Artificial intelligence is putting accounting firm leaders on alert for workers well-versed in using and managing the new tools as the industry invests heavily in modernizing workflows.
Firms should be staying attuned to the talent market and updating their salary structures accordingly to both attract early-career workers and retain staff looking to climb the ranks, according to Dominic Piscopo, founder of compensation data analytics firm Big 4 Transparency. They should also be having transparent conversations with their workers so compensation isn’t a “black box.”
“Having transparency in those models and being willing to talk about it with people—not just have this very kind of cold process where a number is thrown out—can make all the difference, even if the number is exactly the same,” Piscopo told Bloomberg Tax.
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Big Four accounting firms—
In this week’s Talking Tax, Piscopo sat down with Bloomberg Tax reporter Jorja Siemons to discuss how firms and workers alike can navigate the current talent market.
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This transcript was produced by Bloomberg Law Automation.
TRANSCRIPT:
David Schultz:
From Washington, I’m David Schultz, and this is Talking Tax.
If you’re a CPA, do you ever wonder what other CPAs are making? If you’re high up in a CPA firm, do you ever wonder if you’re paying your employees too much or too little? Today’s guest runs an online database that has the info that could scratch this itch. Dominic Piscopo is the founder of Big 4 Transparency, a crowdsourced compendium of salaries throughout the accounting industry. And with all the data he’s compiled, Piscopo says he’s learned some interesting trends about where the industry is at and where it may be heading. He spoke to Bloomberg Tax reporter Jorja Siemons about how he’s already seen the effect of AI on salaries. And Piscopo started off by talking about why it’s not the best time right now to be starting off your career at a big CPA firm.
Dominic Piscopo:
Yeah, so I think we’re kind of in the middle of another shift that seems to be a very, very recurring case in the accounting space where we see the trends in the talent markets almost reversing and changing every couple of years. So in 2024, I had produced an analysis for the full year of data collected in 2024 in tax and audit specifically, and we saw that raises were actually very, very disproportionately pointed towards the lower levels. So intern salaries, staff salaries had gone up close to 4% year over year. And in 2024, senior salaries had actually gone up much, much less. So we had seen manager salaries go up somewhere around 1.5% and senior manager salaries had actually only gone up around 1% that year. And now through our involvement in the kind of talent pool that Big 4 Transparency operates, which gets involved in the recruiting space, we’re seeing a little bit of a leading indicator of that trend potentially reversing.
Jorja Siemons:
Do you have any sense as to why this is occurring?
Dominic Piscopo:
I believe a lot of it does have to do with AI as well as offshoring. Obviously, AI is the trendier topic that people are all pointing towards. But I think just a shift in how some of the work is done in public accounting, where it is essentially reshaping the pyramid of talent that is needed within an accounting firm. So the base of that pyramid being interns and maybe staff accountant level people who are actually executing a lot of the work, right? That work is becoming less and less laborious. We’re finding a lot of very junior people who are graduating, who are actually having trouble finding their first job or someone who maybe a year or two in was unfortunately part of a reduction in force at one of the large firms, and they’re finding it very difficult to bounce back and find their next role. If they’re looking to stay within public accounting, where those technologies don’t come into play as much is in the client relationship in the management of files. And if anything, I would say that the workload on that front has done nothing but increase.
Jorja Siemons:
Right. So entry level staff in a CPA firm are able to perhaps execute more or start more client work because of AI. But ultimately that work needs to get checked. Those relationships need to be maintained, etc. by managers who are competent in reviewing AI work, right? Which I can imagine is a new skill for many CPA firm managers having to think about AI and manage AI.
Dominic Piscopo:
Yeah. I mean, it’s a new skill somewhat. We’ve been through cycles of this before, right? So if it used to maybe be the staff who doesn’t quite get it, they used to have to review that. And then with offshoring, there was like a kind of different set of issues that would be regular when working with offshore talent. There were certain things that they maybe didn’t understand quite the same. And so you start to find the common trends of what really needs review. So you learn to change the way that you’re reviewing to accommodate for that. And so I think it’s another shift of you’re just kind of changing to accommodate to review the work generated by some of these AI tools.
