Understanding How to Attract, Retain & Motivate Young CPAs
In the past five years, the accounting profession has overcome the challenges of the Enron crisis, restoring the reputation and integrity of the profession. In the wake of that crisis, and new requirements created by Sarbanes-Oxley, profession has readily stepped up to the increased emphasis on ethics and importance of financial data integrity. Today, the profession is better positioned for growth than at any time in
In fact, growth is now apparent, with firms restoring revenue growth rates to pre-Enron levels. In 2006, the top 100 accounting firms’ revenue growth rate was the highest
reported since 2000.
The demand for accounting professionals is expected to grow faster than for many other professions in the coming years, with an anticipated 18 to 26 percent growth rate
through 2014, according to U.S. Bureau of Labor Statistics.
The opportunities ahead are tremendous. But along with this success, there is a growing concern: Where are firms going to find the resources to get the job done?
The Shortage of Accounting Talent
The increased demand for accounting professionals comes at a time during which the supply of professionals is shrinking. With the aging population, 8,000 baby boomers a day are now turning 60 years old in the U.S. This is taking its toll on the accounting profession.
The American Institute of Certified Public Accountant has noted that by the year 2020, 75 percent of its membership will be eligible to retire. And while there is an increasing number of young people coming into the profession, the simple fact that the younger population is smaller than the boomer generation means there cannot be a one-for-one replacement for those individuals who are leaving the profession.
With the backdrop of demand outstripping supply, it is apparent to firms that there is an ongoing talent war in the accounting profession, and no end in sight.
What do firms need to do to attract and retain up-and-coming professionals so that they can continue to meet demand and grow their practices?
As a strategic partner to tax and accounting professionals, CCH set out to find answers to this question by issuing the CCH Young Accounting Professionals Survey to examine the benefits, tools, technology and culture that CPAs with four to seven years of experience want most and to discover how well firms perform in meeting these needs. This population was specifically selected because they are crucial assets to firms that want to grow their business. These professionals have a solid base of experience and are eager to move into the more challenging positions that are both being vacated as baby boomers begin to retire and are being created as new demands on the profession develop.
In summary, the CCH survey found that young CPAs want the tools they need to get their jobs done; they want to be developed professionally and valued and rewarded for their performance; and, while they want to be challenged, they also want balance between work and personal life. None of this is particularly surprising, as these are the things that many professionals want in their careers.
What is concerning is that many young professionals believe that their firms aren’t meeting these needs. Overall Small (1-9 employees) Medium (10-49) Large (50+)
The Reasons for Becoming a CPA
Before looking at the specific attributes that young CPAs find most important, it is helpful to understand why individuals selected public accounting in the first place.
The top reason individuals entered the profession was Good Career Opportunities, according to the CCH survey, with 37 percent of respondents citing this as the main reason they became a CPA. Next, a Challenging Work Environment was cited by 20 percent of respondents. Job Stability and Financial Security were each cited by 15 percent of respondents as the reasons they joined the profession. To Make a Difference was cited by 2 percent of respondents and 1 percent cited Opportunity to Travel.
The CCH Young Accounting Professionals Survey looked at four specific areas to gain a better understanding of what young accountants find most important as professionals. These areas are:
1. Firm Infrastructure
2. Firm Culture
3. Benefits and Compensation
4. Professional Training and Development
The survey next asked respondents to identify within each specific area, attributes that were of high importance to them. The attributes outlined in the adjacent table ranked as the top three most important offerings to young CPAs.
The CCH survey then asked the CPAs to rank their firm’s performance for numerous attributes in each of the four areas to compare how well firms are meeting young professionals’ needs. Those results follow.
Firm Infrastructure Shows Resources Lacking
The top three most important Firm Infrastructure attributes identified by young professionals are:
Comprehensive Resources to Get the Job
Done (cited by 67 percent of respondents);
Access to the Latest Technology to Aid Productivity (cited by 55 percent of respondents); and
Investment in Leading Tax and Accounting Software (cited by 48 percent of respondents).
However, fewer than one-half of firms received a “Very Good” rating by young CPAs in delivering on any of these important attributes. Only 39 percent of CPAs highly rated their firm’s ability to provide Comprehensive Resources to Get the Job Done, and only 33 percent reported that their firms were doing a very good job when it came to providing Access to the Latest Technology to Aid Productivity. Firms didn’t do much better in the eyes of young CPAs when it came to making Investment in Leading Tax and Accounting Software, with 41 percent of CPAs rating their firm’s offering as very good.
Firm Culture: The Importance of Ethical Leadership, Post Enron
According to the CCH Young Accounting Professionals Survey, the three most important attributes of Firm Culture are:
Ethical Leadership Within Firm (cited by 63 percent of respondents);
Work/Life Balance/Family-Friendly Policies (cited by 56 percent of respondents); and
High-Quality Feedback (cited by 24 percent of respondents).
Overall, more than one-half (55 percent) of CPAs gave their firms a very good rating when it comes to Ethical Leadership. However, firms did not fare as well in demonstrating to employees that their other top needs will be met. Only 38 percent of firms received a very good rating on their Work/Life Balance programs and they fared even worse when it came to giving High Quality Feedback, with only 13 percent of CPAs saying their firms did a very good job at this.
