Operating efficiency of accounting firms based on different perspectives of human resource structures

This paper evaluates the operating efficiency of accounting firms from five perspectives of human resource allocations by sampling a total of 42 large accounting firms listed in the 2013 Survey Report on Accounting Firms compiled by the Financial Supervisory Commission. The paper adopts the three analytical models—CCR (Charnes, Cooper, and Rhode model), BCC (Banker, Charnes, and Cooper model), and Super SBM (a slack-based measure of super-efficiency)—in the data envelopment analysis (DEA) framework. The four revenue streams—auditing publicly listed companies, tax advisory services, management consulting, and business registration and others—are defined as outputs in the empirical study. On the other hand, human resource metrics are referred to as Inputs. These metrics are either financial (wages) or non-financial (job positions, education, age, business services, and CPA licenses). According to the research findings, 22 out of the 42 sampled accounting firms are operationally efficient, while seven are inefficient when measured using the five constructs of human resource inputs. In terms of the overall operating efficiency, the average efficiency values in the CCR model are the highest when measured with education, age, and practice as the three constructs of human resources. In the Super SBM model, the average efficiency values are the highest when evaluated with practice, education, and age. The efficient accounting firms are mostly measured using the human resource constructs of education (34 firms), age (32 firms), and job positions (30 firms). For both efficient and inefficient firms, tax advisory services and auditing publicly listed companies are the two major sources of revenue and competitive advantage. Meanwhile, the management consulting business still requires extra effort. This paper suggests that accounting firms should spend more on wages as an input in order to enhance employees' loyalty and boost their willingness to work. The non-financial human resource metrics for efficient firms are partners, master's degrees, 25–34 years old, and auditing services; employees without CPA licenses are, in fact, the major contributor to operating efficiency. Managers are advised to assign important tasks to these employees and provide them with generous remunerations and benefits so as to retain these high-caliber professionals and motivate them to create revenues for different businesses. The non-financial human resource metrics for inefficient accounting firms are associates, university degrees, 25–34 years old, and auditing services; employees with CPA licenses are the major contributor to operating efficiency. Thus, managers should fully utilize this human resource and empower them to go the extra mile in boosting revenue streams and improving service quality. Finally, neither the change in input attributes nor the application of different DEA models alters the outcome of performance evaluations. Moreover, this paper expects to provide a template for allocating human resources and synchronizing accounting firms' operating strategies.