Jorja Siemons:
When there was a lot of demand for entry level jobs, which perhaps is still the case in some firms, you saw talent-related efforts like increasing starting salaries or learning and development programs to sort of attract those college grads and get them in the door. If firms are trying to retain more managers, what tools are at their disposal to help achieve that goal?
Dominic Piscopo:
There’s a lot of things like one of the ones, obviously, where Big 4 Transparency gets involved and where I’m most well versed, it is to stay on top of the industry trends when it comes to compensation. Now, that’s obviously just one factor, but it’s a factor that really shouldn’t be that hard to control for realistically. So it is that sometimes firms are not staying on top of updating their salary bands as often as they should, or they’re not staying attuned to the market quite enough to react in time to those shifts. And so sometimes, inadvertently, firms basically create an incentive structure where it’s like if you want to be paid competitively, you almost have to leave and join another firm so that you can be brought in closer to the upper end of the band. So while that is a signal of demand, it is also sometimes a symptom of a firm not doing enough diligence when it comes to compensation benchmarking.
But beyond that, there are some very interesting kind of new incentives that are emerging in the market, particularly with private equity backed firms, where we’re starting to see like equity or phantom equity, profit sharing, things like that being granted at the lower levels. And so, you know, as tech has learned a very long time ago, if you have an equity package where you’re still vesting at an old valuation and the company is now worth two times or three times what that valuation was, that becomes a lot harder to walk away from. And so I believe that equity is going to only continue to be, you know, a part of the incentive structure as we’re looking to retain people for longer.
Jorja Siemons:
We’ve talked a lot about how this talent crunch in the manager space is impacting CPA firms. But I want to turn our focus around and think about, you know, accountants in this market right now. How can they, you know, leverage on this trend or what should they be thinking about as they consider this demand for managers and the compensation data trends you’ve discussed?
Dominic Piscopo:
Yeah, well, I think if you are in one of those roles that is in excessively high demand, I would say, you know, don’t rush the job search process because you may underestimate what you might be worth in the market or even when it comes to certain concessions. Like, again, this is fully in office, but you really appreciate a remote environment. Sometimes you may actually kind of hold a little bit more power than you think you do. And so definitely negotiating on that front and particularly if you’re in a low or medium cost of labor market. So, you know, secondary tertiary cities, you should be exploring both local opportunities and opportunities that are maybe hiring remotely. You know, you should definitely take some time and go and actually really look at what’s out there for you because there are fantastic opportunities, particularly, I would say right now at the manager and up level.
Jorja Siemons:
I know that you also speak with some folks, Dom, who are looking for a job or leaving a job or, you know, in the market and asking them about what, you know, they value as a good workplace or what aspects contribute to that culture. Can you talk a little bit just anecdotally about what people have told you about what contributes to that good environment or what they want in the next one?
Dominic Piscopo:
Yeah, there are a ton of things. One of the one of the trends that I would say is starting to become more common is tech infrastructure. So like I actually just had a senior manager that I’m helping leave one of the top 10 firms. So I wouldn’t have expected this to be a problem where she was basically saying it feels like they’re constantly trying out new tools and like platforms and things like that, where it almost seems like they haven’t done their diligence. And so sometimes people will leave seeking stability.
One of the most common ones for sure is work life balance. People often will find themselves reaching a level of salary where they feel like their needs are being met and they don’t have that constant itch for more, more, more anymore. I find that very often sort of around the senior manager and director levels. People kind of reach this point where, you know, I don’t have the data in front of me right now, but I believe kind of some of those levels, they’re pushing up against almost 50 hours a week on average for the full year. And the marginal utility of that additional twenty thousand dollars that they might be getting paid versus other opportunities in market may no longer be worth it for them to work the extra 10 hours a week on average. And so sometimes people are just leaving because they want to change their lifestyles around.
