Skills shortages and shifts in employee demands brought on by the pandemic will combine to create an all-time high of talent strategy changes in the accounting and professional services industries, according to Matthew Lawford, operations director at specialist accounting recruitment firm AJ Chambers.
“I think we’re seeing hiring volatility and a process change. A lot of firms have had to be much quicker,” he says. “Even now, those who feel like their processes are quite slick are still losing out on talent.”
Research suggests the pandemic has led to significant skills shortages across the accounting industry. In fact, a recent report published by the Professional & Business Services Council and the Financial Services Skills Commission found that an average of 32 percent of UK firms are afflicted by shortages in financial, professional and business services skills.
The report also offers insight on the impact of these talent shortages, with the sector’s annual output expected to be 12 percent higher if skills gaps were plugged – equivalent to £38bn annually.
Lawford attributes this shortage, among other factors, to the dwindling influence of accounting practice firms in the job market, arguing that graduates are often presented with more attractive options elsewhere.
“Auditors and tax candidates, certainly in the last 10 to 15 years, have been in reasonably short supply. Not everyone wants to stay in audit once they’ve qualified as an auditor,” he says.
“I think what’s happened now is that people have more opportunity outside of accountancy practice and go straight into industry.”
Arguably more striking, however, is the measure of the industry’s reaction. While volatility appears to be prevailing, an AJ Chambers report examining the impact of the pandemic on the accounting industry shows that just 9.5 percent of business owners in accounting and finance cited ‘assessing the recruitment strategy’ as a top priority during the pandemic.
In addition, less than five percent cited ‘talent acquisition’ as a top priority for future planning.
Reacting to this, Lawford argues firms must stay alert to the changing landscape and ensure that their offerings to employees square with the burgeoning volatility and competitiveness in the market.
“We’re still seeing quite a few accountancy practices who feel they’re in line with the market rate, but they’re actually not, because the market rate has changed,” he says.
“We have our finger on the pulse – we know that the firms that are paying decent money, that are giving the better benefits, that are giving true flexibility to the employees, are more attractive. And naturally, some will be left behind the curve on that.”
What Lawford describes is a familiar concept in the corporate world, with numerous studies having demonstrated a tangible link between benefits and employer attractiveness. For instance, research published by Personio shows that 38 percent of employees in the UK & Ireland are looking to change roles in the next year. Of that number, the reasons given for leaving include pay cuts (23 percent), poor work-life balance (22 percent) and a lack of learning or development opportunities (17 percent).
Lawford goes on to qualify his stance by explaining the potential impact on the industry. He argues that smaller firms will ultimately bear the brunt of this volatility, noting what he describes as a “trickle-down effect”.
“The competitiveness will have a major effect on the smaller firms. The top 10 are looking for staff, so they’ll do so by looking at the top 20. And then the top 20 need to replenish the staff they’ve lost, so they’re going to look at the top 40. And then you have this trickle-down effect which quickly reaches the bottom and disproportionately affects certain firms.
“And these firms that are losing out, their options are to either pay bigger money or to offer the opportunity to move into a senior or partnership role.”
What next for accounting firms?
Lawford argues that this changing climate and subsequent surge in hiring volatility and process changes has continued to hand market power to the employee, accelerating what he describes as a “candidate-led market”.
On that basis, accounting firms must place far greater emphasis on offering better incentives and remuneration packages to attract and retain top talent, he says.
“Good quality candidates are coming to understand what they’re worth, so firms have to catch up. There are plenty of firms out there that are underpaying good-quality staff, and they’re getting caught out now.
“We’re sometimes shifting entire teams to other accountancy firms because they’re not paying market rate. That is going to be a problem moving forward.”
A large part of this equation, Lawford argues, is going beyond compensation and providing employees with a career development roadmap to bolster retention efforts.
Personio’s research once again supports Lawford’s theory. Of the 38 percent of employees looking to change roles, the most commonly cited rationale was a lack of career opportunities (29 percent).
“I think some of the best firms right now are able to lay down that narrative of career progression so well, that actually salary increases aren’t even the most attractive thing. And if they don’t have that narrative given to them by their current firm, they’re going to hear it from another firm.
“It’s not good enough for them to just be quick – they need to be competitive.”
Lawford points out that the intensifying climate has sparked an overwhelming uptick in demand for statistics and analysis from firms consulting with recruitment agencies. This, he argues, renders the support of HR and recruitment specialists more crucial than ever.
“Firms need to listen to external advisors and HR departments, and more importantly, they need to listen to specialist recruiters that are in the market doing this day in day out, because we’re seeing the whole market and how it shifts,” he says.
“We’re giving a lot more market intelligence than we’ve ever done, and we pride ourselves on that.”