The Battle for Accounting Talent: Why Employers Aren’t Winning
More Demand Than Supply
For the first time in almost a decade the U.S. experienced a full year with an unemployment rate at or under 5 percent, a figure economists have long considered to be “full employment.” While this likely means higher wages for employees, employers often experience a talent shortage where they are unable to find qualified candidates for open positions. More demand than there is supply. For the modern accounting world; however, that is just a fraction of the story.
Crisis of Talent By 2020
Smithink founding director David Smith says, “The profession fundamentally is heading towards a big crisis of talent,” and the AICPA expects more than 75 percent of today’s CPAs will retire within the next 15 years, eligible as early as 2020. That’s one of the highest percentages of any subgroup within any other field over the same timeframe.
The U.S. Bureau of Labor Statistics expects that employment of accountants and auditors will grow faster than any other occupation it tracks through the end of 2018. Between 2014 and 2024, there will be 142,400 new jobs. However, the 11 percent increase within the field will fail to address issues including millennial turnover, lack of experience, and enormous IT changes affecting the profession.
Companies replace positions, but they can’t replace experience. For example, an internal study conducted at PWC showed almost 80 percent of its workforce is filled by millennials, many of whom have less than five years of experience within the industry. More concerning, firms such as the Big 4 aren’t just involved in reactionary tax and accounting services, e.g. your “ma and pa” tax preparation and financial audits, but more forward-looking consulting and planning services. For these services industry experience is vital to enhance the quality of the service provided.
New entrants into the accounting profession also leave more often, and far earlier, than their predecessors. A Gallop study showed the average millennial changes jobs four times before 32, and 93 percent of them have already moved jobs at least once. The 2016 National Benchmarking Report estimated average turnover at public accounting firms with $75 million plus revenue at 17.2 percent.
Current employees within the accounting sector of companies aren’t well-equipped enough with information technology (IT) to implement present-day and future large-scale changes in accounting regulation. Over the next few years companies will have to adopt changes in revenue recognition, credit losses, and leasing standards. Without the IT infrastructure in place to handle these changes at the forefront, companies will face audit quality and financial statement error issues down the road.
Bridging the Generational Gap
Firms have begun implementing changes to help bridge the generational gap: hiring third-party recruiting firms, offering higher wages, flexible work schedules, casual work environments, paid vacation time, and even encouraging senior employees to postpone retirement to work a reduced schedule. However, with millennials representing 50 percent of the workforce by 2020, the hiring landscape may get progressively more competitive for skilled labor.
The McKinsey Global Institute concluded in its report on global labor force trends that by 2020 there will be a global supply shortage of 83-85 million people with college degrees or secondary education. With an aging global population and declining birth rates among every country in the developed world, it is likely the answer will be in part technological and not entirely human capital replacement.
The accounting profession could be the first to reach the pending massive structural employment dilemma and the drastic need to implement proactive changes. In an era of increased importance on work-life balance and a drive towards homogenous career and life fulfillment, employers recruiting accounting talent must help shed the stereotype of cubicle number crunching. In a paperless, cloud based, client focused, and employee driven world there is a battle for accounting talent, and employers aren’t winning it.
By Todd Cheney, CPA, Accounting Policy and Practice Editor
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