In the current economic climate, businesses across industries are grappling with an escalating challenge: the shortage of senior accounting and finance professionals. Three critical factors drive this pervasive issue:
- A retiring workforce
- The Great Resignation of 2020-21
- Dwindling student’s interest in studying accounting.
However, does this trend signify an insurmountable problem, or can it be turned into an opportunity for innovation in talent acquisition and accounting recruitment?
What is happening with the accounting shortage
The retiring workforce
The wave of baby boomers reaching retirement is causing a noticeable brain drain in the accounting industry. Years of accumulated knowledge and experience are leaving the workforce, and the task of filling these vacancies with equally skilled professionals is proving to be a daunting task.
This challenge is one of the most significant factors influencing the struggle to fill senior accounting positions. The task becomes even more daunting when considering the need for professionals who can balance traditional accounting skills with emerging requirements.
The Great Resignation (or Big Quit)
Adding to this is the Great Resignation phenomenon of 2020-21. This term represents a seismic shift in the labor market landscape, which saw an unprecedented number of employees voluntarily leaving their positions. The Big Quit led to more than 300,000 U.S. accountants and auditors leaving their jobs—a 17 percent decline from a 2019 peak, according to The Wall Street Journal.
However, what's even more concerning is that the departure is not limited to a specific age group or level of experience. The U.S. Bureau of Labor Statistics (BLS) reveals that the exodus from the accounting profession has been indiscriminate of age or career stage. Young accountants within the 25-to-34-year-old bracket are opting out of the field, as are mid-career professionals aged 45 to 54. This trend indicates a broader, more systemic issue than merely a generational shift or career progression; it suggests a sector-wide dissatisfaction that needs immediate attention.
The reality of such a sizable talent gap has sent ripples of concern across the industry, prompting a significant rethinking of hiring strategies and talent retention approaches.
The loss of interest in accounting
Meanwhile, another significant piece of the puzzle is the declining interest in the accounting profession among younger generations. The issue is multifaceted and rooted in various factors, from perceptions about the industry to the actual economics of choosing an accounting career. Negative stereotypes about the profession, lower starting salaries compared to other financial careers, and cultural values influence career choices.
The net result? An ever-widening recruitment gap and chronic understaffing, becoming a troubling reality for many businesses. This talent shortage, if not addressed, could have long-term implications for the health and competitiveness of the accounting and finance industry.
The current state of the accounting sector
Such circumstances dramatically impact accounting firms. Salaries, for instance, are set to increase from 2.3% to 5.8% in 2023, even in an uncertain economy. Businesses face understaffing and are unable to fill senior positions. And the demand for accounting firms' services is increasing, as these firms themselves struggle to recruit accountants.
Another factor that often goes unnoticed is the actual cost of recruitment. It's not uncommon for the total cost of hiring a new employee to amount to three to four times the salary, factoring in both direct and indirect costs. These costs accrue not over the course of a year, but within just a few months. And when the time spent by departmental leaders and managers supporting the recruitment process is taken into account, the overall cost of recruitment can skyrocket.
Exploring Alternative Hiring Strategies
So, with internal hiring becoming less viable, companies need to make strategic decisions to reduce costs, increase flexibility, and bridge the recruitment gap. Here are a few other alternatives that accounting and finance firms can explore to hire in a talent-short market:
Up-skilling Current Staff: Firms can invest in training programs to up-skill their existing workforce, allowing them to take on senior roles. This could involve expanding knowledge of new accounting technologies or building leadership skills.
Alumni Hiring: Many firms have benefited from rehiring former employees who left to pursue other opportunities. These individuals come back with a new set of experiences and skills that can be valuable for the company. They are already familiar with the company culture and can hit the ground running.
Flexible Work Arrangements: In the post-pandemic world, the ability to work from anywhere is an attractive perk. Firms can extend their search to candidates who may not be able to relocate but can work remotely.
Hiring from Non-Traditional Backgrounds: There is a growing trend of hiring professionals from non-accounting backgrounds, like mathematics, statistics, and economics. These individuals bring a different perspective and analytical skills that can be valuable in accounting roles.
Apprenticeship Programs: Developing relationships with universities and running apprenticeship programs can create a pipeline of talent that can be groomed for senior roles over time.
With a creative and open mindset towards talent acquisition, the current accounting recruitment gap can be transformed from a significant challenge into an opportunity for innovative hiring practices.
Strategic Talent Hunt outsourcing
One such strategic move that's gaining traction is outsourcing. Firms are beginning to hire part-time experts and nearshore contractors. Outsourcing is proving to be a potent solution to resolve understaffing, offering cost-saving benefits, a larger pool of candidates, flexibility, and increased productivity.
While outsourcing can be a valuable tool, it's essential to make strategic decisions about what functions to outsource and what should remain in-house. For small to medium businesses, this may mean outsourcing full positions or hiring fractional experts. For accounting and finance firms, outsourced staffing may be the solution.
The shortage of accounting talent does not necessarily spell disaster. Instead, it may spur innovative ways to recruit accountants and fill senior accounting positions, as businesses adapt to changing economic trends.
