I read what I thought was quite a surprising press release yesterday.
It was sent to me by a firm called AdvanceTrak. They were clearly seeking to advertise the services that they can supply to firms of accountants, but whilst doing so they noted:
Nearly three-quarters of accountancy firms are now turning away clients because they lack staff, according to a global survey highlighting the growing drag of labour shortages on the profession.
They added:
According to the newly released findings, 73% of firms say they are turning away potential clients due to a lack of available staff, while the same proportion describe the impact of the talent shortage on their business as ‘severe'.
Why am I unsurprised at this? That is because, as I know from colleagues in accounting academia and all those I know through the Accounting Streams project, there is an unemployment crisis at present for those graduating with degrees in business, finance and accounting.
These degrees were, once upon a time, that was not very long ago, a straightforward way to gain access to employment which anyone with moderate aptitude, and a willingness to learn, could use as the basis for a career that they might reasonably hope would last for life, whether they acquired a further accounting qualification or not.
That, I can assure you, is no longer the case. Accounting firms have, over the last few years, significantly reduced the number of people that they seek to recruit, even though the applicants seeking employment with them are at least as well qualified as they ever have been.
What is more, the firms in question now treat those applicants with considerable disdain, in most cases failing to even acknowledge applications. And if they do decide to progress the recruitment process with an applicant, that applicant can expect to engage with AI several times before a human is even involved.
As a result, I am completely unsurprised that the accounting profession might now have a recruitment and retention problem. If you wish to treat people with disdain, people will respond in kind.
And, if you decide not to train people because you think AI will be able to undertake tasks before that is genuinely known, then you should expect to have an employment crisis within the profession as a whole.
There are those who like to claim that young people make unnecessary fuss about the way they are treated now. I always beg to differ. Back in 1978, when I was looking for what was then called 'articles' so that I might undertake the training to be a chartered accountant, I sent a letter to just three firms. I was invited to interview by all of them, almost by return of post, and in each case I had just one interview, and it was with a partner. I secured three offers of employment, and turned down Binder Hamlyn and Price Waterhouse and chose to work for what was then Peat Marwick Mitchell, which later became KPMG. The whole process took place over a period of little more than a fortnight and involved remarkably little stress, and I am well aware that many others secured jobs in not wholly dissimilar ways.
Back then, accounting firms treated potential recruits as human beings. It would appear that, long ago, accountants forgot about that quality that a candidate might possess and have instead treated them as if they are an input into their production processes, to be treated with contempt, putting these firms in the same category as the chief executive of Standard Chartered Bank, about whom I wrote recently.
If the profession is short of people as a result, no one should be surprised.
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What about smaller firms?
I could see the sort of work you described doing when you had your own practice as being rewarding if not financially and interesting
Small firms do not compete with the big industrial monsters. When the EU Comission has an auditing contract, do they do to a family run office in Brussels? No. Who does Siemens turn to when they have to pay tax? PriceWaterhouseCooper. The same as everyone else. That is the problem. Small firms do not have large enough scale to do the job according to the regulations made by our governments (including the EU Comission). Of course our governments take advise from the industry, which just so happens to be the big accounting firms. It is totally rotten.
I am not an accountant so can’t answer for their recruitment processes, but every one of the professional firms I have worked at in the last 20 or so years received many dozens of applications for every training place. They all take considerable care about who is recruited – aptitude tests, assessment days, different sorts of interviews and team tasks.
We invest significant time and money in their development, and we know that most will leave eventually. And then it costs very substantial amounts to recruit a replacement, if you can find someone with the right skills.
Most people I speak to see apprenticeships as a good alternative to recruiting graduates. You get good people younger and train them for longer. But the competition between school leavers to secure a place is even more extreme.
But you are ignoring the fact places are just not being made available now – and this crisis is by choice then.
Numbers are down, but everyone – even the Big 4 – is still recruiting at a junior level. Including, as I said, apprenticeships. One of my children is currently training at the successor to Peat Marwick (their own choice – not encouraged or dissuaded by the parents). In about four or five years, people will be complaining that there are not enough mid-level people to recruit, just as they did after recruitment of juniors reduced around 2008.
Whether AI takes up the slack remains to be seen – and indeed whether it may lead to a democratisation of accessible “good enough” professional advice at a reasonable cost, rather than putting good practical advice beyond the pocket of most people. I think there will always be a place for living, breathing people providing advice to other living, breathing people. How you train people to do that in the age of AI remains to be seen. Perhaps trained professionals become the bespoke tailors of the future, with most people relying on “off the peg” services.
Your claim is contradicted by all I hear from colleagues. Are they all wrong?
