• Industry

    Talent Crisis Survey: Where Have All the Accountants Gone?

    By | March 23, 2017

    We’ve looked everywhere.

    In a March 6 article in The Wall Street Journal, we learn that there is some kind of accounting shortage, particularly for “companies adjusting to accounting-rule changes in the U.S.” In other words, public companies are struggling to poach or even barely seduce experienced hires from public accounting firms.

    Per the article:

    Increasingly, the companies are competing for talent with major accounting and audit firms that had once served as a reliable pipeline for corporate finance back offices.

    Some of the firms have changed their work culture in a bid to keep workers happy and keep them longer. When Len Combs started working at accounting and consulting firm PricewaterhouseCoopers LLP in 1992, long hours at the office were the norm, and work-life balance wasn’t a priority.

    “The idea was, if you don’t like it, go do something else,” said Mr. Combs, now U.S. chief auditor for the firm. Accordingly, many young associates quit and took jobs in corporate-finance departments at public companies.

    Surely Mr. Combs knows that the Two and Done rule has been in place since the time he started at PwC 25 years ago. And surely he also knows that there are still plenty of public accountants putting in their time to get licensed and leave at the first viable opportunity.

    That said, PwC is trying new tactics to keep their associates at the firm, deploying perks such as work from home days, flexible hours, and the ultimate perks of treadmill desks, and Ping Pong and foosball tables. Because, you know, foosball is important when you’re putting in 60 hours a week doing work that should be distributed across a team twice your size. As is that hamster wheel of a desk, which serves to remind you how no matter how many steps you take, you’re still in the same exact place.

    And now public companies are circling like sharks around the bloody water of public accounting firms’ unhappy grunts, looking for qualified hires to help them navigate new FASB rules on the horizon. But according to the WSJ piece, they’re not finding them.

    So that brings us to wonder: is it really that bad out there? And if so, why the hell are you people spending another busy season slaving away for the man in public accounting when you could have it so much better at some desperate public company willing to mud wrestle other public companies to get you to work for them?

    This is a topic we want to look at in depth, and as such are asking you to take this short survey. First, we want to look at data from the AICPA to see if there’s any drop off in accounting grads. We’ll use the results, dig around a bit more and report back. Your participation is appreciated.

    Create your own user feedback survey

    • LeftShark Consultant

      Gone for real lives everyone. When will they (accounting students) ever learn? When will they ever learn.

    • Big4Veteran

      As someone who has spent significant time in public and private, here’s a dirty little secret… Things aren’t that much better in private industry. Either you are working at a finely tuned machine, in which case you are not being challenged and you are just doing the same work month after month…or you are working in a fiery shit hole putting in crazy hours and working with people who are less motivated and less intelligent than you.

      There are very few jobs in private industry that offer both challenging/rewarding work AND a good work-life balance.

      • N.E.R.D.

        “As someone who has spent significant time in public and private, here’s a dirty little secret… Things aren’t that much better in private industry.”

        But they ARE better.

        Lesser of two evils, pick your poison, etc.

        • Big4Veteran

          It depends on how you define “better”. If your definition is having challenging work and having co-workers who are at least as smart as you, many companies in private industry do not offer this.

          I am the smartest and hardest working person in my company’s finance department. I spend half my day fucking around on Going Concern and other, less reputable, websites. And I still get more done and with higher quality every fucking day than anyone else on my team. It’s pretty frustrating sometimes.

          If you are an auditor and have the right mentality, then you can convince yourself that you are playing an important role in helping our financial markets function properly. If you work in private industry, chances are you spend all day (every fucking day) busting your ass just to make rich motherfuckers even richer.

          TL:DR It depends on how you define “better”.

          • N.E.R.D.

            I guess it depends on whether you live to work or work to live.

          • Skitch

            Sounds like you have plenty of time to study non-work related interests while at work all day, and can meet expectations relative to your peers with no effort. Definitely “better” in my book, but I don’t give a shit about work. “Challenging” just gets in the way of things I’m actually interested in.

            And I don’t get what you mean by “chances are you spend all day (every fucking day) busting your ass”–it contradicts the rest of your post.

    • AdvisoryManager

      The problem is that while industry is easy, the pay is terrible, as is the pay progression. Sure, you’ll get a 10K bump when you leave public, but then you’ll be stuck on the B.S. industry 2-4% raise per year treadmill until your manager dies or quits and you get another 10% bump.

