Accounting Influencers Roundtable

Accounting
Influencers
Roundtable

Reasons for the Acute Talent Shortage in Accounting

Welcome to the Accounting Talent Podcast, dropping every Thursday to accounting professionals, finance specialists, software vendors, tech providers and influencers in the accountancy, CPA and bookkeeping space. To participate in our international virtual speed networking events for the accounting community, go to https://accountinginfluencers.com/events and book your place at the next gathering. Great to build your personal brand and make valuable industry connections.

On this episode of The Accounting Talent Podcast, host Rob Brown is joined by Jeff Phillips, CEO of Paget Business Services and founder of AccountingFly, to dive into the alarming talent shortage facing the accounting profession. Statistics reveal around 300,000 fewer accountants and auditors in the US over the past two years, a staggering 17% drop. The root cause? A weak value proposition from the profession, offering less attractive compensation, flexibility, and work-life balance compared to industries like tech. This perception is driving college students away from accounting towards seemingly greener pastures in investment banking, consulting, and tech firms.

Accounting firms face intense competition for talent, not just from each other but from aggressive employers in other sectors with enticing perks and career paths. However, there is hope. By rethinking their value propositions, exploring untapped talent pools like offshoring, remote work, freelancers, and developing innovative hiring/training approaches, firms can regain their appeal to the next generation of accountants. The profession’s future hinges on its ability to revamp its employer branding and talent strategies.

“The accounting profession is not going to die, Rob. It’s not going to wither on the vine. There is lots of talent out there and there are options and hope.” – Jeff Phillips

Key Takeaways:

1. There is a shortage of accounting talent, with around 300,000 fewer accountants and auditors in the United States over the last two years, representing a 17% loss. [00:11:50]

2. The accounting profession is facing a brand and value proposition problem, as the compensation, flexibility, and work-life balance are perceived as weak compared to other industries like tech. [00:04:30]

3. College students are choosing alternative career paths like investment banking, consulting, and tech companies, which are seen as more attractive than “boring old accounting.” [00:14:55]

4. Accounting firms are not just competing with each other for talent but also with more aggressive employers in other industries, offering better perks and career paths. [00:16:50]

5. There are solutions and untapped talent pools that accounting firms can explore, such as offshoring, remote work, freelancers, and non-traditional hiring and training approaches. [00:20:30]

You can watch this episode and more on our YouTube Channel

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Thanks to our sponsors:

ACCOUNTINGFLY. Accountingfly connects employers with top U.S.-based accounting talent through a variety of services including dedicated searches, Always-On Recruiting, and freelance placements for seasonal or temporary needs. They specialize in remote accounting recruitment, recognizing early on the significant advantages that remote work offers to employers, job-seekers, and their own operations. They pride themselves on their track record of matching the right candidates with the right opportunities and building a robust team of industry experts. Additionally, their partnership with Going Concern—an esteemed source for accounting news and insights—further enhances their ability to stay on the cutting edge of remote recruiting by tapping into a natural pipeline of job seekers.

If you’d like to sponsor the show and elevate your brand with our audience, reach out to show host Rob Brown on LinkedIn and his team will reach out to fix up a chat to explore.

Transcript
Rob Brown:

This is the "Accounting Talent Podcast" with Rob Brown. I'm wondering if accounting is going to die because we haven't got enough talent and that the profession is withering on the vine. Jeff Phillips, do you have the answers?

Jeff Phillips:

The accounting profession is not going to die, Rob. It's not going to wither on the

Rob Brown:

are

Jeff Phillips:

and hope.

Rob Brown:

going to go into that today. It's wonderful to have you on. You're joining me as a co host for a few episodes. Now, Jeff, do you want to just introduce yourself for the audience? Because I've got a real live talent expert on here that does this for a living. So tell us what you do. Rob, I'm the CEO of Paget. We are a US based tax and accounting franchise with over 300 offices in North America. So on one hand, I run an accounting firm, but prior to that I founded Accountingfly, which is a boutique. Recruitment company, about 12 years old now, and we match CPAs with CPA firms and accounting teams with a twist. We only place US based remote accountants into those employers. I guess I've been involved with over a thousand hires over the past 12 years. Uh, so, I have learned a lot about hiring, keeping talent, um, through a lot of trial and error over, over, over a decade. Thank you. Well, it's great to have you with us because over the next few months, we're going to be going into a lot of the challenges and threats to accounting and diving into where the shortages are coming from and what is going on. But we're also going to be bringing some hope, Jeff, aren't we, that there are solutions to this, working solutions, practical solutions that firms can implement to bring that talent into the firm and get the growth that they want. So a little bit of hope's a good thing, isn't it? there

Jeff Phillips:

Our value proposition needs work

Rob Brown:

And there are some labor market issues, but firm owners, partners, CFOs have so many options that they may not be aware of that they can deploy and we're seeing it play out, Rob, on a daily basis, both at my firm and And also at my staffing company.

