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Would You Work for Revenue Share?

Posted on by Chris Hooper

This post is inspired by Jeff Maddux CPA, so you can send your hate mail there. Just joking keep it coming, I love it!

His idea (see tweet exchange) was actually really good. You don’t need me to harp on about value based billing (It’s almost as played out as "cloud"). Our firm was on fixed fees, I refer to it as market-based billing, where we look at what the guys next door have been doing and then we use that as a guide for the fee.

The problem is that our staff are still paid at an hourly rate. You guys are accountants so you can understand the issues here. Essentially my inputs are hourly and my outputs are fixed fee. This exposes us to downside risks, if too much time gets booked on a job we lose money. Conversely if the job goes under budget, we book the margin!

To use a crude example:

$5,000 job with a staffer that costs $30 per hour.

  • If they take 50 hours it costs $1,500, the firm books a $3,500 gross margin
  • If they take 100 hours it costs the firm $3,000, the firm books a $2,000 gross margin
  • If they take 200 hours it costs the firm $6,000, the firm fires a staffer

What if, we paid staffers on a percentage of job budget? So instead of $30 an hour, you were paid 30% of the gross fee.

The idea has merit, but like all compensation plans it’s fraught with inconceivable downstream implications. What would it do?

Shy of actually implementing this without much thought (like much of the other stuff I do at Accodex), consider this my feeble attempt at market research. Would you work at a firm that offered this, or would your rally around their office with pitchforks and torches?

Image: "Breakfast time (7560191024)" by Berit/Wikimedia Commons

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How Does a Big 4 Vet Go About Finding the Right Recruiter?

Ed. note: Have a question for the career advice brain trust? Email us at [email protected]

Dear GC,

As I’m sure anyone with their resume on LinkedIn can attest to, I get a plethora of emails from recruiters. I’m currently not looking for another job, but I’ve always heard it is a good idea to find a recruiter to get to know so they’ll have a good feel for the opportunities that are right when that time comes.

I have friends who have used recruiters to obtain positions post-Big 4 but none of them were especially impressed. Do you have any advice for finding the right fit? In my case, I’m interested in getting my MBA and going the IB/PE route and would want to work with someone who has good relationships with local boutiques.

Thanks.


Advanced apologies – I normally don’t write posts before my afternoon whiskey…

Many people hold recruiters in the same light as real estate brokers: sure, they can be forceful, demanding, short with their time, and generally annoying, but they hold the metaphorical (and sometimes, literal) keys to your future. Ideally, you’d like to find one that you can trust. The firm at which the recruiter works at is more important than the recruiter themselves. Why? Because the firm represents clients, and clients means interviews, and interviews mean getting the hell out of your current sitch.

Your recruiter might have two clients (firms, companies, etc.) that are his/her responsibility, but as one of their candidates, you are eligible to receive an interview at any client represented by the firm. Do your homework – try to work with an industry-specific firm that matches up with your background. Ask about their recent placements. Anyone from your firm? Follow up with those people to see what their experience was like.

Sometimes, you will build a great relationship with your recruiter, recommend them to your friends, and invite them to your birthday party. Other times, they are simply a means to an end.

One more thing – start off the conversation by telling the recruiter that you’re interested in the MBA to IB/PE track. Why? Because this is not 2007 when a widget auditor could get a job at Goldman. The recruiter won’t be able to help you, at least not in the way that you think they can. They can’t just snap their fingers and land you on the emerging markets desk trading Brazilian bonds.

Why doesn’t it work that way? Ummm, do you READ the news? Unemployed bankers might as well be the new currency. Recruiters are beating disgruntled/underpaid/unemployed bankers away with sticks right now, all of whom (whom?) are more qualified than your undergraduate degree and 3 parts of a passed CPA exam.

Whiskey, stat.

The Scam That Accounting Education Isn’t

I complain about a lot of things in the industry that I probably should be grateful for instead: Sarbanes-Oxley, the PCAOB, the IASB and the AICPA Board of Examiners… the list goes on. I’ve done my fair share of complaining about accounting education as well (even offending some by implying professors were cheap and lazy though I certainly did not mean all or even most accounting professors) but I think it’s safe for us to say that we have it a lot better than some other professions. Like law.


Check out Critical Mass on the law school scam (the entire thing is recommended reading):

Over the years, I wrote countless law school recommendations and very, very few grad school recommendations. I never worried too much about the ones who were law school-bound–the students I worried about were the ones who decided to go for PhD’s in English. Grad school in the humanities is a scam. There are simply no jobs, tenure is disappearing, the culture of the academic humanities is pathological, and the sort of academic life grad students hope to acquire is ceasing to exist. But law school, I felt, was a safe bet–and would also offer its own variety of intellectual thrill. Who wouldn’t want to learn to think with the precision, capaciousness, originality, and historical-mindedness that the law requires? It’s beautiful and powerful and very, very useful. When done well, it’s applied scholarship, scholarship with decisiveness and impact.

But bubbles are bursting everywhere we look these days. Last month I posted about how Loyola’s law school is cooking transcripts to give its grads a leg up on the job market. Now comes word of widespread cynical profiteering at the expense of students’ futures.

Accounting education doesn’t appear to be so neatly packaged as the debt factory that law is, nor does it seem to produce too many rats to fit in our particular race. Sure, there are plenty of unequipped idiots who get through (shouldn’t professors exist to weed these out if education is, in fact, meant for the greater good of our economy and not just to create more perpetual debt?) but that happens in any profession, no more in accounting than elsewhere as far as I can tell.

Do a Google search on the law school scam and you’ll get pages upon pages of results. Do one on the accounting education scam and you’ll get one question about DeVry’s accounting program (I won’t say a word). Does that mean accounting is any better off?

Somewhere between this depressing March 2010 report from CPA Trendlines on how actual firms held up through the recession in 2009, and the rosy reports from hijacked media like CNN about how great the industry is handling this mess, lies the truth. Some areas are better than others and some accounting grads just don’t deserve a job. With the firms lining up the lawyers instead of the staff, you can bet the days of skating your way through 2 years of easy work experience are pretty much over.

Hopefully this means fewer unqualified future accountants being pushed through accounting programs that will soon be starving for qualified educators and better prospects for the bright, talented future CPAs who actually deserve a job in this industry.

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