Today, tax advisory firms have options to employ CPAs or non-CPAs or install ‘do-it-yourself tax-preparation’ software packages. A firm can also decide to mix them. The option that a firm selects has a major impact on its ability to compete with other firms in the targeted market. The paper explores a case of tax firm that that has employed CPAs and is experiencing market pressures due to competition emerging from firms that employ non-CPAs, as well as firms that use the self-service computer software. The paper examines economic issues that such a firm experiences in pricing its products and services, as well as the ethical challenges that the firm is likely to face when hiring non-CPAs.
Economic Issues Related to Pricing
One of those major economic issues that a tax advisory firm employing CPAs is likely to face in pricing is inability to determine the impact that a change in prices will have on the attractiveness of its products and services to the consumers (Poniachek, 2013). Usually, CPAs require higher level of compensation than non-CPAs, implying that the cost of services provided by a firm hiring CPAs is likely to be higher than the cost of a firm that hires non-CPAs. An organization that uses self-service computer software is likely to incur lower costs than a firm that hires CPAs in the long-run. Consequently, a firm employing CPAs is likely to charge higher prices than the other firms in order to cover the higher costs (Poniachek, 2013). Given the high level of competition that such firms face today, increasing competitiveness in the market may require a firm hiring CPAs to consider replacing some of them with non-CPAs. The step can help to reduce costs and to charge competitive prices for a firm’s services and products.
However, the CPAs usually provide higher valuable services than the non-CPAs since they are more knowledgeable and skilled. At the same time, consumers usually attach value of a product or service to its value. Premium services are charged a higher price than less quality services (Poniachek, 2013). As such, consumers may perceive the lower prices of a tax advisory firm as coinciding to lower-quality services and products. Consequently, a firm serving high-wealth consumers may risk losing the customers who value high quality services that attract higher pay. Although the firm may attract other customers who will be attracted to the lower prices, the high level of competition may limit the ability to attract such customers. Also, a tax advisory firm may not be sure that reducing the prices will attract enough customers to enable it increase profits, irrespective of the reduction in total costs. Although the move may affect the value positioning of a tax advisory firm, offering different services and products to different consumer segments at different prices can help to offset the problem (Poniachek, 2013).
Ethical Challenges of Recruiting non-CPAs
Hiring non-CPAs may raise several challenges to a tax advisory firm. One of the major challenges is the fact that the move may require the firm to lay off CPAs. The move is likely to have negative impacts on the welfare of the laid-off workers, especially if they remain jobless. If a laid off worker stays jobless, he/she may not access enough income to cover his/her expenses v. As such, the move ignores the fact that the laid-off employees may suffer due to lack of constant income. Further, terminating the work contract involves overlooking the social contract existing between the employer and the workers (Loke & Shong, 2008). Employees develop a social contract with their employees, which motivate them to work hard to enhance the progress, achievement and performance of a firm. Ethics standards require every part to a work contract to reciprocate appropriately to the efforts of the other. However, termination of the contract ignores the contribution of a worker and it amounts to a failure to fulfill the expectations of a social contract.
Secondly, recruiting the non-CPAs may affect the value of services offered to the clients. In a tax advisor firm, a worker plays a major role in influencing the loyalty and trust of clients to its services and products. As noted earlier, the CPAs are likely to provide higher quality services to clients than non-CPAs due to their higher level of knowledge and skills (Loke & Shong, 2008). In a firm hires CPAs only, the existing clients are likely to have developed trust and loyalty to the organization due to their preference of the value of services offered by the employees. Hiring non-CPAs who may not have ability to deliver the same quality of work is likely to lead to the betrayal of trust and loyalty of the existing clients who would prefer the services of the CPAs. In short, hiring the non-CPAs is likely to violate the ethical standards guiding the contract between an employer and a worker, as well as the relationship between an organization and the clients (Loke & Shong, 2008).
In conclusion, hiring non-CPAs may help to cut down costs of a tax advisory firm. However, the firm may not be able to asses the impact of a new pricing strategy on the loyalty of the existing customers and the profits. In addition to the economic concerns of pricing, the move may lead to the violation of the ethical standards that guide social contract between the employer and employee, as well as the relationship of the organization and customers.
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