Jeff Phillips:

company.

Rob Brown:

So in this episode, we're gonna outline the problem and, uh, talk about the staffing shortage in accounting. I want, I'm gonna ask you in a moment. Why is there a problem, Jeff? But just for the audience, we're going to put two articles in the show notes. One is from the Fast Company and another is from shrm. org. And these point to the talent shortage with numbers, with statistics. And they are one or two years old, but it's more prevalent now than it was. So let's dive into that. Why is there a problem with talent in accounting, Jeff? Proposition

Jeff Phillips:

Our value proposition needs

Rob Brown:

Rob.

Jeff Phillips:

Rob. Um,

Rob Brown:

by that I mean what the value proposition, the profession is offering talent. And on a firm by firm basis, decisions need to be made about, um, how to change that value proposition. So right now I categorize it as weak and it's not supported well by the fact that, um, we do have fewer people in the profession than we have had in the past. That doesn't mean it's, it's, it doesn't mean that it's, uh, it's a lost cause at all. It just means you've got to change your tactics. Well, what is the talent value proposition? If I was being really cynical, it is, join the accounting profession, work 70 hours, 80 hours a week in a dark room locked to your desk. You might see a client occasionally, but you'll be working with lots of numbers and spreadsheets. I know that's not true, but that is the perception in some quarters. Give us your view of the current value prop for talent in accounting. I'll start with what the The value prop is that is, uh, I'll start with what the positive is.

Jeff Phillips:

is.

Rob Brown:

Accountants are business consultants. Accountants are trusted advisors.

Jeff Phillips:

Um,

Rob Brown:

is a profession that is only going to grow in demand. Here in the U. S. there are 31 million businesses. They've all got to pay taxes. They all need financial related insight. They all need advice. They need audits. They need what we call advisory services.

Jeff Phillips:

The,

Rob Brown:

the the brand of

Jeff Phillips:

of the

Rob Brown:

the CPA and the brand of the ACCA and the enrolled agents are so trusted compared to other professions.

Jeff Phillips:

It's a,

Rob Brown:

a, it's a strong brand and a strong market. And as I feel like almost everybody knows that would be watching this or listening to it,

Jeff Phillips:

it,

Rob Brown:

we hit where we have a weak value proposition is in compensation. flexibility and work life balance, being on call versus being off call, issues around remote work that were brought around from the pandemic

Jeff Phillips:

Um,

Rob Brown:

there before. And so the negative value proposition is,

Jeff Phillips:

around a weaker brand around compensation. the perception of long hours, the perception of it, that it's boring, um,

Rob Brown:

perception that I'm going to be

Jeff Phillips:

be

Rob Brown:

to a desk

Jeff Phillips:

desk

Rob Brown:

and doing tax returns the rest of my career,

Jeff Phillips:

my career.

Rob Brown:

And perception that I don't have a long term career, that

Jeff Phillips:

path,

Rob Brown:

it's a great place to start, but I want to get it, but we want to get out of it as soon as possible. I think a lot of debts before they are fixable, just business model changes, but the fact remains, and you'll see in the Fast Company article, and you'll put in the, show notes,

Jeff Phillips:

in the, in the,

Rob Brown:

the, Sherm are people to our competitors, and our competitors

Jeff Phillips:

people and we're losing people to our competitors and our competitors are

Rob Brown:

companies that offer a set of employment options that

Jeff Phillips:

options

Rob Brown:

the profession does. We're losing people to in house positions, we're losing people to outside of accounting altogether.

Jeff Phillips:

accounting altogether.

Rob Brown:

When I think of my career, I trained as a maths teacher in the end. I taught secondary school mathematics, but I did start out as an accountant. I took a degree in accounting. I didn't complete it. I do have a diploma in accounting, but back then when I didn't know quite what I wanted to do, I was comfortable with numbers and I was attracted by the respect of the accounting profession. There was good coin in it, so you knew you would get some good compensation. I was attracted by the rigour of the profession, it was robust and it was hard to get in. So there was kudos there. Also the security, I never heard of unemployed accountants. So we come into it with those expectations. Yes, it's hard work. We don't want it to be a breeze and there needs to be a barrier to entry. But as you start to compare it to say the legal and the medical profession, who study just as hard for the qualifications, you might argue, and other professional services. The accounts that seem to be dropping down in compensation, and you're right, there is a leeching out of the profession into industry, into finance, into tech, into doing their own thing, are coming out of the labor market altogether. So, the brand of accounting does seem to have a problem, and I'm wondering if that's just happened overnight, or did the pandemic accelerate that? Have we been grinding away at the brand for years? How have we got here?

