This article was first published by the Australian Financial Review on 6th Nov 2018
By Louis White
This content is produced by The Australian Financial Review in commercial partnership with Chartered Accountants Australia and New Zealand.
Staff turnover has always been a pressing issue for small business, but a recent survey has put the levels at pre-GFC highs, indicating a restlessness in the employee market.
The Australian Human Resources Institute report Turnover and Retention Research, released late this year, reveals that overall Australian firms are experiencing 18.5 per cent staff turnover, compared to 18 per cent in 2008 from the same survey conducted before the Global Financial Crisis.
For smaller businesses, it is as high as 22.5 per cent, with the overall business community saying staff turnover would be ideal at between 1 and 10 per cent a year. The report notes Millennials are the quickest to leave at 37 per cent.
For dentist and small businesswoman Tracy Le, staffing issues are the hardest part of running the two practices she co-owns with her husband in the Sydney suburbs of Hornsby and Epping.
"Finding the right staff is hard, and then training them to build, develop and grow as people and into the business is difficult," she says of running the Rawson Dental practices with husband Dr Thuy Le. "You want them to develop a sense of ownership in their role and in the business and to continually improve."
Le's concerns are shared with the accounting community, with Top 100 Accounting Firms data revealing that small accounting firms rate three key issues they face as: staff having the right skills for future work (62 per cent); retaining staff (58 per cent); and succession planning (49 per cent).
At the same time, accounting firms are helping small businesses tackle those same issues. As they diversify their services beyond traditional areas, accountants assist clients with every aspect of their day-to-day small-business functionality, which includes these staffing pain points as well as personal investing, business investing, and goal setting.
Profit sharing and equity participation
The managing director at Aspen Corporate, Sergio Di Vincenzo, says one way to help retain staff is to create new models of profit sharing and equity participation to reward them.
"We have developed a variety of these models for our clients … they are very useful in attracting new staff and have a number of benefits including being tax-effective," Di Vincenzo says.
"The profit sharing and equity participation models lead to in-house solutions to succession planning, as some of the models allow for profit share to be converted to equity after conditions are met.
"They have a further benefit for owners in that they engage the staff member to add value to the business meaning a higher exit value for all."
The managing director of ASF Audits in Adelaide, Richard Smith, says that the cost of replacing staff is a hidden expense that is hard to quantify.
"When you invest time and effort to train staff up, you want to ensure you can retain them in your business, as the cost of replacing them can be significant," Smith says.
"I am not sure if it is just the younger generation, but I am sure job security and the financial stability that it brings is far more important to those who have been in the workforce longer.
In the accounting industry itself, the greater difficulty can be finding experienced staff to recruit when required, Smith says, "which may be a reflection of good staff retention in the industry, as well as it being a specialised area".
Communication and planning key
For the Les, advice from ECOVIS Clark Jacobs, which specialises in dental and medical businesses, has helped them through staffing and other issues for more than a decade.
Tracey Le says having a reliable accountant on board has helped enormously in managing growth: "For instance, they were instrumental in advising when was the right time, financially, to buy a Cerec machine that allows you to make your own crowns.
"This not only increased our own revenue, but reduced costs of outsourcing the service. They have also been very good at helping us invest outside the business, whether it is our superannuation, purchasing our own premises and even general investment issues. It has been a great partnership."
ECOVIS Clark Jacobs associate Adrian Burns says the firm has helped set growth benchmarks outlining how to expand at each stage.
"Two key aspects are communication and planning," Burns says. "Our practice is service-oriented and we partner with our small business clients as advisers in every sense of the word.
"We hold regular meetings and consultation, and not just at tax time. Ensuring the right structures are in place over the business life cycle from legal, taxation, operational and asset-protection perspectives is a priority."
Burns says effective use of cloud accounting ensures reliable, up-to-date information is readily available to track performance, including budgeting and cash flows, which helps with tax planning.
"No client of ours receives a tax bill without at least 12 months' notice," he says