The People Who Count

It was a classic career path, but with a twist: after spending six years at a midsize CPA firm, John Doherty left to become the controller of a regional bank. From there, he moved on to a division of John Hancock, where he was director of financial reporting. That positioned him to advance in corporate finance to, well, almost anywhere. Yet after a mere six months at Hancock, he leapt at an opportunity to go back to his old CPA firm.

A significant jump in salary was one factor. So was the chance to enjoy more-flexible work hours, a greater diversity of work, and the satisfaction of contributing to revenue rather than overhead. "Working at a company, you're constantly watching the bottom line. The stresses of working at a CPA firm relate to client satisfaction, which is easier to manage for me," says Doherty.

All over the country similar scenes are playing out as accounting firms large and small sweeten the pot in order to lure or retain employees. The Big Four have doubled their assurance staffs in the past five years and are expected to nearly double them again in the next five, thanks largely to Section 404 of Sarbanes-Oxley. Smaller accounting firms, their client rosters expanding thanks to new rules on auditor independence, are also upping the ante. Add to that a precipitous plunge in the number of accounting degrees granted in the late 1990s and disaffection with corporate finance jobs, and suddenly the labor pool is roiled by a perfect storm, one that CFOs readily admit is difficult to navigate.

Nearly half of the CFOs surveyed in late 2005 (see "How CFOs Confront the War for Accounting Talent" at the end of this article) say that it is somewhat or very difficult to hire qualified finance staff. "It's an extremely competitive hiring environment today," says Craig Nickerson, CFO of Dynetech Corp., a privately held business-process outsourcer based in Orlando. After a five-month search, he recently hired a senior staff accountant away from Deloitte & Touche but is still looking for an accounting manager for his 33-person finance team, a position the company expected to fill this spring.

Nickerson says competition has not only driven up CPA salaries by as much as 25 percent in the past several years, but now he must contend with public accounting firms that "provide signing bonuses and a lot of fluff benefits that they've never offered before." And there is competition as well from other corporate finance departments. Dynetech had a 10 percent turnover rate among finance staff in 2005, about double its historic average, largely because people had better offers from other companies.

Even though enrollment in accounting programs has risen over the past few years, the demand for CPAs currently outstrips supply by as much as 20 percent, and relief appears to be a long way off. "We'll have an incredible shortage of accountants for the next 10 to 15 years," predicts Allan D. Koltin, president and CEO of PDI Global Inc., a Chicago-based consultancy for accounting and other professional firms.

If there is one bright spot, it may be that the turnover rates at public accounting firms remain high, averaging about 17 percent annually at large companies and 15 percent at smaller ones, and approximately four out of five people who leave those firms do so to work in corporate finance. That may already be changing as companies ranging in size from the Big Four to modest regional firms address everything from compensation to corporate culture in an effort to win the talent war. "There's so much more need for experienced managers, it's become clear to us that we can't accept the kind of turnover we used to have," says Jennifer Allyn, a director in the office of diversity at PricewaterhouseCoopers.

Money is certainly one way to get people's attention. Entry-level annual salaries now average $45,000, according to career-oriented Website Vault.com, a 9 percent increase over last year's rate, and accounting salaries are rising faster than the typical 5 percent increase in other professions. Once in the door, recent grads can expect to see raises of 5 to 10 percent a year. "If you're three years out in public accounting, you're making $60,000 easily," says Michael Assaad, vice president of permanent placement for Ajilon Finance. Add to that retention bonuses — $20,000 to $50,000 for midlevel managers — and impromptu midyear raises and the stakes get high quickly. Such increases make it "pretty much impossible for us to hire anyone but the most junior-level people" from CPA firms, says Larry Trachtenberg, CFO of Tempe, Arizona-based Mobile Mini Inc., a portable-storage-unit provider.

Those who do leave public accounting for the corporate world often cite "work/life balance" as a prime motivator, so accounting firms are fighting back on that front as well. Many are trying to give people more time off, and making sure they use it. PwC, for example, closed its offices to give its entire U.S. staff a paid vacation between Christmas and New Year's Day. The firm is also trying to get people over the idea that "losing vacation is a badge of honor," says Allyn, by having managers encourage staff to take time off and otherwise manage their professional and personal lives to avoid burnout.

Public accounting firms are also leaving no stone unturned in their search for talent by, for example, paying close attention to their alumni network. Nearly 25 percent of Ernst & Young's experienced hires are "boomerangs," people who have left the firm and come back. PwC's Allyn says the firm is in the early stages of actively recruiting (or, one might say, re-recruiting) alums, and has recently started holding events targeted at specific groups of former employees, such as a group of women in the Dallas area who had left to become stay-at-home mothers. "We said, 'Come back, even on a reduced basis,'" says Allyn, an offer that at least two of the women accepted.

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