Jeff Phillips:

We've been grinding away at it for

Rob Brown:

Right.

Jeff Phillips:

And I think if you look at the small and mid market in the United States, partners are making great money. Um, owners of small firms are doing okay. But the, the model has always been, we can hire at a lower compensation

Rob Brown:

very long hours, very stressful career, and it always is that consumer, in this case, which is the employment base, rising up to it, and they're seeing in high school and in college that, that yes, it's secure, but it's, it's, Uh, it lacks the thrill it lacks a

Jeff Phillips:

but it's, Uh, it lacks the thrill or it lacks a

Rob Brown:

long term

Jeff Phillips:

prospect

Rob Brown:

lacks,

Jeff Phillips:

it

Rob Brown:

uh, well, you know, I think just, I spent, you know, if you're in the United States, you've got to get a four year degree, and you add a master's,

Jeff Phillips:

you've got to get a four year degree, then you add a master's and so it's a five year degree. So we've got 150 hours, then you sit for the CPA exam make a salary that is pretty equivalent to a lot of entry level work, Rob, that doesn't require a master's or the credential. Cool. And so I think it starts there. And if you zoom out just for a second, there's a labor problem too, that we're dealing with. Um, Ferry is a massive recruiting firm and they came out with a study. in 2017 that tells us that globally 2027 there will be 50 million fewer

Rob Brown:

knowledge workers then there will be jobs that are trying to hire them. We're just growing our knowledge work,

Jeff Phillips:

Uh,

Rob Brown:

market, labor We are growing the knowledge work

Jeff Phillips:

work economy

Rob Brown:

than there is a labor pool to fill those jobs. I used to show that slide at speeches and presentations and everybody would yawn and say this doesn't affect me. Well, now we're feeling it. And I think the great resignation that occurred as a result of that

Jeff Phillips:

as a result of the 2020 pandemic globally accelerated that. So we have a labor market problem.

Rob Brown:

That's not just accounting too, is it? To be fair, there are many other sectors that are suffering with that, but equally, there are some sectors that are attracting the talent, maybe from the accounting talent pool that are doing well and offering a good employer value, employee value proposition sectors, but specifically in accounting, it states that, it's probably, Trump listeners states there's only 660, 000

Jeff Phillips:

you think I can only speak to the United States, but it's probably true everywhere you have listeners, are about 1. 1 million accountants in the United States. There's only 660, 000 CPAs. Right. And there's a, in America, we have about a three and a half percent unemployment rate right now. Usually accounting and auditing in America is about half that. So something like one and a half percent, one to eight percent. What that means here is that everybody that wants a job is employed. So lots of your listeners have posted a job on ZipRecruiter or Indeed and gotten a lot of applicants, but no accountants. And that's why. So, you know, what I've learned through this process is There are, the value proposition as an industry is weak. but can be changed. We have full employment. And so what can you change in order to have a successful and predictable hiring result? That's the question that ought to be on people's minds.

Rob Brown:

But let's move to that shortly. I just want to. Move beyond the emotions that are clearly in this conversation. And you and I speak to a lot of leaders in accounting and talk about the brand and the challenges. Talk to the FEM owners that they're wanting to grow, but they can't find the people. But let's put some facts behind this. Just pick out a couple of the stats from this Sherm article and this Fast Company piece that you actually commented on at the time, Jeff. What are some of the headline stats here that we should be mindful of?

Jeff Phillips:

Yeah. I thought the Sherm article was interesting. This is the Society of Human Resources Management and it's pointing out there were something like 300, 000 fewer account or 300, 000 accountants and auditors that left their positions over the last two years in the United States.

Rob Brown:

300, 000. Wow.

Jeff Phillips:

so that's about a 17 percent loss of employed accountants from its peak of 2019. So you can trace our current predicament to sailing into the pandemic. I think the, the issues, the value proposition issues, lower wages, longer hours, less flexibility were there and we were complacent, right? But then as you get into 19, 20, 21 and on. That accelerated that, that exposed that weakness that we had in the value proposition.

Rob Brown:

But a lot of people might argue, Jeff, that that's the baby boomers that are leaving, that they're at retirement age, they're selling up, they're moving on, and so naturally there's going to be that churn. 17 percent does sound a lot, but a younger accountant's leaving too.

