There has been significant coverage recently, in both the business and mainstream media, of "the accounting talent crisis." For the most part, these accounts have been factual and timely, but they often focus more on the problem than potential solutions.
The challenge, in short, is that there are not enough accountants to do the work required. As with other professions, baby boomers are retiring in large numbers, but accounting enrollments are also down precipitously at many colleges and universities. In addition, many are leaving the profession after a few short years for what they perceive as greener pastures. Collectively, these factors have resulted in a situation where there is an alarming shortage of accountants.
This is not just an issue for the accounting profession, but has implications and poses risks for our broader economy. Investors and creditors rely on financial reports produced by accountants and audited by CPAs to make business decisions. Our systems of capital formation and allocation in the U.S., arguably the best in the world, rely on the availability of timely and accurate financial information.
With increasing frequency, various entities have been struggling to produce financial statements on a timely basis. Earlier this year, S&P placed 149 ratings on CreditWatch with negative implications because they had not received timely financial statements from the issuers. In connection with the announcement, an S&P analyst referred to a "significant shortage of auditors." A continuation of this trend would negatively impact the efficient functioning of our capital markets.
So, what can and should we do about it? Here are some actionable steps:
1. Do a better job of making young people aware of the long-term benefits of an accounting career. Warren Buffet has famously said "Accounting is the language of business." It's true! The ability to read and interpret financial statements is a skill that will benefit any manager or leader, and launching your career as an accountant can be a pathway to other opportunities. Many CEOs and board members began their career in the profession and continue to utilize their accounting knowledge and experience in their current leadership roles. Let's begin to tell our story in a more compelling fashion.
2. Blow up the myths and stereotypes that exist about the profession. You have heard them all over the years: Accountants "do taxes," accountants are introverts, the work is boring. The reality: Accountants do many things beyond tax compliance, including providing strategic advice and counsel to CEOs, boards, and business owners. Many accountants are personable, articulate, dynamic and funny, and the work is challenging, interesting and puts them on the front lines of a rapidly evolving American business landscape. Every business, from a global Fortune 500 company to a venture-backed start-up, a family business or not-for-profit entity, can benefit from the advice and insights of accountants when making strategic business decisions.
3. Reimagine recruiting efforts. Traditionally, many firms and companies recruit their new hires at the college and university level, but young people today are considering their career opportunities earlier than ever. The profession needs to have a stronger presence at the high school and community college levels to raise awareness of the benefits of an accounting career. This can and should be supplemented with social media campaigns that reach this generation where they spend time, on platforms like Instagram and TikTok.
4. Focus on underrepresented populations. For years, leaders in the profession have talked about increasing diversity but not enough progress has been made. In certain inner-city neighborhoods, young people often have no idea what an accountant does or the potential benefits of a career in the profession. We need to change this by getting into those communities with a campaign to educate and raise awareness. As someone who has spoken with high school students in inner city Philadelphia schools, I know that boots on the ground can make a huge difference in educating diverse talent about opportunities in the profession.
5. Improve retention. Too many people who have entered the profession in recent years have left after a relatively brief time, often in the first one to three years. Their major complaint is long hours and lack of work-life balance. Acknowledging that accounting is a deadline-driven profession that often requires overtime during traditional "busy seasons," the profession can and must do a better job of managing workloads and minimizing excessive overtime. Embracing powerful new technologies, such as generative artificial intelligence, will help facilitate this, but firms and employers must also change the way they think about the employee experience. Turnover rates in many firms today run more than 25% annually. Cutting this in half, which is achievable by leveraging technology investments, will go a long way towards addressing the talent crunch.
6. Ensure compensation is competitive. Firms and employers need to offer fair and attractive compensation packages if they are going to attract bright and motivated young men and women. A recent Wall Street Journal story indicated the profession may not be keeping pace with other disciplines when it comes to entry-level comp packages. Historically, accounting has been a financially rewarding profession for those who stick with it long-term, but we need to make sure financial rewards are competitive at all stages of an individual's career journey.
Accounting is a terrific profession where a first-generation college student can still achieve the American dream. It offers a challenging and rewarding career path that can provide a sense of purpose and satisfaction. The work is meaningful and important not just for your employer but for the benefit of our capital markets and the broader economy, which impacts the lives of all U.S. citizens.
Let's stop dwelling on the problem and start implementing solutions. As John F. Kennedy wisely observed: "It's better to light a single candle than to curse the darkness!"
