The accounting profession is staring at a potentially catastrophic brain drain. Half of the 76 million baby boomers are already at or past retirement age, and the traditional pipeline of incoming CPAs is thinly populated.
Several factors have contributed to a lack of rising CPA talent, which has been a years-long trend, including the barriers they must hurdle to gain certification, such as time and cost, competition for talent from other fields of study, and student's perception of the accounting industry. As with some other professions, the workplace and the workforce are changing. Modernization is imperative as firms prepare for an influx of a digital-native workforce with distinct expectations and demands.
So, what must firms do to adapt to the new landscape, attract the new wave of top talent, and keep as much current talent as possible? By creating efficiencies that accommodate employees' preferred workstyles, recruiting talent earlier in the education cycle, and deploying technologies to enhance the work environment, firms can position themselves for success in the dynamic and evolving accounting industry.
Adapting to the new workforce
It's no secret that younger generations, like millennials and Gen Z, care about work-life balance — an area where the accounting profession must confront some misperceptions as well as evaluate its ability to introduce technology to alleviate time-consuming administrative tasks from staff. Many students think that accounting firms work people to the bone and take up all their free time in the process. We need to change these views, mainly because students considering other fields expect that work-life balance is part of that environment, along with higher pay and other benefits.
One place to start is by offering additional time off during slow seasons and more competitive compensation packages. This is especially important because accounting firms aren't much different from one another, making it easy for employees to move around, applying what they learned at one place to their next job. If another firm is willing to pay an associate $10,000 more with additional time off or more location-based flexibility, they're more likely to consider making the jump.
Touting the opportunities to do more meaningful work is another approach. There is a perception that accounting involves doing a lot of repetitive work, but more firms are expanding their offerings into fields like client advisory services. Instead of just taking on a client's tax or audit engagements, the firms are getting into more of an advisory role in areas such as budgeting or forecasting. This allows accountants to be more involved in a hands-on way with a client's business, which can be more rewarding and insightful. It's something students just out of school might find more meaningful than repetitive compliance engagements.
We will see the role of the accountant begin to change in ways that can make the job more rewarding and help ensure work-life balance, which is a huge factor in attracting young talent. And technology can enable this change.
The advantages of automation and AI
The rise of artificial intelligence, particularly Generative AI models like ChatGPT, is opening the door for other innovations.
Firms are investing heavily in AI capabilities, but how it will eventually play out is still uncertain. Nevertheless, there are some areas where it clearly can be beneficial. In audit cycles, AI could, for instance, review transactions and flag unusual entries for evaluation. Generative AI could help to review a firm's document repository to recall what the firm did during a client engagement in previous years. How did we handle a particular issue? What opinion did we offer? This will assist new staff gain insight into previous engagement cycles to better equip them for the upcoming year as well as give them a leg up with building the client relationship as they are up to speed from the start.
Knowledge work automation could also help firms retain the knowledge that could be lost when CPAs retire. Firms can collect that knowledge and ensure it is pushed through an approval process and maintained in a firmwide repository. Applying these models helps an employee handle a situation and allows them to learn from it.
Automation and AI can create automated workflows for tracking progress on a client engagement or collecting metrics on how long it takes to perform certain reviews. And having this data available enables better decisions about staffing or resource utilization. A knowledge work automation platform can also provide a client portal where a firm shares documents with a client. AI can scan documents in the portal to ensure the proper metadata tags are applied. The portal also offers a searchable interface for quickly retrieving any documents needed and a secure place for clients and firms to share large volumes of sensitive information instead of sending that information via email, which creates a security risk. It also has the added benefit of preventing another kind of brain drain — the loss of information in documents that some retiring people will take with them when they leave.
Bringing new tech to the workforce
Modernization has obvious appeal to younger generations of workers. The ability to access files via a portal or folder hierarchy is how they are used to working with information. They expect to work with powerful tools, technology and systems. One thing that firms should keep in mind, however, is that it's essential to match the right technology with the skills of your workforce, especially when you have a mix of younger and older talent. For example, someone who's good at working with a client portal could be that tool's champion. Accounting firms should also offer continuous training sessions to all employees.
Firms should also consider using a digital transformation office, which is becoming popular in business sectors across the board. A DTO is a group of current employees who are dedicated to evaluating and implementing digital tools and processes. Organizations that use a DTO will be the most successful because they can continuously look at what's working, what's not, and what issues employees are experiencing. And they have the time to focus on finding the right solutions for the teams.
Accounting firms are notoriously slow at adopting new technology. However, the shifting landscape requires modernizing their systems and processes to automate repetitive tasks and enable more meaningful work. This modernization will help firms meet the challenges of attracting new talent to replace retiring accountants and provide an attractive, rewarding work-life balance for current and future employees.
