The accounting profession finds itself in the midst of a personnel transition that is unique in its history, with its youngest employees in a more prominent position than ever before. Even with record numbers of young people studying accounting and taking the CPA Exam, the profession faces a staffing crunch, as the ongoing retirement of the Baby Boomers and the relative dearth of Generation Xers forces firms to make major changes to lure Milllennials into joining and staying with them — and thus driving the profession forward.
But who are these Millennials? And why do they occupy such a pivotal position? In the first part of a two-part series, we’ll take a look at the numbers behind this new class of professionals, as well as the various factors determining their current hiring environment.
According to the American Institute of CPAs’ 2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report, enrollment in accounting and finance college programs, as well as the number of degrees awarded in those fields, are at an all-time high.
In just over 10 years, enrollment in BA programs in accounting rose to 201,570 in the 2011-12 academic year, from enrollment numbers of 133,435 in 2001-02. The enrollment numbers for MA accounting programs more than doubled to 29,648 in 2011-12, compared to 12,565 in 2001-02.
Additionally, the total number of BA accounting degrees awarded per year in the United States has risen from just over 20,000 in 1971 to some 61,000 in 2012. Master’s degrees also increased tenfold to 20,843 in the 2011 academic year. The AICPA report also states that “more than 60 percent of the universities predict increased enrollment in both MBA in accounting and MA in taxation” programs.
Yet despite these impressive figures, some 68 percent of chief financial officers interviewed for the 2015 Robert Half Salary Guide and Salary Calculator claimed that it’s “challenging to find skilled candidates for accounting jobs and other professional-level positions.”
How is this possible? The answer starts with demographics.
As outlined in a 2015 article by Washington, D.C.-based think tank Pew Research Center, using population projection data from the U.S. Census Bureau in December 2014, the Millennial generation (born from 1981 to 1997) is projected to surpass the Baby Boom generation (born from 1946 to 1964) this year as America’s largest living generation. Millennials, who will be between the ages of 18 and 34 in 2015, are projected to number 75.3 million, surpassing the projected 74.9 million Boomers (ages 51 to 69).
The departure of the Boomers from the workforce, compounded by the rapid change in technology in the last decade and a half, and a growing demand for accounting services of all kinds, has created an unquestioned need for highly trained, highly skilled younger people to enter the profession.
The AICPA Trends report shows that a record 23,793 new Bachelor’s graduates were hired by CPA firms in 2012, along with 16,557 new Master’s grads in the same year. These combined numbers have resulted in “hiring by public accounting firms [being at] an all-time high, especially at the Master’s degree level,” with “89 percent of public accounting firms also forecast[ing] that they will hire the same or more graduates in the following year.” This hiring demand has surpassed the previous all-time high set in 2006-07.
The 2015 Robert Half Salary Guide painted the current hiring environment thus: “The challenge employers are facing in filling accounting jobs is threefold: First, businesses are having to offer competitive salaries, signing bonuses and other perks to attract the best. Second, they must have a fast and efficient hiring process since companies that take their time may lose top candidates to the competition. Third, they have to pay attention to their current staff and make sure star employees with in-demand skills don’t jump ship; to keep them happy, employers may have to offer raises and retention bonuses.”
As Millennials continue to keep employers busy, firms’ top brass need to start preparing for a business run by and for a younger generation. And for some, that scenario has already arrived.
THE FUTURE IS NOW
In a report from Big Four firm PricewaterhouseCoopers titled Nextgen: A global generational study, Millennials are already entering the workforce in a big way. “At PwC,” the report claims, “Millennials represent a majority of employees; two out of three of PwC’s staff are in their 20s and early 30s. Within that group, most are unmarried (75 percent) and without kids (92 percent), and for three out of four of them, PwC is their first job out of college. By 2016, almost 80 percent of PwC’s workforce will be comprised of Millennials.”
And while it might seem daunting for younger professionals to jump into larger roles so quickly, they (as well as their higher-ups) must ensure that they’re constantly learning on the job.
“Today’s business climate requires management accountants who play a larger role in their organizations,” said Rebecca Mahler, senior manager of college and university initiatives at the AICPA. “Critical thinking and relationship-building, as well as verbal and written communications skills are crucial to being a successful CPA. Technical knowledge is a minimum requirement, and the more diverse a candidate’s knowledge and expertise, the more valuable they become to an organization.”
“One of the biggest challenges for younger CPAs is proving that they have the ability to take over a larger role at an earlier age,” she continued. “One of the best ways to do that is to demonstrate a commitment not only to exceptional performance, but also to continue to refine their skill-set and ensure that they are not only working on improving their strengths, but also addressing any perceived weaknesses.”
“Understand what motivates your target audience and address those needs in your communications and in practice,” Mahler advised firms that want to hire. “We’ve consistently heard that what drives the younger generation toward specific career opportunities is that they feel like they are a part of the bigger picture. One of the best things a firm or company can do to attract more talent is to connect what an entry-level accountant does at their organization to what their work means and why they do it. This helps satisfy that desire to be part of a cause, to feel like you can make an impact immediately upon joining an organization.”
As always, early adapters to a more future-forward approach to firm culture are the most prepared for success. Millennials aren’t going anywhere, and the best option is to adopt sensibly and promptly.
“By taking a close look at their internal processes and procedures,” Mahler said, “many firms may find that there are small, but important, steps they can take to ensure they’re putting their Millennial employees in a position where they are poised for success.”
In a future article, we’ll look at how firms and accountants of all ages are adapting to new roles and new relationships among generations.
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