It’s no secret that staffing is a massive issue for accounting firms—and it’s not likely to become easier anytime soon. If your firm is like most others, it’s difficult both to recruit staff and to keep the employees you already have, leaving firm owners facing an accountant shortage.
A lot of forces have come together over the last few years to make finding and keeping employees a challenge:
- The accounting profession is growing. Experts say the accounting market is set to expand at a combined annual growth rate (CAGR) of 6.4% through 2030. The CAGR projection for the US economy as a whole is just 2.1%. That means there will be an outsized demand for accounting services in the decade to come. Unfortunately, there will be fewer accountants to do the work.
- In fact, there already are. Burned-out veterans are leaving the profession in large numbers. In small firms, the turnover rate was 15% to 20% before COVID hit in 2020, and experts say it’s even higher now. (As a benchmark, most businesses try to hold the turnover rate to somewhere closer to 10%.)
- Young graduates aren’t replenishing the profession with talent. The number of students who completed a bachelor’s degree in accounting has been in freefall for a decade and continues to drop. In an AICPA survey, firm owners consistently identified “developing the next generation of firm leadership” as one of their biggest challenges.
All of that adds up to the current staffing nightmare getting worse, not better, over the next decade—and likely beyond.
How you can beat the accountant shortage and recruit great employees to your firm
So, how can your firm survive? Here are some steps we at Rootworks advise our member firms to take to help them overcome the accountant shortage without overworking their current employees.
Practice Smart Client Management
For years, accounting firms took any client they could get and did whatever they had to do to keep that client satisfied. Unfortunately, that philosophy has contributed to the current crisis in staffing. The key takeaway is that you don’t need to be desperate for tax season clients anymore.
Smart Client Management is an entirely new way of thinking for firm leaders. It’s not financially wise to continue to drive more clients for increased tax season revenue. That old way of thinking puts pressure on your firm to sustain and perpetually expand its tax season client base. It also creates more work for employees within a finite amount of time. Smart Client Management is the active daily management of your firm’s ideal clients to achieve financial health and feel holistically served. This means doing more for fewer clients.
If you keep piling work on employees during tax season, they’ll quit—and new, young accountants won’t want to join your firm. Accounting should be a year-round profession, with your firm offering services that go beyond tax preparation. Branching into new services wisely and with careful planning spreads revenue across the calendar year. Plus, employees will have fewer 80-hour weeks during the busy season and more work-life balance year-round.
Smart Client Management also involves using data to determine which services to offer your clients—and which clients to keep. Some clients will inevitably be more of a drain on resources than they’re worth, and they’ll push your staffers into not only working more hours, but into frustration with the experience of serving them. Your firm should fire those clients and adopt a business model to make sure any new clients you take on aren’t similarly toxic; you want the kind that fit your ideal client profile.
Shift your culture toward recruiting younger accountants
Outdated technology and outmoded business practices can drive up working hours for young employees and drive them away from your firm. How can your firm attract young staffers…and keep them? Salary increases will help, of course, but the answer isn’t just money.
A recent Thomson Reuters survey indicated that young accountants seek self-fulfillment and respectful treatment above just about any other incentive for staying in a job. Granted, those are somewhat ambiguous concepts, but they can have concrete applications. Statements such as, “I can be myself at work” and “I am treated with fairness and respect” were among the most popular drivers of satisfaction for young accountants.
Young accountants want to feel as though they’re doing something important and “authentic,” according to the survey. And they don’t want to feel like cogs in a machine, working 80 hours a week during busy season.
To survive the accountant shortage, communicate with young accountants clearly and consistently. Demonstrate an understanding of what they want from their jobs. Explain how your technology helps them get more done in less time and boosts work-life balance. Introduce them to Smart Client Management; let them experience how it works so they can see how it makes their jobs easier and more fulfilling.
Above all, demonstrate how your firm is differentiating itself from the rest of the profession. Go against the grain of accounting. If young people are avoiding accounting because they don’t like where the profession is going, take your firm in another direction—and show recent college graduates exactly how you’re different.
Keep your tech stack current by working in the cloud
Young accountants understand the massive impact technology can have on the amount of time they spend working. They’ve grown up with the cloud and know how powerful it is. A cloud-enabled firm will have a significant recruiting advantage over a firm that still uses an in-office server. That’s true not just for young staffers, but for experienced accountants as well.
With reduced work hours, more efficient processes and working collaboratively with clients, a cloud-enabled firm will have a significant recruiting advantage over a firm that still uses an in-office server.
For firms that want to go deeper into taking advantage of the cloud and turn their technology operations over to a trusted partner, managed IT outsourcing is an option.
A smart staffing strategy will carry your firm through the accountant shortage
When someone asks me for the bottom line on the current accountant shortage, I tell them this: If you want to recruit and retain excellent employees during an accountant shortage, you must differentiate your firm from the firms that insist on staying the traditional course.
Spreading your work throughout the year, eliminating low-value clients, developing a youth-friendly culture and working in the cloud will move your firm in front of those firms that are stuck in “business as usual” mode.
And it could make the difference between your firm withering in the next few years or thriving for years to come.
Move your firm into the cloud today. Get started now.