I hope everyone is enjoying the arrival of fall and got through the last big deadline without too much craziness. We’re pretty busy and gearing up for the busiest time of year for us – 4th quarter. It’s also that time of year when I break out of my busy recruiting day to step back and take a high level look at the job market for Colorado tax professionals. This is by far the most popular newsletter we send out each year – a review of salaries and compensation for tax professionals, as well as a synopsis of what’s going on in the job market. The past few years have been particularly interesting as we’ve see salaries increasing pretty significantly, especially for people in the 1- 4 year range. Salaries for highly sought after candidates are probably a lot like the housing market was in Denver the past couple of years. Every time I spoke with someone about their new position, it seemed an even higher record was set for compensation in relation to years of experience. Well, here’s what I know…..
Employment Market for Income Tax Professionals
As has been the case for a number of years now, there remains a strong demand for Associate/Staff through Manager level candidates (no surprise). We’ve also seen more cases where public accounting firms are competing with corporate tax departments for the same people. I suspect this is due, in large part, to the growth many public accounting firms are experiencing. It’s my belief that the population growth and increased economic activity we’ve seen in Denver and all of Colorado has most benefited local and middle-market public accounting firms. We’ve seen a number of firms merge and other firms open an office in Denver as the market grows and becomes more attractive. Sadly, on the industry side, we’re seeing a decrease in the number of tax positions as companies get acquired or move their tax departments out of state – First Data has laid off all but a few of their tax team as the department was moved to New Jersey. The fallout of the Level 3 and CH2M acquisitions is still playing out. These 3 companies alone represent over 80 corporate tax jobs in Colorado. With VF Corporation moving their headquarters to Denver over the next year or so, we hope to gain 15-20 positions. We’ve also seen a small increase in headcount with some of the existing corporate tax groups in Denver due to ongoing growth and the extra work created from tax reform.
What I continue to see is that most corporate tax departments are still trying to find and attract a particular “ideal” candidate that has Big 4 experience, a CPA, an advanced degree (Master’s in Tax or Accounting), steady career progression and that is still early in their career (yes, I mean younger). Demand for tax talent being what it is, some companies are starting to look outside of these parameters, especially those tax departments that have the size or resources to offer training. We are also seeing a trend of the larger public accounting firms focusing on candidates that have passed the CPA exam or, at least, have the required amount of education to sit for the exam.
We have continued to see a steady increase in hiring year over year since 2010. This corresponds very closely with the growth that many public accounting firms have seen. As a result, organizations are faced with not only retaining the employees they have, but filling new positions. This is good news for people looking to make a job change – especially at the 1 – 4 year level where growth is the strongest. While unemployment has slowly decreased in the Colorado job market, workers with a 4 year degree and at least 1 year of experience are in especially short supply. That means that employers have to offer competitive salaries and other benefits to compete for the small supply of eligible candidates. More and more companies are offering creative compensation plans, early promotions, professional development opportunities, flexible work arrangements, fun office perks and better work-life balance in order to attract and retain the best employees. Work-life balance and flexible work arrangements are still the most sought after benefits according to the hundreds of tax candidates I talk to each year. The increase in cost of living is also playing into the rising salaries we are seeing. It’s difficult to know what percentage of the salary increases are due to supply & demand and what are due to the rising COL.
One other thing to note is that most college graduates that start with the same firm or same department are usually getting the same pay, as long as they have similar credentials. That parity continues as long as they stay with the same company and progress at the same pace. The evidence seems to show, however, that people make the most money when they make periodic career changes between employers. I find that kind of ironic because most employers would agree that it’s in their best interest to keep their employees. So why not pay them accordingly?
Show Us the Money
Compensation for tax professionals varies for obvious reasons like years of experience, education level and expertise in a particular area. Other factors that are less obvious are location, size of employer, industry and company financial performance, compensation trends within the company or industry and even perceived desirability of employment opportunities with the company. Even in Colorado, Minnesota and Washington state, where Oxford Tax Recruiting does the majority of our business, I’ve seen salaries for the same position vary greatly between downtown areas, suburban business parks and outlying or rural locations. Throw in soft skills (confidence, communication effectiveness, etc) and the pay range between employees with a similar position can get pretty broad. That being said, I have put together numbers based on recent hiring activity from over 60 different companies and public accounting firms in Colorado – mostly in metro Denver. These numbers do not reflect bonuses and other incentives, which at the Director, VP and Partner level are pretty significant. The salary curve is steeper at the early stages of an employee’s career and then tapers off. While many companies are offering 2-5% annual increases within a title and 5-15% increases when advancing in title, tax professionals can usually expect to see increases of 5-10% when changing employers or getting a promotion. We have started to see some experienced candidates getting increases of 10 to almost 20% when changing employers. Fear of losing a potential new hire, considered to be “highly desirable”, is causing some employers to set new records for what people are getting paid. It doesn’t take long for these exceptions to become the norm.
Although we have seen a definite increase in salaries this past year, many would argue that compensation is still lagging behind the increased cost of living, driven primarily by housing costs. Public accounting firms seem to be more competitive than they used to be, but they still have a difficult time offering the work-life balance that many candidates seek. And if you can handle the roller-coaster ride, oil and gas continues to be an industry that pushes the compensation envelope. Keep in mind, there are only a handful of larger oil & gas companies headquartered in Colorado and thus only a handful of these tax departments. A growing trend I’m seeing is more public accounting firms offering early promotions in an attempt to retain people. The net effect is to get employees a higher salary, sooner. This seems to be happening primarily at the Associate and Senior Associate levels. This trend, though, has some downsides. In the past, someone with the title Senior Associate often meant they were reviewing returns and doing some prep, now that isn’t necessarily the case. I’m also seeing a larger than normal supply of people at the Senior Manager and Director level that are open to considering a new position. This ‘backlog’ might be due in part to the recent loss of industry tax positions in Colorado. My salary ranges for Tax Director, VP and Partner are based in part on conversations I’ve had with tax leaders and not entirely on salaries we’ve seen in placements we’ve made. As you undoubtedly know, there aren’t a lot of Tax Director positions in Colorado and even fewer VP positions. My research shows there are only about 140 companies in Colorado that have some type of full-time, in-house tax department….which may mean only 1 person. The largest tax departments in Colorado (Arrow, CH2M, Western Union, DISH, Great-West, etc.) really aren’t that big, when contrasted with tax departments in other cities. An average tax department in Colorado is about 6 people – and that includes income as well as indirect tax.
One other thing to keep in mind is that while title in some way reflects years of experience, it is a little more nebulous relationship in industry and smaller public accounting firms. I work with candidates that have a Senior Tax Analyst title that have over 20 years of experience and are making $80-100K. I see this occur most often in larger organizations where tax people don’t have the opportunity to advance, or choose not to do so. Some companies we work with simply do not use conventional titles. Tax Accountants at places like these might be doing the work of a “Senior Tax Analyst” or “Tax Manager” somewhere else. Although title isn’t usually a primary consideration when making a job change, it tends to be of more importance to people early in their career.
This salary information is meant as a guide. If you’re unsure about what you should be getting paid, I am always happy to share my knowledge given a specific situation. I am also happy to provide information on compensation for indirect and operating tax positions. As always, I will continue to keep you informed of other changes in the Colorado tax employment market as they arise.
Please let me know if I can help you in the search for your next position. One of the benefits of having me in your corner; is my knowledge of what you should expect in terms of compensation, time-off and benefits and negotiating for you to get it. To those of you that just finished the last big deadline of the year, enjoy this slower time (assuming it is slower).
To your success,
Managing Director, Oxford Tax Recruiting