      Also, for someone that is actually good, industry will be boring AF. You’ll learn and master everything there realistically is to know about the company within a year or so.

      • Adam Hill

        Unless you earn shares in said private company………….and have the public accountants working for you.

        And don’t tell me that public accounting isn’t repetitious Find 2016, Replace with 2017 throughout the work papers.

        You should use your real name, if I were a partner at your firm I would give you a promotion (promotion, not raise, how public typically works) and make you the head of recruiting.

    • PwC Guy

      Something else that might have an effect is where people decide to go and what they decide to do after leaving public. About one third of the people I was friends with that left the firm over the years have gone into non-accounting careers/roles. They felt so burnt out by their couple years working for Papa P’dubs that they never wanted to touch accounting again. A couple even went into yoga and nutrition.

      I would posit that the traditional grind that the firms force their lower level staff through has a different effect on the current generation than it has on past generations. Past generations left for easier accounting jobs in industry. Current generations are more likely to leave accounting all together.

    • Basis Adjustment

      “As is that hamster wheel of a desk, which serves to remind you how no matter how many steps you take, you’re still in the same exact place.” – this line alone has more depth than the Mariana Trench.

    • IndenturedServant

      My take on this has always been accounting requires too much work for not enough pay. The salary for accountants at firms have been stagnant since 2000, whereas the workload has skyrocketed. Many people at the lower levels see this and conclude that accounting is not for them.

      tl;dr: if you want talent you need to be willing to pay for it.

      • Tax Nerd

        The workload hasn’t really skyrocketed. Partners and directors really did work 80-100 hour weeks during busy season back in the 80s and 90s. They were far more likely to have a stay-at-home spouse, or be okay with their kids being a latch-key kid in ways that today’s helicopter parents can’t imagine.

        I don’t know about audit, but tax busy season is a little bit less during the height of busy season. 50-70 hour weeks are more the norm than 80+, but instead of 3-4 months of that, or even 5-6, overtime is expected almost year-round. I recently had a year with mandated 55+ charge hours for at least some weeks in ten of the past twelve months. Once you factor in non-chargeable training, meetings, and other crap, you were usually looking at 60-hour weeks.

        Add in longer commute times, more dual-career couples, unwillingness to be absentee spouses/parents… and the long hours of public accounting seem to really really suck (which they do).

        Compounding the suck factor these days is the expectation that they are “always on”. Long flight to that out-of-the-way client? Great time to catch up on that big project! Watching the game at 10pm? You can be handling emails on your laptop! At your kid’s soccer game? Dial into that conference call. Blizzard shut down your city? Work from home! Going camping somewhere remote in a foreign country is the only way to disconnect anymore. People can’t ever shut down, so they can’t ever really re-charge.

        Salaries have been stagnant… they’ve more or less kept up with inflation, which you’d expect for kids fresh out of school with little to no experience. Public accounting used to be a way for smart kids to climb the economic ladder if they were willing to work hard. But now, there are more options to do that, or at least more option with hope of that.

        • IndenturedServant

          I was thinking more along the lines of SarBox for audit. What you mentioned is exactly what I was talking about with regards to workload.

          There is no downtime anymore. As soon as your provisions finish you have to worry about 4/15 filings. As soon as 4/15 files you have 6/15 filers to worry about. As soon as they are done you have to accelerate work for 9/15. After 9/15 you have state filings. After state filings you accelerate work for your provisions. After that you have your provisions and the cycle repeats itself again.

        • Missing Donut

          Compared to the 80s, accountants actually do a lot more work in a lot less time thanks to the technology we use. Because of that, we are doing much higher-level work than we did in the 80s at any given experience level. The result is a modern 60-70 hour busy season week that is comparatively more mentally draining than the 80-90 hour weeks of yesteryear that were comparatively more physically draining. So the busy season suck of today is quite different than it used to be, but don’t expect partners who entered the profession 30+ years ago to recognize that.

          Agreed about the cultural changes, but it’s not just the stay-at-home spouses; it’s spouses, period. As people push marriage and relationships off, staff increasingly often don’t have a support system that they might have had 30 years ago.

    • McValue Meal Audit

      In the age of information it is tough to justify accepting a public accounting salary given the work life balance. I basically sold 6 months of my life every year for 5 years for an average base comp of $65K a year. no thanks

      Get in and get out…of public.

    • JoeyWC

      I left public accounting 20 years ago and haven’t looked back since…making 1mm+ per year now…don’t slave away at the pyramid scheme of PA!

