Are you getting paid what you’re worth? It’s a question many professionals ask, but finding reliable answers can be challenging.
Having accurate and transparent compensation data is crucial for accounting professionals to advocate for fair pay and for firms to attract and retain top talent in an increasingly competitive industry. Fortunately, Dominic Piscopo, Founder of Big Four Transparency, has the data. In a recent webinar, he shared what he learned, and we’ve summarized the key takeaways for you in this article.
The Birth of Big Four Transparency
Dominic learned the hard way about the significance of paying people what they deserve. While working at one of the Big Four accounting firms, he realized he was being paid much less than other firms in the area were paying people with similar skills. This discovery made him frustrated and unhappy with his job, even though he liked everything else about it.
Piscopo was inspired to create Big Four Transparency, a crowdsourced compensation database that helps accounting professionals know what they’re worth and assists firms in staying ahead of the curve.
Dominic explains that “Big Four Transparency is essentially a giant crowdsourced compensation database. The front-facing function is to help accounting professionals gain access to high-quality compensation data. This is meant to help guide you in your career, help you advocate for the type of compensation you should be looking for in today’s market, and keep you up to date on the evolutions of that.”
Big Four Transparency is essentially a giant crowdsourced compensation database. The front-facing function is to help accounting professionals gain access to high-quality compensation data. This is meant to help guide you in your career, help you advocate for the type of compensation you should be looking for in today’s market, and keep you up to date on the evolutions of that.
Dominic Piscopo, founder of Big 4 Transparency
The accounting industry is experiencing a growing demand for dependable compensation data, as evidenced by the popularity of platforms such as Big Four Transparency. According to Dominic, almost a quarter of a million professionals have utilized his platform alone. As more employees seek out this information, firms prioritizing transparency will have a competitive edge in attracting and retaining the best talent.
The High Cost of Inaccurate Compensation
Compensation is crucial for accounting firms, as it directly impacts their profitability. The workforce generally constitutes the most expensive part of the business. If the firm pays its employees excessively, it may significantly impact its profits.
But the costs of underpaying employees can be just as severe, including:
- Constrained resources for taking on new work, sacrificing firm growth and valuation
- Loss of institutional knowledge due to high employee churn
- Disrupted team dynamics and low morale, which leads to more turnover
- High recruiting and onboarding expenses that can exceed the cost of raising salaries to market rates
Accurate compensation data helps firms make informed decisions that balance financial considerations with employee satisfaction and competitiveness in the market. By investing in the correct data, leaders can develop strategies to optimize costs while attracting the talent needed to drive growth.
Navigating the New World of Work
As remote work becomes more prevalent, accounting firms must adapt their compensation strategies. Piscopo emphasizes the importance of considering the office model (remote, hybrid, in-person) when setting salaries.
For example, remote-first firms should assess whether they need to target high-cost-of-living talent markets. These firms can offer competitive pay while maintaining profitability by carving out certain expensive cities from their compensation benchmarks. However, firms may still need to include those geographies for roles requiring specialized skills concentrated in pricier areas.
The Power of First-Party Data
To make sound compensation decisions, firm leaders should prioritize first-party data over other sources. Salary guides from recruiters and data shared among firm alliances can be prone to bias and lack granularity.
In contrast, first-party data sourced directly from employees is less biased, more detailed, and provides greater confidence in accuracy. Piscopo advises firms to invest in accessing reliable first-party compensation benchmarks to stay ahead of the curve.
The Importance of Nuanced Analysis
Throughout the webinar, Dominic stresses the value of granular data. He shares how filtering out a few high-cost-of-living cities can significantly impact salary benchmarks, even at the entry level.
When analyzing compensation data, firm leaders should examine both averages and percentiles. Averages provide an excellent high-level view but can be skewed by outliers. Percentiles are less sensitive to outliers and lend themselves well to setting salary bands.
Dominic recommends using the 25th, 50th, 75th, and 90th percentiles to establish pay bands with room for progression. For example, a first-year senior accountant might start at the 25th percentile, while a high-performing third-year senior could reach the 90th percentile.
Firms should also dig into granular data cuts, not just overall ranges for a role. Drilling into specific cities, experience levels, and service lines can reveal essential nuances. For instance, firms should avoid grouping higher-paid advisory/consulting roles with audit/tax positions.
Leveraging Data to Spot Red Flags
Beyond informing pay decisions, compensation data can help leaders identify potential organizational issues. Piscopo shares an example of how comparing a firm’s average weekly hours to industry benchmarks might reveal understaffing. By proactively addressing these red flags, firms can boost retention and productivity.
Compensation platforms can also provide insights into job satisfaction through factors like the office model. For instance, if remote employees consistently report higher fulfillment, firms might consider expanding virtual work options.
Recognizing Data Limitations
While compensation data is a powerful tool, firm leaders must also understand its limitations. Piscopo cautions that small sample sizes can skew benchmarks, particularly when segmenting by role, city, and experience level factors.
He suggests strategies like grouping together geographically and economically similar cities to draw reliable conclusions from limited data. Firms should also be transparent about any limitations and avoid misleadingly presenting data.
The Risks of Relying on Negotiations
Piscopo points out that relying on candidate salary demands is risky, as most applicants won’t disclose the minimum they’re willing to accept. Firms that base pay decisions on these negotiations may end up overspending.
Instead, leaders should ground compensation strategy in data. By understanding the market through a data-driven lens, firms can develop salary bands that balance external competitiveness with internal equity and profitability.
Embracing Transparency, Driving Growth
In today’s competitive landscape, accurate compensation data is more than nice to have – it’s a critical tool for driving firm growth and profitability. By investing in first-party data, analyzing the nuances, and proactively identifying issues, accounting firms can optimize their talent strategies to attract top performers and boost retention.
The demand for pay transparency will only continue to grow. Firms that embrace this trend and arm themselves with reliable data will be best positioned to navigate the challenges of the evolving industry. In the words of Dominic Piscopo, “Compensation is usually the highest cost item for accounting firms. If you don’t get it right, it will cause some issues.”