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How Would Salary Transparency Go Over at Accounting Firms?

Posted on by Caleb Newquist

In case you're new round these parts, compensation is a popular topic of conversation.

What we've managed to do is to give people a place where they can talk openly about their pay, whether they think it's fair and to stay informed about what other jobs offer.

But what if your employer did that? I stumbled across this old Fast Company post about a startup called Buffer that discloses all its salaries and the formulas behind them:

[T]he formula is composed of job types, seniority, experience, location, and equity. That translates into figures: The results, then, are totally open: CEO Joel Gascoigne makes $158,800, [CMO Leo] Widrich makes $146,800, CTO Sunil Sadasivan makes $137,600. 

Okay, first of all, this would be possible at an accounting firm. But why would a company want to do this? Buffer says that it discloses all this info because it "breeds trust amongst all people involved" which, okay, maybe, but I think this reasoning is far more interesting:

"For certain areas, companies operate in a vacuum, without any feedback or discussion," Widrich says. "[By] sharing with the whole world how we compensate our team members, we're getting an incredible amount of feedback from others, that helps us get to the next level, improve the formula and do an even better job compensating our team in a fair and beneficial way."

Some firms, to an extent, have tried to do this. We covered PwC's change to its comp structure several years ago and have kept up with KPMG's Early Career Investment Bonus Program but I can't recall anything that comes close to the universal compensation disclosure that invites meticulous feedback like what's being described at Buffer. It's pretty hard, actually, to imagine having access to the salaries, bonuses and other compensation data for everyone in your firm. Would you want that?

On the surface, it might sound like a universally horrible idea, what with the mutinies and all. But, at the very least, it would root out pay gaps between men and women and maybe even minorities. And it could help explain why recruits with master's degrees are paid virtually the same as those without them. As a master's degree holder, that always bugged the shit out of me.

And I have no doubt it would force a firm to get more serious about ensuring that everyone is adequately compensated for their education and skills, but would knowing what your co-workers earn really cause you to trust them more? Would it make you more honest and productive (another claim Buffer makes)?

Don't worry, I haven't lost my marbles. It'll be a chilly day in hell when an accounting firm discloses the salaries for all its employees and partners. But maybe some burgeoning firm that's eager to challenge people on how they think about compensation would give this a shot. If you started a firm, would you consider it? If so, how do you think would go over? If you were an employee, would you want that level of transparency? Is there anything that firms can actually do to make compensation more transparent? Discuss.

Why This Startup Made Their Salaries Radically Transparent [FC]

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Three Signs That It Might Be Time to Get Out of Public Accounting

Busy season is rounding the corner and, if you look carefully, you might be able to see the light at the end of the tunnel. Squint. No I swear, it’s there.

My posts this week will shift from social media to the potential job market. As a public accountant, you should always be cognizant of the fact that you have the ability to continuously develop your strengths and mold your career path. Want to pursue of a career in hedge funds? Network within your firm to be staffed on the right engagements. Need to add tax experience to your resume? Seek out a rotation.


Here are three signs that you should get you thinking about exploring your options.

1. You’ve got your CPA – This might go without saying, but many people enter the public accounting industry with the “two years and done” mentality. Pass the CPA, earn some experience stripes, and get the *$@% out. There’s nothing wrong with this, but don’t expect to $100K jobs to be jumping into your lap. The average salary bump for younger staff from public to the private sector can range from 5-10%, usually topping out around 15%. If this isn’t enough of a bump to seriously consider a private job, don’t lose sight of the quality of life improvement a new job can bring. No, not the smoke and mirrors your firm is promising you. The real deal.

2. Someone you know is interviewing – Believe it or not, the job market is actually improving. The hiring freezes on many financial firms is now limited largely to supporting roles (i.e. HR folks like myself). Hedge and private equity funds are picking up their hiring as the markets begin to thaw. Recruiters are not wasting their time with interviewing individuals for the sole purpose of interviewing. So take note next time your senior staff member has three doctor appointments in a week; perhaps you should be “coming down with a nasty bug,” too.

