The accounting shortage is here and could worsen in the future with the perfect storm of an aging workforce nearing retirement age and fewer students pursuing degrees in accounting. But your company can take a shortcut today to weather the storm and work toward a solution.
More than 300,000 U.S. accountants and auditors have left their jobs in the past two years, with both young (25 to 34) and midcareer (45 to 54) professionals departing in high numbers starting in 2019, according to U.S. Bureau of Labor Statistics Data as reported by The Wall Street Journal. We’re already seeing the effects today. Some 600 U.S. publicly listed companies disclosed a material weakness related to personnel in accounting or information technology during the second quarter of 2023, a 40.6% increase from the same period in 2019, according to The Wall Street Journal.
So, what can your company do today to fight the accountant shortage? Solving the problem starts with ensuring your team has the right technology and then investing in professional development, team training, and advancement opportunities. Solving the shortage on a company level begins with working to change your culture and evaluating how your current tech is helping (or hurting) efficiency.
Invest in Technology That Drives Efficiency
Improving and investing in new technology seems like a simple solution, but it’s one that’s frequently overlooked. According to MIP Fund Accounting’s 2023 Trends and Insights Report, 61% of 416 respondents said their current technology was time-consuming. This builds on results from a previous survey that showed nearly half of 400 respondents utilized six different digital tools to do their jobs, with 23% of professionals relying on eight digital tools. Disparate tools decreased efficiency, with 78% of respondents spending at least a quarter of their workday managing multiple systems.
Inefficient, dated technology is limiting finance and accounting team success and efficiency. Your team spends about 520 hours (about three weeks a year, or 10 hours each week) navigating between the different tools required to complete finance jobs based on the statistics above.
Ensuring that your company’s technology meets your current team needs is critical to retaining talent. According to the 2022 Wolters Kluwer Annual Accounting Industry Survey Report, improving operational workflows, increasing employee effectiveness, and investing in new technologies that support remote work were three vital strategic goals that companies were targeting in 2023.
Furthermore, the survey highlighted several different benefits of new technology:
- 71% said that technology is helping to reduce the number of hours worked per client and by tax return.
- 73% said technology is helping to improve average client response time, and 72% said technology is helping them recruit and retain clients.
- 62% said technology is helping them add new services.
When your company’s technology solves client issues, it’s solving organizational pain points. Yet, despite the benefits of technology, fewer than 20% of companies felt they were using their technology to the fullest potential, according to Wolters Kluwer. Consider whether your company is working as efficiently as possible and if your technology is helping the process or hindering it. Even a shift to cloud-based systems can have a transformative effect on your organizational workflow (see “Examining Cloud-Based Software”).
Examining Cloud-Based Software
Investing in new technologies that support remote work is a vital strategic goal that companies are targeting in 2023. What does that look like for accountants, and how should your organization approach cloud technology? Cloud technology offers several benefits over legacy systems. Cloud technology:
- Cloud technology decreases reliance on an on-site IT team and also ensures your organization’s data is protected in the event of a natural disaster.
- While certain legacy systems require on-site servers, cloud technology is in secure, off-site data centers.
- The cloud allows multiple users to use the software simultaneously, enabling real-time collaboration.
- Cloud providers and vendors are dedicated to creating secure environments at a scale individual companies can’t replicate.
A pivotal question to examine is whether your technology utilizes workflow automation. Automation helps your team work smarter and more efficiently. Studies have shown that 95% of IT and engineering leaders say automation improves an organization’s operations and communication between team members. Automating repetitive administrative manual tasks frees up your team to do the work that matters and makes a difference to your company. In fact, more organizations are making workflow automation a priority. According to McKinsey, 66% of companies have begun introducing software to automate workflows since 2020.
When your team manually completes tasks, it’s creating inefficiency and adding to team dissatisfaction. Manual workflows make it difficult for your company to scale and grow. Plus, they increase compliance issues by elevating the risk of human error, creating inefficiencies based on employee variation, and reducing visibility into your company as a whole.
So, what can your company do to ensure it’s using its technology to the fullest potential and supporting its employees along the way?
Your technology must improve data collection and evaluation and create insights faster. Using technology from multiple providers introduces more opportunities for human error and slows down the data aggregation process.
Condensing the number of providers your company works with centralizes the data into one system that can be leveraged across a company’s technological system, allowing for more insightful discussions internally and with stakeholders without having to navigate multiple programs and reducing errors associated with manual operations.
There isn’t going to be a magic bullet that solves all your problems, but by working with and keeping your team members informed during the process, you’ll be able to identify the right systems to support your employees. For more details, see “What’s in a Go-Forward Plan?”
What's in a Go-Forward Plan?
What are the benefits?
What are the drawbacks?
Does the vendor still support the software?
Is the software regularly updated?
Does the software feature cross-compatibility?
Your team members need to play a central role in the transition process because they’ll handle the day-to-day operations. Partner with a vendor that works to support the transition and ensures that your team is supported in its day-to-day efforts.
Your go-forward plan will have multiple moving parts, so it’s crucial that leadership regularly communicates updates and keeps the entire company on the same page as you advance.
If you’re seeking out new software, consider incorporating team members who were involved in the plan development process to sit in and listen to the pitches. Again, there’s no one solution that will solve all the pain points brought to light, but if new software would alleviate some of the most recurring pain points, your team and your go-forward plan will make it abundantly clear.
Continue to collect your team’s feedback, take the feedback to your vendor, and see if they have solutions. The best partners work to support an organization from implementation to several years down the road. Your success is your vendor’s success, and it’s essential always to remember that. Plus, the feedback your team produces is invaluable to vendors. If you’re experiencing an issue with the technology, it’s likely another user has the same experience.
