How Can You Get Fired in Public Accounting?
A question I see get thrown around often in online accounting communities is some variation of "am I getting fired?", "Will I be fired for this?", Or "How do you get fired from Public Accounting?" These questions are often met with varied responses like "I've never seen anyone fired, if you can key in numbers and keep your shirt on you won't be fired" or "Yea it happens from time to time, don't dwell on it too much." As you can probably guess, my initial response to these questions is usually IT DEPENDS, because there are so many factors that affect the decision to terminate an employee. Today, I'm going to share some context to help you better understand how and why people get fired in public accounting, despite the numerous staffing and recruiting problems the industry is facing (it’s still possible, don’t worry).
Why Does Someone Get Fired from a Public Accounting firm?
The answer to this question can be summarized from a lesson that accountants learn in their managerial accounting class: the cost-benefit principle. When making a decision to fire an employee, The firm simply needs to weigh the costs and benefits of letting the person go. These costs and benefits can be quantitative (Salary costs and client fees from hours billed) and qualitative (Team morale and client interactions). Here are some examples that illustrate this cost-benefit analysis.
The answer to this question can be summarized from a lesson that accountants learn in their managerial accounting class: the cost-benefit principle. When making a decision to fire an employee, The firm simply needs to weigh the costs and benefits of letting the person go. These costs and benefits can be quantitative (Salary costs and client fees from hours billed) and qualitative (Team morale and client interactions). Here are some examples that illustrate this cost-benefit analysis.
A manager has worked her way up in the firm and has proven herself as a competent worker. She is intelligent but does not have the time or patience to teach others, and often acts rudely to people who aren’t up to her standards (pretty much anyone below her). As a result of her attitude, no one wants to work with her, and is not efficient when doing so. Because of this, she cannot delegate work and perform her role effectively. Despite the benefits of having a bright team member, the cost of efficiency across the entire team is not worth keeping her around.
A senior associate did good work but was not very consistent in terms of working his working schedule, often taking long breaks in the middle of the day without telling anyone and logging on later to make up the time. Although his work was good, his working schedule did not mesh well with other employees and clients. Other employees took notice of his absenteeism and were not happy that he wasn’t pulling his weight during the day, leading to the other team members not putting in their own efforts. After all, why would they? If someone can go missing for a good portion of the day then why should they have to put in the extra effort for no additional benefits? Eventually, the senior went MIA enough times to warrant action from management.
A new hire to the firm was brought on to help support the team during a busy time of year. New hires aren’t expected to know much and it’s common practice to teach them on the job. This particular new hire just was not catching onto core accounting and technology concepts to the point where it would take hours to explain things and no one had time to teach him, especially since the information just wasn’t sticking. No person on the team wanted to work with this person because it would take longer to do the work with the person than it would to just do it themselves and the work product they produced was not acceptable without significant rework. This new hire was taking time away from other team members and was not on track to benefit the team in any meaningful way, so they were let go.
A new hire was sent out to the client site and said some inappropriate things to client personnel that indicated a lack of professionalism. Management was informed and determined that if this person should not be client facing. Unfortunately, this person was in a client facing role and it was determined that sending this person out to clients was not worth the reputation risk, and keeping them away from client sites and calls was too much trouble. With no other alternative, management determined that this person and the firm should go their separate ways.
A firm acquisition occurred where not all the clients were retained post-merger, leaving some existing employees with nothing to work on. Because the firm could not find work for these employees, their salary costs exceeded the benefit of them being there since they weren’t generating any revenue. As a result, the employees needed to be let go. While this last example is not a “for cause” termination, it’s important to understand that this cost-benefit framework applies to all types of scenarios.
Why Does This Matter?
While most people are not in a position where they could be let go from a public accounting firm, it’s important to understand the fundamental decision making process behind these decisions because it could be beneficial to help a colleague out of a bad situation in the future. Not getting fired based on this framework is pretty simple at the surface level. You just need to bring more benefits to the table than you cost the company. It’s important to remember that each position at a company will have different expectations in terms of experience, pay, and job responsibilities. This means that what could get someone fired as a first year may be different from what gets someone fired as a senior manager. As noted in the examples above, there are many different factors that contribute to these decisions, and unfortunately, not all of them can be controlled. Every company will judge its employees differently, where some may focus more on past performance and others may focus more on future benefit or potential liability. Now that you understand this framework behind the termination decision and how it incorporates both qualitative and quantitative factors, you can better prepare yourself or a colleague to address any issues with your own cost-benefit analysis. Good luck!