The Right Way to Plan Accounting Compensation w/Dominic Piscopo

Podcast

Episode Round-Up

In this episode of the Growing Your Firm Podcast, host Dave Cristello welcomes Dominic Piscopo, the founder of Big 4 Transparency. An expert in salary benchmarking within the accounting industry, Dominic shares insights into compensation strategies, year-over-year changes, and the impact of private equity (PE) on salaries. 

The conversation highlights the evolving landscape of compensation in accounting firms.

Guest Bio – Who Is Dominic Piscopo?

Dominic Piscopo, CPA is known as a compensation guru in the accounting industry. After years of working as an accountant and financial analyst, he founded Big 4 Transparency – which has served hundreds of thousands of CPAs by making salary data more visible. 

Dominic assists accounting firms by giving them a user-friendly dashboard for understanding industry trends around compensation. He’s also the host of the Big 4 Transparency podcast, where he interviews accounting industry insiders.

Episode Synopsis:

The Birth of Big 4 Transparency

Dominic begins by explaining the origins of Big 4 Transparency, which started as a community project, not a formal business. 

He recognized a significant gap in the availability of reliable salary data for accounting professionals, particularly in Canada, where starting salaries at large firms were notably low. Frustrated by the lack of accurate information, he created a platform where individuals could anonymously share their salary data. 

Over time, this initiative grew, amassing 18,000 records of first-party submitted salary information, including details on bonuses, hours worked, and job satisfaction. Now, the organization also works with accounting firms – providing them with the salary benchmarks necessary to set salaries for their accountants. 

Salary Trends and the “Talent Crunch”

As the conversation shifts to the current state of compensation in the accounting industry, Dominic highlights the ongoing talent crunch. 

Headlines suggest a shortage of talent, but the reality of salary increases is more nuanced. While there was a surge in salary increases in 2022 and early 2023, the growth has since stabilized – with salaries increasing at a rate of approximately 2.5% to 3% year-over-year.

The increases are not uniform across all levels. For example, intern salaries have seen a notable rise, reflecting the sensitivity of entry-level candidates to salary differences. Tax roles, particularly at the manager and senior manager levels, have also seen significant increases – largely due to heightened competition for talent. 

Private Equity: Changing the Compensation Game

Dominic reveals that salaries at PE-backed firms have been increasing at a faster rate than at non-PE firms. 

He shares specific data points, indicating that at the analyst level, PE-backed firms experienced a 4.6% increase in salaries, compared to 4.2% for non-PE firms. This trend continues across various levels, with senior managers at PE firms seeing the most significant increases. Additionally, bonuses at PE-backed firms are generally higher, with a notable spike in the year following a PE deal.

While discussing job satisfaction, Dominic notes that employees at PE-backed firms report slightly lower satisfaction levels compared to their non-PE counterparts. He attributes this to the perception of increased pressure and workload, although the actual difference in reported hours worked is minimal. 

The average hours for PE-backed firms are around 47.5 hours per week, compared to 46.6 hours for non-PE firms. This data suggests that while compensation may be higher, the trade-off in job satisfaction and work-life balance is a critical consideration for employees.

Why Retention Is Key

As the conversation progresses, Dominic emphasizes the importance of retention strategies for accounting firms. Many firms focus heavily on attracting new talent while neglecting the need to retain existing employees. 

Dominic advocates for regular salary reviews and adjustments to ensure internal equity, particularly in light of the disparities between externally hired and internally promoted salaries. He also highlights a potential point of tension within a firm: employees discovering that new hires are earning more than their long-standing colleagues.

Common Compensation Mistakes

Dominic identifies several common mistakes that firms make regarding their compensation strategies. One significant issue is the reliance on outdated salary reports, which can lead to panic when unexpected salary increases occur. He stresses the importance of ongoing monitoring of compensation trends to avoid budgetary surprises. 

Additionally, Dominic warns against using free resources or generic salary guides from recruitment firms, which may not provide accurate or relevant data for specific firms.

To effectively set compensation levels, firms really need access to granular data. Dominic explains that firms must consider various factors, including geographic location and specific service lines, to make informed decisions. 

For example, salaries for remote positions can vary significantly based on the cost of living in different regions. He provides examples of how firms can strategically target lower-cost markets to attract talent without competing directly with larger firms in high-cost areas.

Conclusion – Leveraging Big 4 Transparency

In wrapping up the episode, Dominic reiterates the value of Big 4 Transparency as a resource for accounting professionals and firms alike. He encourages listeners to explore the platform and utilize the data available to make informed decisions about compensation. 

You can reach out to Dominic through LinkedIn or the Big 4 Transparency website for further insights – or for help navigating the complexities of compensation in the accounting field.

Actionable Insights for Your Firm

• Regularly Update Your Compensation Data: Continuously monitor compensation trends to avoid surprises and ensure budgets align with market rates.
• Prioritize Retention: Regularly assess and adjust internal salary bands to keep pace with external market rates, preventing “loyalty tax” issues.
• Use Reliable Data Sources: Leverage comprehensive data platforms like Big 4 Transparency to gain accurate insights into compensation trends.
• Communicate Your Compensation Strategies: Prioritize transparency around salary bands and the rationale behind them – which will alleviate concerns about pay equity.
• Segment Compensation by Role and Location: Tailor salary offers based on specific market conditions to attract the right talent without overextending budgets.

Minute-by-Minute

00:00:00 – Introduction to Dominic Piscopo and Big 4 Transparency

00:01:12 – The Origin of Big 4 Transparency

00:04:25 – Year-Over-Year Compensation Trends

00:06:14 – Current Salary Increases and Distribution

00:08:19 – High-Demand Roles in Compensation

00:10:07 – Internal vs. External Salary Discrepancies

00:12:37 – The Impact of Private Equity on Compensation

00:19:16 – Strategies for Remote Hiring and Salary Adjustments