Jeff Phillips:

You're right, Rob. So this, a large part of this picture was, I'm a baby boomer. I'm ready to retire sooner than I thought I was going to. But this Sherm article also points out that accountants, you know, between 25 and 50 years of age are leaving the profession at a faster clip than, um, they had ever before as well. It's smaller, right? So that gives us a little bit of hope, but it's still significant. And I think that's, that's where we have to pay attention.

Rob Brown:

Yeah. Okay. So we, we know we've got people leaving. Uh, there's a start on job growth as well. It's 6 percent a year for the next eight years. So the accountant numbers are going down and, and the job vacancies are going up. That's not something that stacks up mathematically.

Jeff Phillips:

It's not, this is why that corn ferry study was so important. It's telling us as knowledge workers, we're going to have more jobs than we have people to fill them. And that is exactly the case in the United States. And it's, the industry is only growing. The demand for what we do is growing and growing and growing. and the labor pool is sort of staying the same and marginally leaving in the, in the, in the age groups that we are concerned about.

Rob Brown:

But Jeff, my thinking here is, okay, people leave every profession, every industry, every sector, but there's always people coming through. So are there any barriers to entry that are stopping people taking accounting degrees or coming into public accounting or taking chartered accounting qualifications here in the UK? What's stopping that influx at the bottom end? There's a slight downtick in the number of people that are taking the CPA exam. There's a slight downtick in the number of people getting a cab. So our supply is a little bit smaller in the United States, way more complexity on the tax side. But there, what's happening is students are just seeing better careers outside aggressive industries. They're seeing that in investment banking, consulting, paper 2.

Jeff Phillips:

bit smaller and yet we're all getting more customers, more demand. Not to mention over here in the United States way more complexity on the tax side. I think that they're, I think what's happening in, in, in, in stepping away from numbers for a second is that college students are just seeing a better career path and by better career path, I mean a better life. a better financial upside, the perks that come with more progressive industries. seeing that, they're looking at investment banking, they're looking at consulting, they're looking at going into work in high tech companies, and they're comparing that to, you know, boring old accounting, and so

Rob Brown:

So, they are

Jeff Phillips:

making that equation for themselves that I'm better off choosing this more, know, attractive career path.

Rob Brown:

Yeah, when we use the phrase the war for talent, traditionally, we might say the war for talent is between accounting firms. The big four, for instance, always try and put cream off the top talent coming out of universities to recruit for their firms. But the war for talent now is that accountants or would be accountants are looking at different career paths and saying, well, I don't even want to go into accounting. Just like a competitor for Apple is Amazon. It didn't used to be because they were in different markets, but these entertainment providers now are all competitors. Even. Take a hotel. The Radisson Hotel or the Hilton Hotel is a competitor for accounting firms. Insofar as people will walk into the lobby and have an experience. They'll have a customer experience. Or if you have a website online, you compete with Amazon because they create an experience for you in buying or seeing stuff online that really, really works. So, there's so many competitors out there beyond accounting firms themselves. for this talent. And you mentioned consulting. That is a massive one. And these upwardly mobile tech companies, that is another massive one where they can almost be Google type employers and give you a really interesting, meaningful, exciting, varied career path, that accounting, whilst it might do, doesn't seem to be able to articulate.

Jeff Phillips:

is competing against high tech. It's not just firm A is competing against firm B. I mean, we should dig into how to compete, but yes, we as a profession competing against much more aggressive employers. I'm reminded of a story, Rob. I at a CPA firm conference eight or nine years ago. and was in a room full of CPA partners at wonderful middle market firms here in the United States. And I wanted to talk about their value proposition to talent. That was what they asked me to come and speak. What I did was I

Rob Brown:

And she explains to CPA

Jeff Phillips:

officer of a Silicon Valley a company that's a, that's a billion dollar unicorn now, but it, it plays in the accounting space and she explained to the CPA partners,

Rob Brown:

partners, their

Jeff Phillips:

around flexibility,

Rob Brown:

flexibility, HR

Jeff Phillips:

leave, just general HR policies that

Rob Brown:

that

Jeff Phillips:

trust

Rob Brown:

and trustworthiness.

Jeff Phillips:

general HR policies that are investing heavily in the career path of their people. And I could feel the tension in the room because there was such a large resistance. I remember, I remember hearing, I remember hearing like audible sighs when she would talk about paternity leave. Who, who could imagine such a radical idea? And I got up on stage after she spoke. I said, this is who we're competing against. It's not that people don't

Rob Brown:

It's that we're selling the wrong product. And our experience of working inside your firms is the differentiating factor. How do we sell it better, right? How do we, how do we change the experience for the town? What?

Jeff Phillips:

I see a lot of opportunity in that.

