Attracting and retaining the right talent has become an urgent and pressing challenge for accounting firms. The talent exodus in the accounting profession, which predates the COVID-19 era, is a serious issue that cannot be underestimated. Talented accountants and professionals are leaving the profession and the industry at an alarming rate, making it crucial for us to address this issue immediately.
This growing talent exodus has sent firms, clients, and professionals into a frenzy, with everyone trying to bring in necessary measures to retain and attract accounting talent. From increasing the salaries of accounting professionals to harnessing the advanced tools powered by AI/ML to make it easy for their employees, accounting firms have tried it all to prevent their best employees from walking out of the door.
But if we indeed are to prevent the talent exodus, we must reach the very bottom of the issue and identify the fundamental factors driving skilled accountants to walk away. That is precisely what we will try to unpack in this blog. An amalgamation of numerous conversations we’ve had with industry leaders worldwide, this blog aims to highlight the various causes behind the ‘brain drain’ in accounting, discuss its impact, and empower you with potential solutions for accounting firms to retain their best talent.
The Current State of Accounting Workspace
Before we start dissecting the issues causing the talent exodus in the accounting space, we must take a closer look at the current state of the accounting workspace. It could shed some light on the glaring issues that could easily be the breeding ground for the problems causing the brain drain.
For as long as we can remember, the accounting industry has been synonymous with a steady career choice, with roles ranging from tax preparation and auditing to financial planning and advisory services. The significance of these changes cannot be overstated.
However, in recent times, issues such as wage disparity, poor work-life balance, burnout and long hours, and lack of technological disruptions within the space have all resulted in fewer professionals entering the field, and even those who already are part of the industry deciding to leave.
Each of those factors has affected the accounting industry severely, resulting in a growing shortage of qualified professionals, posing significant challenges for firms and clients who rely on consistent, skilled services.
Let us look at some of the most glaring issues that can easily be attributed to the shortage of talent in the accounting industry.
Accounting Talent Exodus – The Prime Culprits
The Wage Wars
While not the main culprit, wage disparity is easily among the biggest culprits that divert young accounting professionals away from the profession. In the recent Accounting Today’s inaugural salary survey, the wage disparity became transparent, with average annual wages for entry-level staff coming to $65,000 as opposed to the $88,000 of the senior team members. The situation worsens, with average managerial salaries averaging $106,000 in small firms and $121,000 in large organizations.
When you compare the compensations in the accounting industry with other industries—especially in finance, consulting, and technology— the accounting salaries and benefits fall short. While higher pay is not always the aim behind choosing a career path, there is no denying that the allure of higher pay, along with an upward-facing career path and balanced work environment, certainly carries enough pull to deviate any talent away from the traditional accounting firms. This exacerbates the talent shortage, underlining the urgent need to address wage disparity.
Generational Shifts and Changing Values
With new generations entering the workforce every year, the workplace and the employer’s expectations also change. The younger generations, including the millennials and Gen Z, prefer a more balanced work-life, meaningful work, and career growth.
Offering them hefty packages will not do it for them when they only seek a role where they can channel their creativity and passion, make a significant impact, and, most importantly, feel valued beyond their output.
The accounting industry’s traditional and somewhat rigid structure is lagging way behind several other industries when meeting the values and expectations of the younger and modern workforce. As a business leader or business owner, you must give the younger generation the freedom and the tools to explore their career paths.
The Need of Work-Life Balance
Work-life balance is the most lucrative employment benefit any organization can offer. For the younger workforce, the need for a balanced lifestyle is so high on the priority list that it is now the critical factor influencing their career decisions.
Accounting has been frequently associated with long work hours and stringent deadlines, which sadly does not align with the personal goal of having an impeccable work-life balance of the modern workforce. The need for work-life balance is directing talent towards industries where they can work remotely, have flexible hours, and enjoy more personal time.
If accounting firms are to attract young talent or retain existing ones, they must rethink their operational model and include a more relaxed and flexible environment.
Technological Disruptions
While technology has been a great enabler, it has always had some downside. There’s no denying that the advent of automation, AI, and data analytics have all transformed the accounting space for good. However, by automating many tasks that earlier required manual intervention, technology has made all those roles redundant and has significantly increased the need for tech-savvy professionals.
While the constant upskilling has allowed accountants to cope with these changes, there exists a crop of accounts for whom technological shifts can be overwhelming, leading to job dissatisfaction. This can easily prompt them to seek new careers in emerging fields. However, if you’re in the accounting profession, it’s worth mentioning that the tech- apocalypse is almost imminent, and the only way to survive is to upskill.
While these are the most glaring causes of talent exodus in the accounting industry, the list continues. Depending upon the size of the firm you have and the industry you are in, several other factors could be causing your accounting team to seek alternative career options. You need to find and address those causes most effectively to prevent brain drain at your firm.
Here are some strategies you can try –
- Foster a Supportive and Inclusive Culture
- Embrace Technology and Encourage Upskilling
- Promote Work-Life Balance
- Offer Competitive Packages
The Way Ahead for Accounting Firms
While the ongoing talent exodus in the accounting industry certainly is a pressing issue with far-reaching implications, the solution to it is more complex than it may sound. As an industry, it will require a multi-faceted approach to make accounting an attractive career path for the young and upcoming workforce.
Bringing in measures such as promoting work-life balance, enhancing compensation, embracing technology, and creating a supportive culture can be a good start, but a lot needs to be done as an industry accounting has a long way to go to retain their top talent and continue delivering high-quality service.
If you’re battling a talent shortage at your firm, we can help you overcome those challenges for good with our specially tailored accounting and bookkeeping services for CPAs/Accountants. Just write to us at [email protected], and we will have our accounting experts contact you.