    • FifotryFISI

      Having left PA I can confidently say that the way the current salary structure/ performance system doesn’t make sense if you want to maintain the top 10-20% of your talent especially in the current market. If you are a top performer you basically have three opportunities when you hit your second/third year.

      1)Stay: make ~70k and grind it out for half of the year for 3 years to make right 100k when you make it to manager.

      2)Go into Private: If you are in this group of top performers you probably a good interviewer and if you are well connected you can get a junior manager position in a FP&A or division finance group be making ~100k with bonus and be around 140-150 with the manager title by the time you would made manager in the Big 4. Life stye is significantly better as well.

      3)Go into consulting: Immediate jump to 80k-85k base plus 30% bonus, by the time you would have been manager in the Big 4 you will be making what a SM makes with a little more sprinkled on top. Hours are about the same, but exit ops are pretty good and chances you can weasel in to a high visibility ops position are strong.

      I am not even including the opportunity to go into Banking/High finance and its still hard to see why any top business minded talent would stay. You could do a simple DCF and see that even if you had a 75% chance of making partner in 12-14 years, the other paths would give you a higher return overall with it being significantly less backloaded. I honestly did not dislike my audit job that much, it just seems like you are wasting talent in that space with the other options provide more diverse opportunities, better pay, and better lifestyle. The firms need to find a way to change the dynamic, technology will help some by reducing the number of warm bodies needed allowing salaries to increase, but we all know it is truly a culture issue at the top.

      • Tyler Durden

        Your (1) is true; it’s rough. (2) and (3) are more on the optimistic side of the scale, even for a top performer at Big 4. I’ve never come across a manager in FP&A with 5 years of total work experience making $140-150k all in. I’m sure it happens but most probably an anomaly. (3) can happen but depends on what type of consulting you’re talking about. Usually, the consulting that Big 4 (assuming audit or accounting advisory) will get you into is not exactly the same kind that can set you up for a “high visibility ops” position, or high finance. I agree with your overall conclusion that it’s hard for a top performer to stay and suffer the low wages and grind, but the decision is not quite as easy as you may think at 2nd or 3rd year. In your DCF model, you need to apply a % to the (2) and (3) scenario to make it apples-to-apples comparison.

      • Guest12

        Completely agree with the conclusion of your comment in that the firms are not doing enough to retain “top performers” on a year over year basis. In my office in particular we have an issue with too many people sticking around rather than leaving for industry. Ultimately, the firm’s response has been to give mediocre raises to everyone each year rather than focusing on who they want to keep and trimming the fat through a different allocation of raises across the various performance levels (i.e. larger than a 1-3% difference in raise % for top performers). As expected, this has resulted in an abundance of mediocre employees sticking around while the few talented employees jump at outside opportunities. In the end, this creates more work for executives as we are forced to be more involved in lower level auditing throughout the year due to the inability to rely on a competent manager/senior to run the show.

        TL;DR The focus needs to be on identifying competent employees at each level early on and paying them accordingly.

        • keepin_it_real

          “TL;DR The focus needs to be on identifying competent employees at each level early on and paying them accordingly.”

          That’s just the thing. Competent doesn’t mean top employees, especially in audit. The firm needs a shit ton of staff to do the work and if they gave everyone but the top tier shit raises then all the bottom and middle people would quit. That’s going to overwork the top people even more and they’ll feel underpaid even more.

          FYI, Grant Thornton tried to do this earlier in the decade by giving the top rated people bigger raises and bonuses compared to the middle tier group. Sure enough all of the middle tier folks said fuck this and left to big 4.

          • Guest12

            I would disagree with your classification of competency. I know for example, people who get rated as a 3 consistently are usually on the low end of the performance scale, whereas top performers are consistently rated in the higher 2 tiers. Typically, what I’ve seen, is that the middle of the road individuals you are referring to are given average ratings in their first year at a level and end up shifting into the “above average” tier as they progress through the rank (i.e. Senior 2, Senior 3, etc.). Understanding that the rating process is not the most cut and dry way of judging performance but it provides somewhat of a basis for purposes of this discussion. Either way, I agree that the firm would need to shift this thinking based on the office and the current needs of that office (i.e. if you need people to leave there should be a greater disparity in raises for top tier vs. average tier, and vice versa).

            The firms also have a never ending pool of candidates willing to step in out of college to fill in at those lower levels so why not create more turnover through raise disparity and continue to bring in more people at the entry level rather than incentivizing the lower performers to stick around for multiple years?