3. Recruiters call – and you listen – Speaking about recruiters, be prepared for an onslaught of calls. Their timing is no coincidence. The private sector has been shuffling around over the last few months (remember when your client contact suddenly went MIA?), and as the cycle goes, the newly opened private jobs will inevitably be filled by auditors and tax accountants from public. Listen to the cold, scripted calls; be open to a pay increase and better work hours; reclaim your weekends. It can’t hurt to listen to the (substantiated) claims that you’re undervalued in today’s market.

Newsflash: you are grossly undervalued.

Celebrate the New Year with Accounting Salaries Charted by Company Type, Role, Service Line and More

We present the following charts for your enjoyment, amusement, and/or bewilderment.

Credentials for Accountants: Certified Management Accountant

Last week we kicked off our certification series by looking at the CFE for those of you interested in becoming numbers sleuths that also have the figurative iron-clad stones that Sam Antar insists are imperative for any CFE.

This week we look at the Certified Management Accountant (“CMA”) credential and while it’s probably not as sexy as the CFE, a lot of you may want to consider the CMA if you see yourself spending a good portion of your career working as an in-house accountant or finance pro.


The credential is administered by the Institute of Management Accountants whose website states that “85% owork inside organizations, where expertise in decision support, planning, and control over value-adding operations are crucial elements of operational success,” and boasts 60,000 members worldwide.

Here’s the rundown on the CMA:

Education Requirement
You can meet the education requirement by verifying that you have a bachelor’s degree from an accredited college or university or that you have a professional qualification, such as a CPA (here’s a partial list of global certifications that qualify).

Professional Requirements
The professional requirement for the CMA is two continuous years of experience in management accounting or financial management. This can be completed prior to the application or within two years of passing the CMA exam. The website states that, “Qualifying experience consists of positions requiring judgments regularly made employing the principles of management accounting and financial management.”

There is a long list of experience that will satisfy this requirement including financial analysis, budget preparation, management information system analysis, financial management, management accounting, auditing in government, finance or industry, management consulting, auditing in public accounting, research, teaching or consulting related to management accounting or financial management.

CMA Exam
The CMA Exam is currently transitioning from a four-part format to a two-part format. The two-part format rolls out on May 1st but testing of the four-part format will be available through December 31, 2010. The new format will focus on financial planning, analysis, control, and decision support. The two four hour exams consist of 100 multiple choice questions and two 30 minute essay questions.

Part 1 breaks down like this:
Planning, Budgeting and Forecasting (30%)
Performance Management (25%)
Cost Management (25%)
Internal Controls (15%)
Professional Ethics (5%)

And Part 2:
Financial Statement Analysis (25%)
Corporate Finance (25%)
Decision Analysis and Risk Management (25%)
Investment Decisions (20%)
Professional Ethics (5%)

There’s a lot of information on the new exam format including fees, testing windows, and more that can be seen here.

After certification, you are required to complete 30 hours of CPE annually, of which, 2 hours are required to be in ethics.

Career Options
Many CMAs work in budgeting, financial planning, cost accounting, performance evaluation, asset management and other various capacities. The work often times result in internal reports that will help management make prudent decisions rather than just taking wild stabs at running their respective companies. So it goes without saying that this is important stuff.

For those of you still working in the public realm, you can get benefits out of a CMA too. Our favorite Exuberant Accountant, Scott Heintzelman, has a CMA and he told us that it helps him better understand the needs of his manufacturing clients, “I had a bunch of clients in the manufacturing space and many of the controllers were CMA’s. I thought taking the time to get this certification would give me more creditability with this group…it helped me gain more manufacturing clients as they saw me as one of them, not just a CPA.”

Compensation and Other Benefits
According to the IMA’s most recent survey, CMAs earn 24-31% more than their non-certified colleagues. Those surveyed that have both a CMA and a CPA have even higher salaries. Now, we know what that you’re hung up on money but there are some other advantages too.

According to Scott, “Partners then had this belief [then] that the CMA was a brutal test (and it was). So a year later I started the process and actually was fortunate to pass the entire test on the first attempt. I had also passed the CPA exam on the first attempt a year earlier and so my partners suddenly thought I was some super smart young accountant and many believed I was ‘fast tracked’ to partner. I believe I just worked my butt off to learn that stuff, but none the less several of my partners looked at me differently. A very key moment in my young career.”