And then again, a very common one, and this is more common at the more junior levels, kind of ambitious seniors and managers. It is finding that these growth opportunities are not met. In my own experience at Big Four, I had someone leave the firm who was beloved by all and like she was exceptionally good at what she did, but she had requested an internal transfer into indirect tax. And the firm was just kind of saying, like, hey, you know, we’re more short staffed in the current area of tax that you are versus the indirect tax team. Like they’re really just sitting on that request. And so very obviously, she just left for a new indirect tax role. And so it is supporting people in their own individual journeys.
Jorja Siemons:
And I think this is where it connects to the pricing models. You know, when I’ve spoken with people about the move away from the billable hour, you know, there’s been a discussion about how that impacts workplace culture and this idea that, you know, if we move towards more efficiency and that is valued in an AI-forward organization, that leads to less billable hours, perhaps. And so I wonder, too, how these conversations go back to a larger pricing model conversation as well.
Dominic Piscopo: For people who feel like their hard work is just going to be met with more taskings and there aren’t rewards that are aligned exactly with that, then that can be very difficult to justify staying right where it’s like, OK, well, I’m a top performer and I’m not being recognized via compensation for being a top performer and I don’t get to work any less because I’m so efficient at what I do, then that’s not great. Right. And so anytime a firm is operating strictly on the billable hour and there’s no value billing or no value pricing, then I certainly agree that that would also be a reason someone might go seek an alternative firm that has adopted that alternative pricing model because they want to be pushed to have that incentive to learn the software, to be innovative, to learn better ways to do things.
Personally, in my own experience, like one of the things that I rolled my eyes at the most was the whole mentality around SALY. Right. The same as last year. Did you check last year? And it’s like, well, yeah, but the process that was adopted last year was really not good. And it may take me an extra hour this year, but it’ll save us 10 hours every year going forward. And the partner who maybe is too shortsighted to see that and just wants to focus on the budget for this year might say, don’t do that, don’t do the improvement. Right. And people feel that in a big way. It’s very discouraging.
Jorja Siemons:
Looking ahead into the future, how can firms leverage talent and compensation strategies to acquire the best talent they can and also retain talent so that that talent can grow through the ranks of the organization?
Dominic Piscopo:
Really, it’s just knowledge is power, is understand exactly where the market is at. And then one of the things that I think is very underrated that I talk about a lot in managing compensation is being transparent in how that is being done and how the discussions are going to happen. So when compensation is a little bit of a black box and you’re just told this is your number because this is your number and you’re not happy with that number, it just feels like the only thing to do feels like complaining and feels like a conflict. Whereas if there can be that level of openness of like, hey, you know, we think you’re a really strong performer. We’re not the Big Four. Let’s say we can’t necessarily afford to pay you at the tippy top of the market, but we think that we are providing you a good lifestyle. We think we’re providing you good learning opportunities. And we’re actually stretching our budget a little bit. You know, we’re paying you somewhere between the 50th and 75th percentile for what we’re doing. We’re very aware of this. We’re a little bit ahead of kind of the average of what you would be looking at in the market. That feels very different for what might be the same number than just being told this is your number.
And on the employee perspective as well, like when you’re informed and you can bring forward that discussion, it feels a lot less like you’re just throwing a tantrum over demanding more just in general because you always want more versus saying like, hey, I’m actually like realizing I’m not even being paid the median for my role. I feel like I’m a really strong performer. If you disagree with that, I would love for that to be a discussion. But if you do agree with that, I would like to know like why I’m not being compensated accordingly. So I think that having transparency in those models and being willing to talk about it with people, not just have this very kind of cold process where a number is thrown out, can make all the difference, even if the number is exactly the same.
David Schultz:
That was Dominic Piscopo, the founder of Big 4 Transparency, speaking with Jorja Siemons. And that’s it for today’s podcast. You can find up to the minute news on the latest tax and accounting developments at our website, news.bloombergtax.com. That website, once again, is news.bloombergtax.com.
Today’s episode is produced by myself, David Schultz, and our editor Amelia Gruber. From Washington, I’m David Schultz. Thanks for listening.
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