Smart Staff Retention Strategies for Today's Accounting Firms

The talent shortage has been a persistent problem in the accounting industry for decades. The pandemic, followed by the Great Resignation, has only made things worse. The US Chamber of Commerce conducted a survey of unemployed workers in May 2022 and some of their findings are quite startling. Here’s what the report found:

• Respondents in the 25-34 age group prioritize personal growth over jobs, and 36% are focused on gaining new skills, education, or training before re-entering the job market.
• 49%, which is almost half the population, will not accept jobs that do not offer remote settings.
• About 17% of the respondents have retired, 19% have become homemakers, and 14% are working part-time.

Several factors contribute to the talent shortage in accounting, and it is not just the retirement of the boomers. There is a huge gap in the firms that need skilled accountants. The most concerning factor is that many college graduates, even those who majored in accounting, do not want to work as accountants. Many temporary workers are joining the workforce; however, this does not seem to be a permanent solution.

The quitting trend among accountants began in 2021 and appears to have continued. Accountants are expected to do more with less, suffer the brutality of the busy seasons, sacrifice work-life balance, and lack the resources they need to succeed—these are some of the top reasons why there is a dearth of these professionals. With fewer accountants and CPAs entering the workforce and more opting to quit or retire, firm leaders should brainstorm on how to mitigate the challenges of talent retention.

Why does retention matter?

It is no secret that accounting is a niche field that requires employees with specialized skills and knowledge. Losing valuable team members can not only disrupt the workflow but also affect client relationships and cause the firm to incur significant costs related to hiring, training, and rehiring. This can become especially overwhelming for small accounting firms that run on limited resources and budgets.

Six retention challenges faced by accounting firms (and how to address them)

1. Work-Life Balance

A 70-80 work-hour week, especially during the busy season, continues to be a major woe for millennial and Gen-Z accountants. The modern generation of finance professionals constantly seeks a work environment where they have the flexibility to balance the professional and personal. Accountants find themselves juggling multiple deadlines and personal commitments, which leads to stress and burnout. They end up losing the motivation to perform.

The Solution:

Times have changed, and so have the priorities of the workforce. For accounting firms, it is extremely important to accommodate the changing needs. Here are some ways to strike the balance the employees need:

• Introduce flexible work or remote options to allow employees to manage their time and responsibilities better.
• Set realistic expectations with the clients about the workload and deadlines. Ensure the team is also aware of what is expected of them and when. Also, ensure proper work distribution.
• Encourage your employees to take regular breaks where they shut off their work mode. Also, introduce paid vacations to allow employees to recharge and rejuvenate.
• Resources such as employee assistance and counseling services can go a long way to support physical and mental well-being. 

2. Learning & Development

Accounting is an ever-evolving field, with constant changes in regulations, compliance, and operational methods. Small accounting firms often find it challenging and expensive to keep their team members up-to-date through learning and development. This can leave employees feeling trapped in a cycle without a clear path for growth opportunities.

The Solution:

Despite the challenges it may present, it is essential to encourage your team to engage in learning and development. Here are some strategies to facilitate this:

• Organize frequent training sessions and workshops focusing on accounting software, current industry trends, updates, and enhancing soft skills development.
• Provide materials and financial assistance to support your employees in pursuing professional certifications like CPA, CMA, etc.
• Mentorship programs can not only provide guidance but also inculcate a culture of mutual support and learning.
• Provide access to online courses, webinars, and educational materials that encourage self-directed learning and skill development.

 3. Compensation and Benefits:

Today's employees are well informed about their qualifications and the corresponding compensation and benefits they should receive. This awareness often poses a challenge for small accounting firms that may find it difficult to provide competitive packages and can result in losing highly qualified and high-performing employees and diminished morale.

The Solution:

Before entering the job market as an employer, it's crucial to evaluate the value you will contribute to an employee's career rather than solely concentrating on how they can benefit your business. Remember that employment is a two-way street. Here are some things you can do:

• Conduct market research on the benchmark salaries and benefits per industry standards and align your compensation package accordingly.
• Implement performance-based compensation that rewards employees to contribute better and feel valued.
• Introduce employee benefits by adding perks like paid time off, healthcare benefits, and flexible working arrangements.
• Recognition and rewards are essential for employees’ hard work and dedication through bonuses and incentives. 

4. Mandatory Busy Season Saturdays

The debate on whether accounting firms should continue with their traditional model of working on Saturdays during the busy season has been long ongoing. During tax season or year ends, accountants end up working for 70 or more hours in the week - and even on weekends. This leads to burnout, strain on the personal front, and deteriorated morale.

The Solution:

Each firm has its own distinct characteristics and specific business requirements. Determining whether your firm should operate on Saturdays during the busy season depends on various factors. Here are some strategies to help alleviate the challenges faced by your employees during these demanding times:

• Introduce a rotating schedule to evenly distribute weekend tasks among all team members. Explore options to minimize the amount of Saturdays employees are required to work.
• Provide additional compensation or extra time off for working weekends.
• Offer benefits like onsite meals, transportation, or childcare assistance during extended hours to ease the burden.
• Empower employees to manage the extra hours they put in by offering flexible working arrangements during times of increased workload. This flexibility can help them maintain a better work-life balance and adapt to the demands of the busy season more effectively.

5. Desperation Hiring

Instead of recognizing the need for additional support, many firms often resort to frantic hiring for open positions. This can lead to the recruitment of underqualified or misfit candidates, ultimately resulting in elevated turnover rates and diminished productivity levels.

The Solution:

The first step here is to understand that desperate hiring will not deliver the results, accounting firm leaders are looking for. The right strategy is where the trick lies. Here’s what firm leaders need to do:

• Develop a strategic plan for recruitment to build a talent pipeline and long-term workforce to avoid last-moment needs.
• A thorough screening process is a must. It should include skills tests and behavioral interviews to ensure that the candidate is a good fit.
• Invest in employer branding to attract top talent and reduce the need for desperate hiring.
• Provide training for hiring managers on effective interviewing techniques and evaluate candidates effectively. 

6. Outdated technology

The abundance of choices in the market for accounting or project management software can overwhelm small accounting firms, making it challenging to determine the right fit for their needs. Outdated and inefficient technology hampers productivity and adds to frustration within the team. Limited knowledge and resources may lead these firms to make misguided decisions when investing in modern technology solutions.

The Solution:

Selecting a platform that meets all of your firm's requirements can be challenging. However, by diligently assessing your needs, you can make an informed decision.

• Conduct a comprehensive assessment of the existing software and hardware infrastructure to identify areas of improvement.
• Allocate resources to invest in modern accounting technology, cloud-based software, and automation tools.
• Provide thorough training to ease the process of adaptation for the employees and integrate them into the daily operations.
• Make sure that you use data security measures and maintain confidentiality. Train the employees on the ethical use of technology and spread awareness of the associated risks.

Employee retention in accounting firms - End Note

Hiring and retention are an endless cycle. With the talent shortage still lurking, firms need to choose measures that truly showcase empathy and understanding toward the employees. However, it is never a foolproof method to ensure seamless operations, as there are no signs of the attrition rate in the industry going down. If your accounting firm has been struggling with resource problems, it might be wise to consider outsourcing your accounting operations.

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