Most everyone is aware of what is being called the Great Resignation. The demand for talent in the accounting arena has reached unprecedented levels. With a significant decline in the number of people graduating with accounting degrees from colleges and universities, as well as unemployment in the accounting profession at an all-time low, businesses need to reconsider how they staff their accounting departments, and in the case of certified public accounting firms, their client engagements. This has residual impact on clients and what services they receive.
The recent pandemic advanced public accounting by at least a decade. Firms that never would have adopted a work-from-anywhere policy were forced to do so, and found that work still got done. As a result, many employees are now seeking the same flexibility that was offered during the peak of the pandemic. Those organizations that are mandating a return to the office are facing significant resignations by those who have adapted well to – and now seek – the work-from-home flexibility that many organizations still offer.
Fierce competition amongst CPA firms and private industry for experienced staff with the CPA designation is creating significant increases in compensation levels. In the past, a six-figure salary was reserved for someone who achieved the level of supervisor or manager. Today, senior accountants with no more than two or three years of experience are sometimes earning more than $100,000. These increases in compensation are no doubt resulting in shrinking margins. This could lead to price increases for clients, which need to be kept in check.
To combat the shrinking margins, some organizations have begun exploring outsourcing or offshoring their work. This is not a new phenomenon; midsize and large CPA firms have been doing this for years. To be competitive, offshoring is no longer optional. And why not? Whether India, the Philippines, South Africa, Nigeria, Colombia, Brazil or Mexico, these countries have considerable advantages in areas, including significantly reduced compensation requirements, candidates from Big Four affiliate firms, and a superior work ethic. Frequently, we are also hearing that firms are getting millennials with baby boomer work ethics.
In addition to going offshore, many organizations are rolling out the red carpet for their employees. It’s cheaper to invest in a strong retention program than to have to go out and pay recruitment fees. Some firms are reducing busy season hours down to a 45- to 50-hour work week from what had become the norm of 55 to 60 and even 70 hours per week or, in the Big Four, sometimes 90 to 100 hours a week. These conditions are helping to drive CPAs out of the large and Big Four accounting firms. Whether a tremendous opportunity in private industry or with a midsize or smaller CPA firm, the fact is that these organizations are affording desirable lifestyles for their staff.
There is not a CPA firm in the country that is without hiring needs. Candidates have multiple opportunities and are in the driver’s seat. Fast-movers, same-day offers and an efficient interview process results in greater successes for organizations. Those involved in the interview process must ensure that there is alignment in the messaging they deliver to candidates. Too often, candidates are being sold by the interviewer and enter an environment that does not match the messages received.
There has been significant consolidation in the public accounting industry for the past 10 years. The pace has never been more frenetic than it is now. With private equity entering the marketplace and investing in CPA firms, as well as other non-traditional buyers, it has become the wild-wild-west in public accounting. Naturally, this significantly affects the talent and clients of CPA firms. For the staff, many started at a larger firm and found greater comfort moving to a smaller firm. With the merger and acquisition (M&A) mania, many employees find themselves potentially back at a significantly larger firm and are deciding to leave. Many managing partners of midsize CPA firms have shared with me that they have been the beneficiary of new clients because of some of the firms that have merged with larger firms. Clients should take advantage of these situations to negotiate their best services and fees.
The reality is that there is a bright light for entrepreneurial CPAs and employees who embrace the growth that is brought on due to the M&A frenzy. With outside investment and a true partnership, the new buyers in the marketplace are having a tremendously positive impact for not only themselves, but their employees and partners, both young and old. A larger firm, while still having significant hiring needs, has a greater ability to recruit and retain employees than most, if not all, smaller firms. The hiring crisis in the accounting profession is not going away any time soon, but it can still create many opportunities for business clients.
About the Author: Philip J. Whitman, CPA, CEPA, is the president and CEO of Whitman Transition Advisors LLC, which specializes in CPA practice management, risk management, outsourced human resources and marketing and communications services. He can be reached at email@example.com.