRIME SYMPOSIUM PACKAGE (Includes Workshops and Prime) Save $300
NOV. 5-6 PRIME SYMPOSIUM ONLY
NOV. 5-6 PRIME WORKSHOPS ONLY
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