6 min read
Overcoming Talent Retention Hurdles in Accounting Firms
Talent shortage is a problem in accounting. It has been for decades, and it’s only getting worse. Firms face a historical struggle to find quality accountants—and keep them—while focusing on growing the business.
Of course, there are a number of ways industry professionals stick their finger into the wind and attempt to make sense of talent shortages.
One that’s specific to accounting is the “exam gap,” meaning that there’s a difference between those who want the training to become a CPA and the number of people who actually take and pass the exam. As you might suspect, the former far outpaces the latter, and it’s a difference that’s been growing for nearly a decade.
Now the problem is magnified as the finance industry as a whole grapples with the “great resignation.”
According to NPR, this coined term is a way to describe the millions per month leaving their roles “...in search of more money, more flexibility, and more happiness. Many are rethinking what work means to them, how they are valued, and how they spend their time.”
Note: We discuss other industry-specific reasons in detail in our full write-up on the “great resignation,” which you can find right here.
With all these challenges amid an already difficult task of scaling a firm—what can you do to fix and prevent staff shortages at your accounting firm?
Let’s jump into it.
YOU MAY ALSO WANT TO GRAB A COPY OF THIS EBOOK:
HOW TO INCREASE ACCOUNTING FIRM CAPACITY—WITHOUT HIRING MORE PEOPLE
3 Root Causes of the Issue
Before you settle on a solution to your hiring and retention challenges, you should take some time to examine the source of each.
Data can help illuminate the issue, but let’s not forget about good, old-fashioned common sense. We see the following three issues as leading causes for accounting firm staffing and talent retention challenges.
1. Demand IS UP
The Bureau of Labor Statistics predicts that demand for accountants will grow 10% by 2026; a rate that’s faster than the average growth of any industry. (Unsurprisingly, the pandemic has muddied things up a bit with the gap between demand and supply.)
That said, there are potential problems caused by demand:
Wage wars: Firms with big reputations and margins are more likely to attract top talent with larger paychecks.
Job security: Large venture-backed firms and other players like Pilot and Bench might be less susceptible to market fluctuations and can offer steady positions that won’t change with the seasons.
No more geography barrier: With the forced embrace of remote work during the pandemic, many firms are realizing they can hire beyond their local geographies, broadening their talent pool and creating more competition for the best accountants.
Overgrowth: If your firm grows past the limits of your capacity (due to the increase in demand), accountants can easily burn out and hit the road.
2. The 3-to-5 Year Itch
Want to know the most desired talent assets in the finance world? Accountants with 3 to 5 years of experience! But such accounting professionals can be hard to keep around.
After a few years of mindless reconciliations, seeing coworkers leave (both the firm and the industry altogether), and getting tired of the “same stuff, different day” work life; it’s no wonder accountants begin to scroll through job sites or chat with recruiters.
In other words, they move on. And it’s not a major surprise when you consider how in-demand they are—and how large firms can afford to hire them. Big 4 firms actively hire experienced accountants at about the same rate as fresh grads, but their experience leads to different results:
- A reduction in time-to-value
- Beneficial client experience
- Greater autonomy, which means less hand-holding
Bottom line: Bored or unsatisfied employees will leave if you don’t act to keep them happy and fulfilled. This increases attrition rates for both your accounting firm and your clients.
3. Technology Puts a New Spin on What Accountants Are Expected to Do
Okay, reason number one was “demand,” meaning more businesses are turning to accounting professionals for help running their businesses. But not only are more businesses seeking financial help, they’re also demanding more value in every area.
The savvy business owner is paying attention and raising their expectations of what they pay for. They might already use technology to do things like:
- Automate reconciliations
- See cash flow in real-time
- Even handle payroll at the push of a button
While some have thought this transition to tech would devastate the accounting industry, it hasn’t. Instead, access to data has excited many business owners who are able to see the potential but are unable to translate that data to valuable insights for improving their company. As a result, they want virtual CFOs, they want forecasts, and they need advisory help!
That’s a good thing, right? What’s the problem?
