Wake-up call for the profession
By Randy Crabtree, CPA
October 30, 2023
Recent articles in
The Wall Street Journal asked readers
Why no one’s going into accounting and suggested that
Job security isn’t enough to keep many accountants from quitting. According to these articles, accountant pay has stagnated “in a profession once seen as a sure thing.” It also noted that “auditors and tax accountants are moving on — or considering quitting the profession — citing other available options at a time of an already widening shortage.”
Ouch!
I’m not sure what’s driving this criticism of our profession lately, but clearly we are suffering from the declining working age population and the movement toward a more balanced approach to work and life. Other professions are up against similar challenges, so I’m not sure why we’re being singled out!
That being said, that coverage was definitely a wakeup call for us. We can’t continue with business as usual if we want to attract and retain the best talent. Here are five suggestions for addressing these challenges:
- Increase the starting salaries to make accounting more competitive with other knowledge professions.
- Change the perception of an accountant’s life.
- Become more efficient so we’re not so obsessed with grinding out billable hours.
- Help clients realize the value we’re delivering – not the cost to do the job.
- Mental health.
Let’s take a closer look at each.
Pay
As The Wall Street Journal reported, “Salaries have risen for young people in finance, marketing, logistics and consulting in recent years. Even young teachers have seen a slight uptick. At the same time, the median, inflation-adjusted pay for young accountants has stagnated, according to a Wall Street Journal analysis of salary data compiled by the Census Bureau.”
I don’t think many young people realize they can make $500,000 to $800,000 as a partner in an accounting firm — but they also don’t want to wait 20 years for that to happen. We need to think about taking some of the cash compensation out of the partner group and funnel it down to the first- and second-year associates. In return, we could give partners more equity on the back end that ends up being worth far more than the salary they sacrificed for the firm.
Most partners will resist this suggestion because they feel they’ve paid their dues and want to be rewarded. However, I’m confident the next generation of firm leaders may see the light and private equity’s movement into our industry is accelerating that trend. That’s important because even if starting salaries for accountants catch up to financial services, consulting and private industry, if young people see they have to work 60-plus hours a week in a CPA firm to earn the same as their classmates earn for a 40 to 45 hour week in financial services, accounting becomes a tough sell — especially when a fifth year of school and 150-hour requirement is factored in.
On the bright side, accounting firms are starting to emulate tech companies when it comes to offering stock options or other ownership interests to most employees. RSM introduced an employee stock ownership plan (ESOP) and at Lance CPAs, employees can buy in as shareholders after they’ve been with the firm for a few years. They don’t need a partner committee to vote on it.
Perception
People often ask me what else we can do to show that accounting work is not boring. In accounting, you’re helping individuals, businesses, companies, and employees become more successful as a result of your advice. I don’t know what could be more rewarding than to affect somebody’s future and livelihood by advising them on tax saving opportunities or cost saving opportunities, etc.
For too long, the knock against accountants is that we’re nose-to-the grindstone workers who spend 12 hours a day at our desks looking at what happened to a company or individual in the past. But as the profession evolves, accountants are increasingly seen as influencers, proactively affecting what’s happening in a company or individual family. To me, that’s pretty amazing. So, it’s not just sitting at the desk, nose to the grindstone — it’s actually about interaction, building relationships and affecting our clients’ success.
Accounting is a great window into a company’s inner workings and how the numbers impact every area of operations. You get to interact with the leaders of the company, and you get to know an industry in-depth. Accounting is an incredible foundation if you ever want to run your own company someday or be a chief financial officer. In fact, Robert Half data finds that one-third of CEOs have
accounting or financial services backgrounds.
Even if you don’t stay in public accounting, the skill sets you gain — relationship skills, interpersonal skills, analysis skills, communication skills — are invaluable throughout your career.
Efficiency
There’s been a lot of talk about how AI can do some of the basic functions that account for most entry level accountants’ roles. But suppose AI was brought in not to replace people, but to take up a lot of the routine mundane work that the first- and second-year associates are doing. Using AI is inexpensive and frees up money for young people to do higher level work right off the bat. Automation is going to be key going forward. In fact, we’re thinking of changing the theme of our firm’s conference next year to: Collaborate, automate, delegate. It's all about dealing with the people shortage. Automation and AI are a big part of it.
Delivering value
As a profession, we need to demonstrate the value of the services that we bring because almost everything we do is measurable. Whether it’s tax savings, bottom line growth, or lowering the cost of goods sold to 28% from 30%, we need to be more proactive about communicating the value of the advice we offer. It’s not just a transactional relationship built on invoices for hourly services to deliver a work product.
Mental health
The Wall Street Journal reported, “Now the foot soldiers of the profession are leaving the field in droves. Accountants cite low salaries, mundane tasks, burnout and the threat of new technology like generative AI as reasons for considering other industries.”
Burnout is a reality, but it's often self-induced. It's a mindset. Our profession has come to realize that there are diminishing returns to working when you’re overtired and constantly stressed. With the right energy and mindset, you can accomplish more in eight hours than you used to accomplish in 12 grind-out-out hours. We’re getting away from the heads down, pencils moving mantra of the past. Logging more hours doesn’t mean you’re more productive or delivering more value to clients. It just means your logging more butt time at your desk. Part of burnout is undervaluing yourself and feeling pressured to grind out longer hours to make more money and get ahead. Fortunately, that’s changing.
As we become more efficient, we don’t need to put in the same hours to get the same result. Clearly we need to move beyond hourly billing. Once we do, you’ll see burnout and disenchantment diminish and retention improve.
One of the biggest things for our profession is to realize that we don't have to sell our time to be successful we can sell our value.
Looking ahead for the industry
The challenges outlined by these articles are real — and they won’t be easy to solve. But I’m confident that we can rally together as a profession, lean into these issues and come out stronger on the other side.
Randy Crabtree, co-founder and partner of Tri-Merit Specialty Tax Professionals,
is a widely followed author, lecturer and host of “The Unique CPA” podcast.