Compensation Leads in Importance
According to the CCH Young Accounting Professionals Survey, the three most important benefits and compensation attributes to young professionals are:
Compensation (cited by 74 percent of respondents);
Flexible Hours (cited by 51 percent of respondents); and
Reward Directly on Merit (cited by 34 percent of respondents).
When asked how well their firms deliver on these attributes, only 19 percent ranked their firm’s offering for Compensation as very good; and only 20 percent of CPAs ranked their firms as very good when it came to Rewarding Directly on Merit. CPAs gave their firms a higher rating for offering Flexible Hours, with 45 percent of respondents rating their firms’ benefits in this category.
Professional Training & Development: CPE Offerings Are Crucial
When it comes to professional training and development, young CPAs indicated that firms are more effective in this area in meeting their needs, but there is still room for improvement, according to the CCH Young Accounting Professionals Survey. Th e top three items of importance to up-and- coming CPAs are:
Support for Continuing Professional Education (CPE) (cited by 49 percent of respondents);
Challenging Work Environment (cited by 37 percent of respondents); and
Continuous Skill Development (cited by 33 percent of respondents) respondents ranked their firm’s Support for CPE as very good; 41 percent also gave their firms a very good rating for offering a Challenging Work Environment; and 32 percent rated their firm’s Continuous Skill Development as very good.
Firm ratings in all other key areas of training and development achieved a very good rating by fewer than one-half of the CPAs surveyed, including Client Contact Opportunities, Challenging Work Environment, Interesting Work, Support for Professional Association Involvement, Variety of Work, Continuous Skill Development, Opportunity for Advancement, and Training in Tax and Accounting Software Tools.
Pulling It All Together By Investing in Talent Management, Training & Technology for Long-term Success
The findings of the CCH Young Accounting Professionals Survey are clear. Young CPAs want: The tools they need to get their jobs done; To be developed professionally and valued and rewarded for their performance; To be challenged; and To have balance between work and personal life.
These are probably the same things that many more senior professionals also want in their own careers. What is likely very different, however, are the unique circumstances presented today in the accounting profession: namely, a shrinking workforce and an increasing demand for time and talent. Young CPAs know they have career autonomy and are open to moving on – to another firm, the corporate setting or a government position. Their loyalty is not necessarily to the firm that they work for but the organization that can deliver on those needs that are most important to them and their career development. Today, it appears that firms are not highly or consistently successful in meeting those expectations.
At the same time, firms are faced by considerable talent challenges. Not only is there the strain of fewer individuals to replace those leaving the profession, but there is also significantly more work, and more complex work, that needs to be accomplished. In fact, if a firm today were delivering the exact same services to the exact same clients it was serving five years ago, that firm’s workload still would have increased based on new compliance requirements.
Obviously, firms need to do everything they can to attract talent, and then they need to ensure their employees feel valued and fairly compensated from a pay perspective.
As importantly, firms must also invest in their employees in other ways that will serve as levers to help attract and keep talent. As the results of the CCH survey show, a firm’s investment in talent management, training and technology are of high importance to young professionals. These investments are a win-win for both the employee and the firm.
Talent Management – Firms must ensure they are proactively developing their up-and-coming talent in a planned and deliberate way. This includes providing good career opportunities, a challenging work environment, opportunities for advancement and ongoing performance management and feedback. Employees will value the firm that values them. Firms also benefit from having a talent management program in place. By focusing on talent management, firms can build ready bench-strength so that they are best prepared to overcome challenges and optimize the opportunities ahead.
Training – Firms need to invest in training to help employees keep their skills and knowledge current in this increasingly complex, fast-changing and technology-driven world. Training provides professionals with the necessary skills to leverage the information and technology resources that they need to perform well. It also benefits the firm. Well-trained employees who can do their work efficiently and accurately will deliver higher quality work, at higher productivity rates. As a result, firms can achieve more with limited resources, and offer higher value-added services to their clients.
Technology – Today, having the right technology infrastructure and tools is at the heart of a firm’s business and its success. From a talent perspective, it is critical to technology savvy young professionals that their firm invests in the latest technology and provides them with the resources they need, such as leading software solutions, to get the job done.
For the firm, the return on the investment in technology is significant. Not only will it help recruit talent, but it will serve as a foundation that the firm can leverage over and over again to deliver on the wide-range of issues important to professionals. Best-of-breed software provides the most effective tools employees need to efficiently perform and deliver high-quality services.
Such tools minimize the need for young talent to perform routine or mundane tasks, opening them up for the more challenging assignments that they desire. And, the most effective use of those tools, supported by the right infrastructure, delivers even greater benefits to both employees and the firm. Technology can help a firm offer more family-friendly policies, and help employees achieve greater work/life balance by allowing employees to work remotely, and be more flexible in their work hours. It also enables the firm to implement knowledge management processes that will help them overcome the staffing challenges that are ahead as the large and experienced baby boomer generation of professionals begins to retire.
Is the accounting profession up to the challenges that it faces? Absolutely. Firms that focus on what new professionals want and that understand the importance of investing in talent management, training and technology will be successful. They will be the hallmark of the accounting firm of the future, and their businesses will prosper.