Recruitment may be down in many places but it has not stopped. Here is an example: https://www.bbc.co.uk/news/articles/c86ynz9xy72o “PwC planning to increase the number of graduates it takes on”
That said, many firms need serious consideration of what the career path looks like. Partnership is not what it was, and further away and harder to achieve, and many people just don’t want it.
A few years ago, I read somewhere that there are more accountants in Britain than the rest of the EU together. Is this correct? From my experience it does seem to be the case that more accountants here rise to senior executive positions than comparable European companies where engineering or similar qualifications take precedence.
I have no axe to grind either way, am just curious.
We have more accountants. That is true. However, large numbers of them do not work in accounting many seats a general management qualification. Whether it is a good one is another question.
I interviewed for an apprentice accountants position around 1998, and there was a whole-day evaluation evaluating a large group for maths, leadership and general skills. I know I would have been one of the highest-scoring on the maths part, I made sure my group could each have their say and helped with the outcome in the leadership challenge, and much of the general part went decently, with the exception that my suit was declared ‘a bit casual’ because I only had a velvet jacket as I didn’t have a business suit yet. I got turned down for reasons unexplained, but I’m sure it was that last bit.
In any case, they were selective in their hiring and it was apparently rather more competitive that 20 years later, but they still responded and didn’t have nearly as many stages. Meanwhile getting into IT was still a case of a single stage, making the right impression, and getting offers from most places you applied, so I ended up going that route. In any case, it seems that things were turning in the world of accountancy over 20 years ago but the dehumanising changes have happened since then.
I wonder how much of it is down to people being in roles for less time on average. If you stayed and grew with a company as a manager you mainly experienced interview processes that were relatively light on what they had to evaluate. As people change roles more often you have more hiring for senior roles where more complex skills are then evaluated, leading to a decision to more extensive interviewing. That then leads those hired managers to treat longer interview processes as normal, extending the process for more junior roles, and then that becomes a cycle.
It comes down to deskilling.
A good inteviewer knows the outcome of an interviw within 30 seconds at most of it beginning.
AI can’t do that.
Absolutely correct. I’ve interviewed 100’s and 100’s for various positions during my lifetime and I’d say 20 max. I had a few surprises but not many
I reckon less than 30 usually, as you say
When I joined Peat Marwick Mitchell, around the same time as Richard, the first question from the pin-striped Manager was, “ So, old chap, what do you have in your portfolio?” When I opened up my brand new briefcase to show him my sandwiches, he laughed out loud. “No, not THAT kind of portfolio….”
It really is a brutal situation for trainees and part qualified accountants at the moment not just in practice but also in industry. I’m not convinced it is AI driven, I think it’s a combination of offshoring over the past 15 years (so now a lot of the early years opportunities are in India, the Philippines, Poland etc), some nearshoring (the north of England and the south of the Republic of Ireland seem to be experiencing less recruitment issues) and also greedy leadership teams squeezing those holding roles in the traditional “middle.”
In my own adjacent profession, I should have a team of 4 but only there are only 2 of us. It is not because AI has saved us lots of time (although it has saved a few hours a week) or because we offshore. It’s simply the expectation that we will work evenings and weekends to get the work done whilst the bosses announce record profits.
Look for another job?
Can I draw an analogy here with HGV drivers, strange as it may sound.
Year ago the route to an HGV career was through apprenticeship. Haulage firm took on young people, gave them a good grounding in how large vehicles work and how to repair them and then put those who were appropriate through training to gain an HGV licence. Others were given further training in maintaining the vehicles. Obviously, this was not a cheap proces.
Then someone realised that their haulage firm could make better profits if they only took on drivers with licences. They paid slightly better wages to tempt the drivers away from the companies who had trained them.
Over time this became the norm, but the supply of trained drivers began to dry up, so would-be HGV drivers had to pay to get their own licences. there was a time when Job Centres would pay the costs involved in trainign for this type of career, but that ended a long time ago.
There was great surprise throughout the industry when, during Covid there were huge problems because of the lack of HGV drivers. I wonder why that shortage happened?
That problem is getting worse.
There is a shortage of younged drivers to replace those retiring.
Like a lot of industries there is also a major issue with retention which is often down to poor working conditions
I am a Chartered Accountant. It can cost £100,000 to train someone over three years and then they may well leave. An articled clerk like RM in the 1970s would have been on a 5-year commitment that would have made the firm a profit. Using AI to filter candidates is a very good way of protecting from the perilous employment legislation relating to claims for discrimination. My son was recently selected from LinkedIn using AI by a global corporate, but that was soon followed up with a 1-to-1 Zoom with three more rounds to go.
In my day it was seen as a training to offer a gateway to something more interesting, and I left one year after qualifying. These days, if you want to make serious money with equity, you won’t do it in public practise.