According to CFO’s contributor David McCann, chief financial officers are struggling to find accounting candidates with a wide range of talents, including leadership, budgeting, reporting, and management.
CFOs attribute this to a global skills gap and talent shortage, which makes finding qualified people much more difficult than it was when the baby boomers were the majority in the workforce.
As the baby boomer generation approaches retirement, business executives are asking a crucial question: who will pick up the slack?
In this article, we'll cover:
- A Generational Shift in the Workforce
- The Evolution of Job Demands
- The Advance of Technology
- Best Practices for Remote Working Accountants
- Skills Gap in Accounting Leadership
A Generational Shift In The Workforce
As Pew Research reports, the Baby Boom Generation, which was born between 1946 and 1964, accounts for about a third of the workforce, or around 41 million people. With more than 75 million baby boomers expected to retire in the next few years, businesses that rely on them will need a solid workforce plan to replace them.
By age 68, only 16% of baby boomers actually work full time, while 17% work part-time, according to Gallup. This means that filling the workforce gap now presents a great challenge. Many millennials lack the necessary work experience, and the number of Gen X workers won’t be enough.
Population growth in the United States has slowed. The decline of the 20-through-64 population since the end of 2018 has, however, certainly received less attention, which is understandable given that few people keep track of this demographic.
The more closely monitored "prime-age" population of those aged 25 to 54 began shrinking in 2008, a few years after the baby boomers began turning 55. Then it resumed growth in the mid-2010s, as the largest part of the millennial generation turned 25.
This presents a perfect storm of sorts, with baby boomers approaching retirement, college grads lacking necessary skills, leaving many office seats vacant. Unfortunately, the workforce is not getting any younger.
The Evolution of Job Demands
As the population of actively employed people ages, and as technology and employment needs evolve, workers' adaptability has become more important. The accounting industry is gradually moving away from using Microsoft Excel and standard sheets. Intelligent software solutions that are packed with automation features have swept the market, making some manual labor obsolete.
Certain basic skills, on the other hand, are required for people to grasp how to use the programs at the level required for the job. Senior workers and younger age groups should be expected to be able to fulfill today’s working needs which have changed dramatically in previous decades. In the past, workers did not have to continually upgrade their skills to keep up with technological changes.
The Advance of Technology
Although the principles of accounting have stayed mostly unchanged over the last decade, the technology supporting accountancy has vastly improved. Accounting has evolved significantly over the years. It has evolved in lockstep with technology advancements, from accountants relying solely on pen and paper to early IBM computers, and finally to AI-powered tools of today.
Accounting technology has always played a part in making the accountant's job a little easier, despite the learning curve that comes with all new technology. The accountant's capacity to analyze statistical values has improved as knowledge and technology have advanced. Without a doubt, technological improvements have increased accountants’ ability to interpret data swiftly and effectively, which makes them more effective workers.
Is Automation An Opportunity, Or a Threat?
Despite the advancements in accounting technology, many professional accountants are still hesitant to embrace automation and artificial intelligence (AI).
Accountants are concerned about the potential of automated accounting. For years, the media has portrayed automation as a general threat, with examples of robotic process automation (RPA) and artificial intelligence (AI) taking over low-level, repetitive activities. While this might be true in some instances, automation should be seen as an opportunity for improvement, rather than a threat when it comes to accounting. This is because the goal of automation solutions is to be a helping hand of an accountant, rather than a replacement for one. Implementation of automation software means that there will be a reduced chance for erroneous inputs, reduction in time needed to accomplish calculations and forecasts, and more.
"I can hire more people and provide more jobs if I can take on more clients thanks to automation's efficiency. So that's how you've got to see it: as an opportunity to do more and get closer to your clientele," reports Samantha Mitcham.
We know that having the technical skills isn't quite all that it takes to be a successful accountant. It takes more than just Microsoft Word, Microsoft Excel, and QuickBooks skills for an accountant to be able to respond to these work challenges including automation. High organizational skills, as well as attention to detail, are important, as automation might help with a few crucial things, but is not intended to replace the employee.
