Don’t be surprised if your CPA suddenly quits after April 15. While the Great Resignation is delivering higher than normal quit rates in many industries, accounting is a field where turnover isn’t unusual. But this year may be the worst yet, experts predict.
“Before 2020, turnover was 15% to 20% for small firms,” says Jeff Phillips, CEO of tax and accounting advisory Padgett Business Services and founder of the recruitment firm Accountingfly. “Our industry is set up to burn people out, but over the last decade it had gotten to its max peak—before we even hit the pandemic. Now it’s gone through the roof.”
The pandemic exacerbated an issue that was already there. The IRS delayed filing deadlines, which helped businesses and individuals but didn’t necessarily help accountants. And then there were businesses who needed help with the Paycheck Protection Program.
“Remember, when COVID hit in March 2020, it was the middle of tax season,” says Michael Platt, managing principal of INSIDE Public Accounting, which provides practice resources for the accounting profession. “Generally, February 1 to April 15 has about 10 weeks of pretty high-pressure work. You know it’s coming, and you know it’s got an end. But when 10 weeks turns into 10 months, it takes its toll. There was higher than normal turnover after April 2021. I certainly expect by April of 22, there will be a spike in turnover again.”
While most unhappy accountants wait until tax season is over to leave, Phillips says this is changing, too. “There is an unwritten code you don’t recruit during busy season and a little bit of an unwritten code that you don’t leave a public accounting firm during busy season,” he says. “That’s a red flag for the next firm, but if you get on Reddit’s r/accounting page, you’ll see people who are high-fiving each other for getting out of the profession and leaving the big four [accounting firms] and we are in the busy season.”
“People commit to getting through tax season, and when they get done with it, it’s time for them to pick up and move on,” adds Platt. “Normally people don’t resign January, February, March and April. It leaves your peers in a lurch. . . . Short term, there might be a stigma attached to it, but I think everybody gets over it pretty quickly because the need is so high right now. I think that wouldn’t necessarily hurt their career long-term.”
But Burnout Isn’t the Whole Story
The AICPA surveys 40,000 firms in America every two years on issues in the field and “finding qualified talent” has been a top concern since 2015. In an interview with The Verge, Joe Schroeder, associate professor of accounting at Indiana University’s Kelly School of Business, said accountants’ pay has been stagnant over the past 20 years, and Phillips says it’s partly responsible for the industry’s high turnover.
“If you go into investment banking or medicine, the financial ROI is worth the long hours,” he says. “It’s not worth it in accounting. A junior accountant could be making $80,000 a year. A bank teller could be at $55,000 a year, but they’re not on call, working 70 or 80 hours a week. You’ve got candidates who are rethinking their lives because the ROI isn’t there for them. The value proposition for the career path in public accounting has reached a point where it sucks.”
Accounting also hasn’t embraced remote work on a large scale. “If you’re in Tulsa and you are growing at 15% a year and you need to fill CPA positions at that clip, it’s harder to fill them locally,” says Phillips. “When this pandemic is all over, I don’t know if firms will have learned their lesson and will demand employees come back to the office. It’s the conservative, slow-to-change nature of our profession.”
The accounting industry also hasn’t made a genuine commitment to work-life balance, says Phillips. “If I walked into a room of managing partners at large firms and said, ‘You should embrace responsible, unlimited PTO,’ I’d get some head nods,” he says. “But no one would take that seriously. It’s a business model that needs to change.”
Where Will They Go?
Some of these accountants move into management accounting, focusing on financials inside a business instead of handling taxes. “There’s always a rotation of people through the CPA track into industry accounting,” says Russ Porter, CFO and senior vice president of Institute of Management Accountants. “During the initial outbreak of the pandemic, there was a low amount of movement out of public and into private company accounting. That lull is leading a lot of people to reevaluate. Now that things are settling down with a pandemic, a lot of people are thinking it’s time to look at what else might be out there.”
Many leave the industry, which is a concern, says Platt. “Especially over the last two years, those who are leaving tend to be getting out of public accounting altogether,” he says.
But Porter believes the pendulum will swing back. “I think as 2022 and especially ’23 go on, we’re going to see more of those people coming back into the workforce,” he says. “Some of them maybe go back to previous employers, but a lot of them will probably find new jobs or new careers that they’ve decided to embark upon because they’re reevaluating a lot in professional life.”
What Can Employers Do?
Phillips says retention starts with money. “If the ROI is broken and other industries have this similar churn and burn approach, pay more,” he says. “I don’t think they have a choice. KPMG said last week it was going to do $160 million in salary increases for its 35,000 employees. They’re not doing that out of the goodness of their heart. They’re doing that because they’re arriving at the same conclusion.”
Porter says giving all employees a raise could be a knee-jerk reaction. “For some industries, that’s going to be the right answer, because they’re structurally they need a higher compensation level,” he says. “For others, this might be very short-lived.”
Other middle market firms have committed to 40-hour work weeks during busy season, says Phillips. “That’s less than half what you’re normally doing,” he says. “They are eating some profitability, but they have really happy people. Their turnover isn’t perfect, but it’s a lot better than the norm.”
Another solution is to address the culture. “Like all industries, our workforces are millennials, millennial couples, moms and dads who work and need to take care of sick kids or sick puppies and emergencies at home,” says Phillips. “If a culture at a firm is not letting you leave because you have to be on call, it’s so easy just to walk away from that.”
More companies are offering remote work, too. “West coast and east coast firms in higher priced markets are reaching out to the firms in the Midwest where people cost less and pitching them to take a Los Angeles-based salary working from home in your pajamas,” says Platt. “That pitch has been relatively successful.”
Companies will need to figure out what motivates their employees. “It may be more flexible hours, the ability to work from home, or a better benefits package that would be not as expensive for a company as straight-out compensation,” says Porter. “It might also be that companies go back to their mission, making sure that they’re communicating their values and the mission to their people. Those non-financials can help the morale and the dedication of a workforce when money is not really the driving factor. It’s incumbent to know what your people need.”
“People who go into accounting love the work and the satisfaction of helping businesses run better,” says Phillips. “It’s important work. It’s a proud work. It’s not accounting that is broken. It’s the career plan of public accounting.”