🔒In tight labor market, Big Four accounting firm KPMG revamps benefits to retain, recruit top talent

It’s no secret there’s intense competition for top talent.

Companies of all sizes and in all industries are trying to figure out how to deal with the “Great Resignation,” the informal name given to the trend of workers leaving their jobs in droves during the pandemic.

A record 4.4 million Americans quit their jobs in September, up from a record 4.3 million Americans who left their jobs in August, according to the federal Bureau of Labor Statistics.

Amid that shifting employment landscape, and in response to the pandemic in general, employers are trying to figure out what the future of work will look like and what it takes to attract and retain talent.

Big Four accounting firm KPMG recently announced major changes to its benefit offerings in an effort to make the company more attractive to current employees and new potential accountants and consultants.

The accounting industry, particularly in Greater Hartford, has always been competitive in terms of numerous accounting firms — ranging from smaller local shops to large national/international players — competing for a limited talent pool.

But in addition to pay and benefits, companies are focusing more of their attention on work-life balance and other issues that are increasingly top of mind to workers.

The changes KPMG recently introduced include:

Reducing employee healthcare premiums by 10% in 2022, with no change in benefit levels;

Replacing its 401(k) match and pension programs with a single, automatic firm-funded contribution within the 401(k) plan equal to 6% to 8% of eligible W-2 pay;

Providing up to three weeks of additional paid caregiver leave for employees to spend time caring for a member of their family or household with a serious health condition;

Allowing all parents to receive 12 weeks of paid parental leave to spend time with a newborn, newly-adopted or new foster care child;

Taking a firm-wide break twice per year, giving employees at least nine consecutive days off.

KPMG Hartford office Managing Partner Tom Daugherty recently sat down with Hartford Business Journal to discuss his firm’s new benefits strategy, how it came about and how the firm’s local clients are responding to the changing work environment.

Daugherty is a Connecticut native who grew up in Meriden, attended Central Connecticut State University and started at KPMG out of college in 1985. Today he oversees about 180 people who work out of the firm’s Hartford office in the Gold Building.

He’s been managing partner since 2017.

Here’s what Daugherty had to say:

Q: Why is KPMG making all these changes to its benefits?

It’s our biggest change in about 10 years. It’s a modernization of our benefits and I think it comes from a longer trend.

Even before the pandemic we were changing our ways of working. We had already started programs that allowed employees to pick their times when it made sense to work with their teams in person at a particular location, or work remotely.

I just think the pandemic has been an accelerator to this and for companies to transform their operations in many ways. I don’t think we are an exception in professional services.

We started by asking the question ‘How do we work remotely, work as teams, and make those investments?’ Then our conversation extended to that other mega-trend related to benefits.

People want more from their career. They want more control over the conditions of their employment. It’s not just getting a salary or an opportunity to grow within the company, they want some transparency and some control over all aspects of their jobs, including benefits.

In the pandemic, our first steps were expanding things like additional time off so people can cope with family issues related to the pandemic.

One of the challenges was figuring out how we make the most attractive package for what’s really a couple of different generations of workers that constitute our workforce. Each generations’ needs are slightly different, so flexibility is important. That’s what was behind the firm’s thinking.

Q: In your mind, what’s the most significant change?

Updating the 401(k) and pension plan was a big deal. We had a traditional pension plan and 401(k) where we would match employees contributing into the 401(k) and you got a set amount based on your compensation into a pension plan.

Now we are not requiring our employees to contribute to their 401(k) plan to get a benefit, we are flat-out giving them between 6% to 8% of total compensation into that plan.

We have younger employees on staff who may have a harder time saving. This gives them the benefit even if they aren’t contributing.

Q: What other changes stick out to you?

Our healthcare costs are increasing as an employer but we lowered the amount employees have to pay into that. And if you compound that with medical inflation we think that’s a 16% benefit to our employees.

At the same time there are no reductions or changes to benefits, and in fact we’ve enhanced them through things like telehealth and additional programs for mental health awareness.

The other thing, a lot of our folks are younger, in their 30s, starting families. We’ve increased the amount of paid family leave, whether you are the primary caregiver or not.

Traditionally, the mother got the richer benefit in many plans, but this is across the board. Between that, and if it’s short-term disability for a parent when giving birth, you can get up to 22 weeks off.

That’s a tangible benefit that folks value beyond money.

Q: How is KPMG’s Hartford office holding up in the Great Resignation? Are you seeing a lot of turnover?

The Great Resignation exists, but I’m not sure it’s changed the dynamic in our firm completely. Most of our employees have a longer view of their career, but we are not immune to these kinds of trends. It’s having some impact but we are trying to address that and react to it.

In professional services we are always competing for talent. We hire folks who are attractive to other companies, and of course people are given opportunities outside the firm.

What we try to do is match those opportunities so that the experience and opportunity inside the firm is compelling and they stay.

Q: What’s the competition out there locally for accounting and CPA talent? Where do you recruit from?

There is tremendous opportunity if you want to come into professional services because there isn’t enough talent at the end of the day and we are competing against other professional service firms and private industry.

I think some of the remote work environment creates an opportunity. If you are working remotely and you’re not commuting into Manhattan or Boston, central Connecticut has a great work-life balance to offer.

I don’t think the pandemic necessarily hurt us or helped us in terms of recruiting, but for us in Hartford, we’re a great place to live and work.

Q: When you are looking to recruit, are you mostly looking at Connecticut colleges?

At the firm level, we have an open application so anyone, anywhere can go on and apply for a job.

We do spend time on college campuses, UConn, University of Hartford, Fairfield University, Central Connecticut State University. But it’s also an interesting dynamic here in Connecticut because a lot of students leave the state to go to college so that’s where our national footprint comes into play, especially for those students who want to come back to Connecticut after they graduate.

Q: What does the future of work look like at KPMG?

Our future work state is what we call ‘flex with purpose,’ and I think that’s an important distinction. It’s a hybrid model.

We are a big firm. People’s roles are different.

There are some people who would traditionally be at a client location primarily, there are some that would be in the office primarily and some who do a combination of both.

Fundamentally none of that is changing, except we don’t expect everyone to come to a location everyday. Remote working has proven to be effective and we are going to continue that, but we do believe in the value of teaming and getting together in person as colleagues or with clients.

And so when the interactions are meaningful we want people to come together, when conditions are safe. We see an essential kind of cultural and personal bonding and professional development of interacting with others in person.

Over time that’s how I think our new model will work.

Q: Are most of your employees working remotely right now?

Yes, to a large extent. You can come into the office with the right protocols, vaccination, wearing a mask, appropriately social distancing.

Q: Will your real estate needs change with a more permanent hybrid model going forward?

I think over time, across the firm we are rethinking what the right layout is when you have a flex with purpose type of program. Do you need more individual cubes or gathering spaces?

All of that is still in the works, we aren’t ready to make a decision yet.

Q: I’m sure you are getting a lot of questions from clients about the future of work and retaining and attracting talent. What advice are you giving them?

I think we’ve been working with a lot of companies on front-office and digital transformations. It really started from an acute need to go remote. In the early days of the crisis we had a lot of short-term projects of really getting people up and going remotely.

And now you move on to where companies are saying they see the value of flexibility and maybe not every job needs to be day to day in the office, so then the question becomes ‘How do we change our processes and systems to make that a long-term solution?’ That’s really one of the big trends coming out of this pandemic.