Where to go to determine appropriate compensation for employee.

[Hamacher]

I have an employee that I hired on a temporary basis. He JUST graduated with his accounting degree and has shown some interest in sticking around. He has worked with another CPA firm and does a great job but does have some learning to do. I would like to keep him but I'm not sure what a fair wage would be. I certainly do not want pay to be an issue but he's wanting $25/hr which is more than I was paying the last person in his position who was a CPA with 15 years experience.

Any input would be appreciated!

[JohnH]

I don't have much experience in this area, but what about some sort of hourly pay plus an incentive? Maybe tying his base pay to hours worked, and then a percentage of the billable hours he brings in for existing clients and a higher bonus percentage for new clients he finds and retains.

He might be worth $40-$80 an hour (or more) to you in the long run, and tying his compensation to his productivity is a good way to find out. Personally, I wouldn't cap the compensation either. I think one of the biggest mistake incentive plans employ is to decrease the value of the incentive when the individual begins to earn "too much". What better outcome could there be than to be paying him well above the norm, because you're also earning more as he earns more. Plus, if you're paying him well, there will be less inclination for him to go out on his own or jump to a competitor, since most of them aren't creative enough (or too cheap and short-sighted) to incentivize their employees in the first place..

[AZ-Tax]

Have considered Independent Contract status?

I have an employee that I hired on a temporary basis. He JUST graduated with his accounting degree and has shown some interest in sticking around. He has worked with another CPA firm and does a great job but does have some learning to do. I would like to keep him but I'm not sure what a fair wage would be. I certainly do not want pay to be an issue but he's wanting $25/hr which is more than I was paying the last person in his position who was a CPA with 15 years experience.

Any input would be appreciated!

Show SOME interest does not sound to promising to me. I have 2 part time bookkeepers I use as "independent contractors" and issue them 1099-misc. One is an Accounting Major in Senior year @ ASU. The other is somewhat familiar with QB. They have found out by being very organized and getting versed in QB, they can make more then $25/hour. Both are free to work their own hours mostly from their homes plus I have an Indepedent Contractor agreement in place for both of them. I had a kid a while back start as an employee with me part time and was a hard worker but as soon as I took the kid on as a full time employee, he goofed off most of the time. I will probably will never go back to an employee status again.

You may want to go to Craigslist or Monster board and see what other employers in your area are paying bookkeepers per hour in your area.

[Hamacher]

Incentive pay

I don't have much experience in this area, but what about some sort of hourly pay plus an incentive? Maybe tying his base pay to hours worked, and then a percentage of the billable hours he brings in for existing clients and a higher bonus percentage for new clients he finds and retains.

He might be worth $40-$80 an hour (or more) to you in the long run, and tying his compensation to his productivity is a good way to find out. Personally, I wouldn't cap the compensation either. I think one of the biggest mistake incentive plans employ is to decrease the value of the incentive when the individual begins to earn "too much". What better outcome could there be than to be paying him well above the norm, because you're also earning more as he earns more. Plus, if you're paying him well, there will be less inclination for him to go out on his own or jump to a competitor, since most of them aren't creative enough (or too cheap and short-sighted) to incentivize their employees in the first place..

Unfortunatly most of my engagements are fixed fee. There is no way to track billings to hours worked. So the incentive program is not going to be feesable. For reasons mentioned in another response, I do not like to pay employees via salary either. In the past employees seemed to work less hours and were not as productive. By paying by the hour, we can be very flexible with the hours worked. If they need to come in later than normal or leave earlier, they can do so. If they need to take a 2 hour lunch, that is fine. We just need to make sure the work is getting done. I know the larger local firms are paying new hires about $45,000 annually but work their employees to death.

[ChEAr$]

$ 45,000 per year? With two weeks vacation, that sounds like $ 22.50 per hour, thereabouts. That's less than he's asking, but he probably knows to ask "high". What are you offering him?

[Hamacher]

$ 45,000 per year? With two weeks vacation, that sounds like $ 22.50 per hour, thereabouts. That's less than he's asking, but he probably knows to ask "high". What are you offering him?

That would be true if they worked 2,000 hours but they expect at least 2,400 to 2,500 hours annually. I know when I worked there I worked 2,600 - 2,700 and was made to feel like I should be working harder. It's a completely different work environment. I do not like to kill my employees. I do not think that it lends itself to a happy employee long term.

[Hamacher]

BTW - He was making with his former employer and is currently making $16/hr. He was working part time but now that he graduated last month he wants full time.

[Nashville]

Geographical?

but he's wanting $25/hr which is more than I was paying the last person in his position who was a CPA with 15 years experience.

Hamacher, we don't know where you are and that is important. I live in the rural south and trained professional people in San Francisco, Massachusetts, or Washington DC make double and triple what they do here.

If your last guy was sharp enough to pass his CPA exam and had 15 years, I don't know anywhere in the USA where $25 per hour would be considered excessive.

There are websites such as monster.com, careerbuilder.com, salary.com who maintain a database of comparative salaries on a geographical basis. I encounter these sometimes when I help a military contractor put together cost for bids. It is my experience that these websites overstate salaries significantly. We have experience telling us if we inquire from those sites, the "average" salary is intentionally made to appear attractive, and we've had no problem finding people at their 25th percentile level.

[Hamacher]

Hamacher, we don't know where you are and that is important. I live in the rural south and trained professional people in San Francisco, Massachusetts, or Washington DC make double and triple what they do here.

If your last guy was sharp enough to pass his CPA exam and had 15 years, I don't know anywhere in the USA where $25 per hour would be considered excessive.

There are websites such as monster.com, careerbuilder.com, salary.com who maintain a database of comparative salaries on a geographical basis. I encounter these sometimes when I help a military contractor put together cost for bids. It is my experience that these websites overstate salaries significantly. We have experience telling us if we inquire from those sites, the "average" salary is intentionally made to appear attractive, and we've had no problem finding people at their 25th percentile level.

I'm not suggesting that the last person who worked for me was getting paid too much. I was using it as a refernce point. I had no problem paying her $25/hr. The other person who works for me with the same level of experience and education (i.e. bachelors degree non-CPA) is making $18/hr.

I'm simply trying to find out what would be a fair counter offer for this kid.

BTW - we are located in Kalamazoo, Michigan.

[taxea]

you could google salaries or go to salary.com