Adopting data-driven technology that embraces automation and supports your company’s continuous professional development training is essential to retain talent and attract new finance and accounting team members to join. Still, it’s only half the shortcut.
The Training That Moves Your Team Forward
Investing in professional development for all employees is key to long-term success. Hold team training opportunities and regularly share opportunities for advancement.
New finance and accounting team members entering the field must have the appropriate training to succeed. According to a Dell Technologies survey of 15,000-plus Generation Z respondents entering the workforce, 44% felt both schools and businesses need to work together to bridge the digital skills gap, and more than one-third of respondents felt that their school education didn’t prepare them with the technology skills needed for their planned career with 56% having received either very basic or no digital skills training.
If your team doesn’t feel supported, they’ll find an organization that will help them succeed. According to the Dell survey, 36% of Gen Z respondents plan to keep acquiring new digital skills to ensure continuous employment throughout their career.
Examine your company’s training and professional development options. Your company can find ways to support its team members. Establishing a mentorship program that pairs new finance and accounting team members with more experienced team members is a simple way to help new team members and give seasoned finance and accounting team members a platform to share their skills. Keep these sessions small, limit the number of mentees to each mentor, and consider an incentive to encourage mentor participation.
Also, consider whether you can implement a new hire support program. Joining a company and getting used to its culture can be intimidating, and while onboarding helps new finance and accounting team members get over initial fears, it can take time before a new hire is comfortable. Creating a program for new finance and accounting team members to get to know each other and socialize is one way to ensure you’re creating a healthy culture in your organization.
Another critical component of the accountant shortage is a lack of advancement opportunities. Accounting has a negative stigma associated with low starting salaries and the hurdles related to advancement. The Wall Street Journal noted accountants had a starting salary of $66,504 in 2021 and that while median salaries have increased 14% from 2010 to 2021, that lags drastically behind median starting salaries for similar positions, like in data science and others where median starting pay has increased by 30% to 40%.
Your leadership team has the opportunity to be the most prominent advocate for your company’s advancement. Too often, executives and senior leaders downplay team accomplishments and don’t go out of their way to highlight the heights young finance and accounting team members can reach if they stay with a company. Be a cheerleader for your organization, develop a program for young finance and accounting team members, and support their growth opportunities.
Plus, remember your current team members too. While attracting talent is important, retaining the talent you have under your roof today is equally important. Develop programs to support employees and seek feedback on your company’s culture. It’s easy to rest on your laurels, but the best companies are continually evolving and improving. Just because your company has had a culture that’s existed for 20, 40, or even 60 years doesn’t mean you should stop adapting to the times. A progressive culture that evolves to meet the needs of its team members contributes to workplace satisfaction.
When it comes to solving the accounting shortage, your company must highlight its training and career progression opportunities and emerging trends. Whether attracting new finance and accounting team members or recognizing the contributions of someone who has been with you for decades, it’s essential to remember that people are the reason behind your company’s success.
Getting to the Finish Line Together
Finance and accounting team members could feel the effects of the accountant shortage for years to come, but there’s potential to come out of this transformed on the other end. While the problem may worsen, your company can’t afford to ignore the pressing need for technology investment and continuous training and professional development. See “How to Approach Implementation” for some initial considerations for getting started.
How to Approach Implementation
Vendor support for your team should be the determining factor if you partner with a vendor. Any piece of software has a learning curve and can only be as effective as the training to get used to it. The more training opportunities that are available, the easier it is to implement new technology and support your team through upskilling. Elements to consider:
Together, companies, professional organizations, and even colleges and universities will weather the next few years, and the industry as a whole will come out of this stronger. Efforts to combat the shortage are underway and already creating meaningful change. The collective efforts around improving student interest in accounting are also something to be lauded.
IMA® (Institute of Management Accountants) President and CEO Mike DePrisco; Global Board of Directors Chair Rich Brady; Diversity, Equity, and Inclusion (DE&I) Committee Chair Rinku Bhattacharya; and Volunteer Leadership Committee Chair Roopa Venkatesh noted that “IMA is taking strategic actions to address the talent pipeline shortage in the accounting profession in a holistic manner that builds value and promotes trust in the profession.”
To that end, IMA published Talent Retention in the U.S. Accounting and Finance Profession and Talent Retention in the Asia-Pacific Accounting and Finance Profession in October 2023. Further, in a crucial step to pivoting to growth areas in the industry in order to attract new talent to the profession, in collaboration with the Committee of Sponsoring Organizations of the Treadway Commission (COSO), IMA published a report in March 2023, in part to create awareness about how accountants can play a critical role in sustainability reporting.
DE&I efforts are equally paramount to drawing new talent across the profession. IMA’s research and thought leadership, in collaboration with IMA’s DE&I Committee, released the Diversifying Global Accounting Talent research series, where IMA partnered with the International Federation of Accountants, CalCPA, and more than 60 accounting associations to analyze the state of DE&I in the global accountancy and finance profession.
As we continue to work to prevent an accountant shortage, we’ll likely continue to see companies step up to meet challenges around hiring and retention and share the best continuous practices around training and advancement. There will surely be innovation in the field to address the shortage.
A continuously growing trend over the last few years is hiring nonaccountants for accounting positions and supporting them through training programs, according to the Society for Human Resource Management. SHRM spoke with Yvonne Hinson, CEO of the American Accounting Association, who highlighted the trend of hiring engineers and other similar majors, to work for the company. It’s another strategy to improve innovation in the field and addresses areas that could represent weaknesses for your company.
The shortcut to solving the accountant shortage is a larger issue than just one company can solve, but the foundational changes companies take today to invest in technology and ongoing professional development can position them for continuous, sustained success tomorrow.
For more on this subject, check out the Count Me In podcast: Ep. 222: Megan Weiss - Navigating the Talent Shortage in the Accounting World