For modern, tech-forward firms it’s not a problem. But many firms still use their best asset—their people—to do things that machines should be doing with greater accuracy (tabulating numbers, running reports, invoicing, etc.) So not only are these redundant tasks contributing to the 3-to-5 year itch and eventual turnover, they’re also creating a demand gap from the client side.
3 Potential Solutions
Now that you (hopefully) understand some of the most common root causes of staffing shortages, it’s time to look at potential solutions and the data that goes along with them.
1. CREATE A Rock-Solid Structure
Imagine going to work and seeing a different coworker’s desk being cleaned out every week. And worse, picture these people as rocks to the rest of the team—what a sad scenario! It easily conjures questions like who’s going to pick up the slack, what processes will look like moving forward, and how the entire team will be impacted.
If your processes are built around specific people within the firm, you’re unfortunately setting your firm up for operational issues. A few ways to improve your internal structure might include:
Workflow mapping/design: List out all of your services and processes and break them down into the individual tasks involved. Essentially, you’re creating the way your firm works, not relying on particular people to get things done their own way.
Use technology: Remember those tools that handle reconciliations and other redundant finance tasks? Use those to create flexibility in your staffing schedule. Then, re-allocate that time to other tasks that will reduce the overall burden on the team.
Transition planning: Unfortunately, some attrition is natural. Think about your team—if one of your key players leaves, what’s the plan? Begin working on contingency plans now with a special focus on hiring and developing a talent pipeline.
2. OFFER THE BEST Benefits, Flexibility, and Purpose
Sure, a significant difference in pay can influence someone’s decision to take a new job/position or stay where they’re at. But truly, a lot of accounting positions offer similar salaries. That’s where benefits come into the conversation. And we’re not just talking about maternity leave and vacation time (although those two are hugely important benefits).
One study found that more than 75% of job seekers want flexibility in their eventual role. A few other things on the desired list include:
- Paternity leave
- Fulfilling work and purpose (i.e., contributing to the business, not simply staring at receipts all day)
- Flexible working conditions (e.g., remote work days, no-hassle sick days, flexible working hours, etc.)
Note: Many of the benefits that speak to accounting talent aren’t expensive, but they go a long way in showing that you care about employees’ mental and physical well-being.
3. Invest in Their Future (and Yours)
If your team feels like Phil Connors from Groundhog Day, they’ll only live that same busy tax season so many times before they start to look for a way out.
The bad news?
Lack of career training and development magnifies problems during a staff shortage. Two or three key teammates putting in their notice means more hours and antacids for everyone else.
The good news?
Investing in your team’s training is also a solution that can prevent people from taking their exit.
The authors of “Addressing the Silver Tsunami in the Accounting Industry” said it best:
To combat the issue of knowledge loss, [one] interviewee asserted, “Cross-training, job shadowing, documentation, and teaching the basics of accounting and finance can help us.” Each interviewee provided insight into how their organization is using the theme of knowledge to understand and address the issue...They view this theme in two dimensions: (1) an issue and (2) a solution. They informed us that they acknowledge the loss of knowledge can be a major issue as experienced employees retire.
Simply put, another way to invest in your team and your firm is by providing time to study—and prioritizing professional development. Allowing for a certain portion of work time to study certain certifications (including the CPA exam) is an immediate benefit for staff. And it shows your commitment to their individual success—helping them feel like a part of the team and not just another cog in the machine.
The Great Resignation and Your Firm
The industry is facing a momentous challenge in the “great resignation.” Maybe your firm doesn’t have a “silver tsunami” right now, just a bit of a shortage. But if the tempest roars closer to your ship, it’s better to have more sailors than deckhands.
The perfect recipe for accounting firm talent retention doesn’t necessarily exist, but here are some helpful strategies we’ve covered here and in other articles:
- Train your team to do more
- Show them you care
- Document your processes
- Offer clients the in-depth services they really want.
It takes work, but increasing accounting firm retention is doable. One strategy you can deploy right away is to leverage automation for the tasks that bore accounting professionals to exhaustion and drive them out of the industry.
And now’s the perfect time to explore such technology: meet with a Botkeeper specialist today, and you’ll get a $25 gift card as a thank you for your time. No strings attached—just a helpful nudge toward better results for your accounting firm!
Click below to get started.