Financial professionals are in short supply. Though the industry peaked in 2019, the number of accountants, CPAs, and corporate finance workers dropped by 17% by 2021, according to Bloomberg Tax Analysis, and the U.S. Bureau of Labor Statistics projects that throughout the next decade, there will be 136,400 openings for accountants and auditors each year.
Sure, the industry is transforming through the advent and use of modern technological advancements, but no amount of AI can replace the human touch. The shortage of CPAs and accountants ultimately impacts the quality of audits and thereby exposes companies to greater risk.
As for whether the shortage of accountants and CPAs will continue into 2023, all current signs point to the answer being a resounding “yes.” With that being said, here’s what you need to know about the growing talent shortage and how companies can maintain quality even amid these droughts.
Why the Shortage?
According to a 2022 survey from Deloitte, 82.4% of hiring managers for accounting and financial roles at public companies admit to struggling with talent retention, and 68.9% of hiring managers at private companies say the same, thus creating a need to work hard to attract and retain top talent. The shortage itself is caused by a small variety of overlapping factors — here are some of the top reasons:
The Retirement of CPAs and Accountants
As recently as 2018, Baby Boomers — the generation of those born between 1946 and 1964 — represented a third of the U.S. labor force. But as they’ve begun to reach retirement age, the members of this generation are leaving the workplace by the millions. The American Institute of Certified Public Accountants (AICPA) projects that 75% of today’s public accountants and CPAs will retire over the next 15 years.
This isn’t just a loss in numbers; it’s also a loss of experience. Older accounting professionals have developed lifelong skills and experience that younger accountants simply can’t replicate. Worse still, the AICPA also reports that the new “CPA pipeline” is the weakest it’s been in over 13 years, which will only create greater shortages as boomers continue to leave their professions en masse.
The Impact of the Great Resignation
In 2021, corporate America was rocked by the “Great Resignation,” a period in which professionals across a variety of industries abandoned their current positions in search of better alternatives.
The Great Resignation has only magnified the gaps created by a retiring labor force, and it has also forced companies to reevaluate what it means to measure performance and attract new talent in an age where job seekers hold all the power. Companies have been pushed to augment their offered salaries and increase their provided benefits in order to retain valuable workers, putting a strain on company resources.
Watch our on-demand webinar Managing Corporate F&A in the Great Resignation to learn about the causes of this unprecedented turnover, along with best practices for staff training, retention and recruitment.
Diminished CPA Pipeline
Since the pandemic, undergraduate enrollment in public colleges and universities has declined by 9.4% — roughly 1.4 million students. More significantly, students are not selecting accounting or finance majors, and the number of CPA exam candidates has hit a ten-year low.
It’s no wonder that even major companies note that recruiting has become a major challenge. No shift in compensation and benefits can account for a fundamental shortage of qualified workers. Deloitte’s survey reveals that 82.3% of hiring managers at public companies believe that they will need to work hard(er) to recruit and retain employees in the near future.
Changing Industry Demands
Even qualified accountants can struggle with changing industry demands. Many accountants and CPAs are being asked to measure things that have never been on their radar before.
For instance, accountants often bear the responsibility of measuring a company’s environmental impact or carbon offsets, and with the SEC cracking down on “greenwashing” (claiming to take sustainability initiatives but never following through), accountants face mounting pressure to comply with environmental, social, and governance (ESG) standards.
How to Navigate the Talent Shortage
Unfortunately, the talent shortage isn’t something that can be solved overnight, but accounting firms and corporate finance departments can navigate the challenges posed by the shortage by taking the following steps:
Recognize Changing Workloads
Adopting ESG criteria may be good for your company’s vision, but it has a trickle-down effect on your accounting department. Staff your team accordingly, ensuring that you have a sufficient headcount to prevent your current employees from experiencing dissatisfaction and burnout.
Focus on Technological Skills
When hiring new staff members, focus on their technological skills, such as their familiarity with enterprise resource planning (ERP) software or similar platforms, as this can help you adapt to the future of finance as well as streamline your accounting department so you can do more with a smaller team.
Keep Your Workers Happy
Keeping workers happy is about more than offering a raise or bonus. Offering non-financial benefits such as a meaningful title or flexible work schedule can keep your accountants and CPAs consistently engaged and may prevent them from searching elsewhere for a new position.
A New Map for a New Frontier
Companies will need to recognize the cultural and industry shifts leading to current talent shortages in the accounting and financial industry. By implementing a new approach, corporate leaders can navigate this new terrain and help their team members align with their long-term vision.
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