Nonetheless, there are accounting-specific skills that should be tested separately, depending on the position, such as bookkeeping, advanced accounting, and business accounting, to ensure that employees actually have the necessary skills to do the job.
Remote Work: A New Challenge in the Workforce
While remote and hybrid work approaches were not widely adopted prior to 2019, things changed dramatically after the pandemic began and many businesses adopted remote work as a new standard. This was easier for some companies to accomplish than others, and it came with its own advantages and disadvantages.
According to research by ConvergenceCoaching, which provides training to the public accounting profession, only 4% of 223 CPA firms interviewed in the summer of 2020 said they were entirely virtual before the pandemic began. About three-fifths of the organizations (61%) stated they had some remote personnel, and 27% said they were entirely in-office prior to the pandemic.
According to this report, 81% of companies foresee an increase in remote working among their staff after the pandemic is over. Around 30% of surveyed companies plan on reducing their office footprint after the pandemic is over.
Best Practices for Remote Working Accountants
Although remote accounting is feasible, it can be difficult for accountants who are accustomed to thriving in the office environment. For both businesses and accountants, reorganizing processes to accommodate remote work plans can be a challenge. For some accountants, this may include establishing their own virtual business, in which they will be completely responsible for all aspects of their firm, including administrative tasks that have historically been handled by lower-level employees.
Online accounting software programs help remote accountants save time and money by streamlining operations and increasing efficiency. Tech applications like Skype, Calendly, Zapier, and others make scheduling, communication with colleagues or clients, efficiency analysis, and time tracking, much easier.
Because transitioning from daily commutes to working from home can be difficult, accountants who work remotely may benefit from asking those who have done it successfully. Nonetheless, according to a Statista survey, the most significant barrier to remote work is dealing with at-home distractions, such as personal tasks or entertainment. Maintaining a solid remote work-life balance and accepting that working from home would not be as easy as initially expected are two of the most crucial remote working recommendations for accountants.
Skills Gap in the Leadership Department
CFOs are also having trouble finding accountants who can lead their departments in the future. According to an APQC poll of finance professionals, bridging the skills gap will require strong collaboration between different organizations, not only employers but also educational institutions candidates attend prior to seeking employment.
Leadership skills, for example, could be developed at school, while other strengths are better developed on the job through experience. A partnership between schools and organizations could result in a more seamless development of each competency, which will require the engagement of finance professors, students, and industry experts.
Leadership skills were once thought to be developed over the course of a person's career. Entry-level financial professionals, on the other hand, need leadership skills from the start of their careers, according to poll participants. The findings reveal that entry-level management accounting and finance professionals lack leadership abilities and reinforce the premise that entry-level job requirements have become more stringent, but workforce entrants' skills have lagged behind.
Introducing additional learning experiences to the finance educational curriculum, offering more internships to finance students, and/or providing expedited training and development during the first year of employment could close skills gaps. However, organizations will continue to experience negative consequences of the skills gap if no changes are made - read more about this issue in "Overcoming the Accounting Skills Gap with Applicants".
Because of technological advancements and unanticipated events like the pandemic, the way accounting work is done today has changed dramatically. Both young and more experienced workers will need to keep up with the technology and new tools if they want to stay relevant in the workplace.
With the baby boomer population approaching retirement, companies will find it challenging to locate skilled workers due to a worldwide skills gap and talent shortage. As the finance department plays a critical role in every company, accounting candidates should have the quantifiable and undeniable knowledge needed to perform well.
And, as we discuss in "Accounting Skills Gap No Longer Unlikely," one of the most effective methods to assess your candidate’s capabilities is administering pre-employment tests that reliably assess both hard and soft skills. For accounting knowledge, employers should look to test not only for the position they are hiring for, but also for a wide range of talents, including leadership, cognitive ability, and technology skills. By doing this, hiring managers can know for certain they are selecting the applicants who will be high performers for years to come.
EmployTest can assist in identifying top talent and screening candidates before the interview process, and it especially holds true for accounting positions. Request a free sample of our accounting skills test to learn more.