Beyond Growth: Why Top Talent Stays (or Leaves)

82% of firms now cite talent retention as their top challenge, ahead of even revenue growth

Author

Edna Garcia
February 13, 2025 • Estimated Reading Time: 6 minutes

Hey — It's Edna.

Welcome to this week's edition of The Growth Ledger, your resource for modernizing your tax practice.

According to new research from Wolters Kluwer, talent retention has become the defining challenge for firms in 2024. What's more interesting is what the data reveals about why people stay—or leave.

When we analyzed the latest findings, we discovered something that challenges conventional wisdom: while firms focus on compensation packages, research shows that the real retention driver is how effectively firms use technology to create meaningful career paths.

Today, we're diving into:

  • Why replacing a CPA costs more than you think

  • The surprising link between automation and retention

  • A proven framework for keeping your best people

  • Real examples from firms getting it right

The Hidden Costs of Losing Great People

The math on CPA turnover is startling. According to SHRM's latest analysis, replacing a specialized professional like a CPA costs between 50-200% of their annual salary. For a tax manager making $120,000, that's up to $240,000 in replacement costs.

Recent industry studies break down the true cost:

  • Direct replacement costs (50-60% of salary)

  • Lost productivity during transition (30-40%)

  • Client relationship impact (40-70%)

  • Team morale and overtime costs (20-30%)

The top factors driving retention in 2024 are:

Meaningful work beyond data entry (73%) Clear path to growth (68%) Modern tech tools and training (65%) "This represents a fundamental shift in what tax professionals value," notes the latest CPA Practice Advisor report. "They're not just looking for better pay—they're looking for better work."

What Actually Makes People Stay

Recent research from Wolters Kluwer challenges the traditional view that it's all about compensation. The top factors driving retention are:

  • Meaningful work beyond data entry (61% of accountants associate automation with capacity for engaging work)

  • Clear path to growth (32% of firms focus on enhanced training programs)

  • Modern tech tools (35% say AI helps attract tech-savvy professionals)

"This represents a fundamental shift in what tax professionals value," notes the CPA Practice Advisor. "They're not just looking for better pay—they're looking for better work."

The Reality of Career Progression

According to Journal of Accountancy, the difference between traditional and tech-forward firms isn't just about efficiency—it's about how quickly junior staff can progress to meaningful client work.

Accelerated Path to Advisory

Instead of spending their first two years primarily on data entry, new CPAs at tech-forward firms are getting client exposure earlier. Studies show that junior staff at automated firms begin client work 6-12 months earlier than their peers at traditional firms.

Traditional Path:

Year 1-2: 80% data entry, 20% analysis

Year 3-4: Begin client interactions

Year 5+: Advisory work

Tech-Enabled Career Path:

Year 1: 40% data entry, 60% analysis

Year 2: Begin client interactions

Year 3: Advisory work

Making Technology Work for Your Team

Leading firms are using automation strategically in three key areas:

1. Strategic Task Shifting

Recent data from FloQast shows firms using automation effectively:

  • Reduce manual data entry by 60-70%

  • Free up 15-20 hours per staff member during tax season

  • Enable junior staff to participate in client meetings 2x sooner

2. Accelerated Professional Development

According to the Journal of Accountancy, top-performing firms are:

  • Investing saved time in advisory skill development

  • Creating structured mentorship programs

  • Building expertise in high-value services

3. Better Work Experience

The latest industry research reveals firms with modern tech tools see:

  • 47% higher staff satisfaction scores

  • 3x better retention rates among junior staff

  • Significant improvement in work-life balance ratings
    Retaining Talent for the Long Haul

Retention is about more than perks or paychecks. It’s about creating a work environment where people feel challenged, supported, and part of something bigger.

Firms that retain top talent focus on:

✔ Purpose-driven work: Giving CPAs the opportunity to solve real client problems.
✔ Work-life balance: Reducing seasonal burnout through automation and outsourcing. ✔ Pathways to growth: Offering ongoing learning and opportunities to take on leadership roles.

72% of accountants prioritize firms offering automation-driven flexibility (e.g., remote work).

88% of Gen Z CPAs seek employers that invest in AI and automation, associating them with career advancement.

By embracing technology, you’re not just scaling your firm—you’re building a place where top talent wants to stay. And in today’s market, that’s a serious competitive advantage.

How are you balancing profitability and employee satisfaction?

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Click to vote and check-in next week to see how other firms are approaching this challenge.

Until next week,

Edna