Rob Brown:

In another show, Jeff, I want to talk about the, the implications for the employers. What does this mean for accounting firms? What does this mean for the future of the profession? And I also want to dip into some of the solutions we will over coming weeks. Uh, but just give us a little bit of hope here as we draw to a close on this episode of, Okay, there are problems, but some firms are dealing with it. There are mechanisms, there are systems, processes, means by which to bypass, overcome the talent problem. So give us a little bit of hope here.

Jeff Phillips:

The CPA brand here in the United States is the, is the most trusted professional brand. that there is. There are 31 million businesses and growing. The demand for the accounting services is growing. We, we work in a phenomenal, um, profession of business advisors and financial

Rob Brown:

You're preaching to the converted though, Jeff. All of our listeners, watchers, they know that because they are in this game. We need that message to get to the people that are not in accounting that could be or considering leaving perhaps.

Jeff Phillips:

Well, I think the hope is what we tell and how we communicate our value proposition

Rob Brown:

Yeah.

Jeff Phillips:

to be improved, number one. Number two, there are There are pockets of talent that CPA firms are

Rob Brown:

an exciting time.

Jeff Phillips:

accounting firm owners that don't think deeply about onboarding and how to create a amazing um, employee experience inside their firm so that they. stay. to call it the new talent stack. There is just a new way of thinking about who we hire what we tell them to, to, uh, them excited about this career journey.

Rob Brown:

Quickly, if employers don't get talent right, there's a lot of complacency out there. We've got a great firm. We've got a great brand. People will want to work for us. We've been going millions of years and there is that almost ignorance of the talent problem because they think they're always going to fill vacancies. But that's starting to happen now where it isn't being filled. So the implications for employers are severe now and will get ever more severe, but all for maybe a few brands.

Jeff Phillips:

Ultimately owners of firms care about their enterprise value. What's, what's my succession plan? What will I exit for?

Rob Brown:

Yeah.

Jeff Phillips:

The ability to predictably and reliably hire talent into a firm is one of the value drivers of the, of the exit price of a business. And. where we've got to work and there are systems and processes there where you can win and it directly affects Whether or not you sell your firm whether or not you sell your book of business your practice your partnership So it's critical

Rob Brown:

Jeff, we'll sign off there, but give us a flavor of what kind of things we're going to be talking about on the Accounting Talent Podcast over the next few weeks, because you've got a whole list of topics, juicy topics that you want to get into, and real life examples that are really, really working. So what's on the agenda for our listeners and watchers?

Jeff Phillips:

the agenda is do we win? I have the privilege of watching employers win on a daily basis. I'm inspired by their stories and I appreciate you asking me back to tell some of those stories, but we're going to, we're going to talk about who are we hiring? Where are they living currently? How are we going to find them and bring them into our firm and create an awesome culture for them? How are we going to address remote work? What are we going to do about offshoring? How are we going to properly integrate new hires into our teams? In this new hybrid environment, how are we going to make sure those employees that we don't see are productive and we feel confident that they're getting the job done? Uh, how are we going to trust those employees? So I, I think what you'll see is we're going to lay out a sequence of topics that are useful to every employer in the accounting profession that I hope they feel inspired and confident. And what they do is they take practical checklists from this that will, that will move the needle forward for them a daily basis.

Rob Brown:

And you said every employer in accounting, I'm thinking of the succession plan and the way people grow into careers, we're all probably going to be employers at some point, we're building teams, we're building departments and functions and service lines, and we're moving up the career ladder, which means we're more managers, bosses, leaders, then at the bottom rung of the ladder, so I guess the target for this show as we build it up, Jeff, is anyone in leadership or would be leadership positions in accounting?

Jeff Phillips:

Anyone that is a leader in this profession going to have to be involved in hiring, outsourcing, delegating. You can't grow a business without other people, especially in the business we're in. We're not selling widgets at scale. We're selling the time and expertise of professionals, those professionals are essential to growing our business, accomplishing our goals.

Rob Brown:

Well, Jeff Phillips, we are excited about you joining us for this journey. We've got so many things to discuss. I'm thrilled that you'll be our co host. I'm Rob Brown. This is the Accounting Talent Podcast. Weekly episodes coming out every Thursday, tune in and tell your friends about the show. Also check out our associate sister show, the Accounting Influencers Podcast. Jeff appears on that as well. We're currently doing a series on the future of accounting. These are four personal panels with some of the top experts and leaders, thinkers in the world that have something to say about where accounting is going. And we will touch on a little bit of talent thing, but this is your show to focus on accounting and on talent, the challenges and the solutions. Thank you for listening. We'll see you next time.