Finance and Accounting Skills Gap Vexes CFOs

The wish list of traits desired in entry-level finance and management accounting staff continues to expand.
David McCannFebruary 4, 2015

While CFOs generally say on the record that they have no problem finding young accounting and finance talent, research suggests that such assertions are less than candid.

Indeed, a shortage of top-quality, entry-level employees in the field is worsening as companies raise the bar for the skills they require from newbies, largely because of today’s advanced information systems and complex data-analytics tools.

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The latest evidence of these trends comes from Competency Crisis, a coalition of finance professionals, employers, students and professors organized by the Institute of Management Accountants (IMA). The group, together with the American Productivity & Quality Center (APQC), surveyed 173 corporate executives and managers, most of them in the finance field.

“The survey results reveal large gaps between the competencies that organizations need to succeed and those that entry-level management accounting and finance professionals possess,” says the report, which defines “entry level” as having a bachelor’s degree and less than three years of work experience.

“The consequences of hiring challenges can include increased spending, reduced productivity, and diminished work quality,” the report says. “Nearly half of survey participants are experiencing increased time to fill entry-level positions. Roughly one-third are experiencing increased recruiting costs, and just under one-third are hiring under-qualified candidates to fill entry-level positions.”

The survey asked participants to rank 25 skill areas in terms of (1) their importance in the success of entry-level management accounting and finance professionals, and (2) the degree to which such candidates currently possess them. The ratings, made on a 5-point scale, show a significant gap between the two ratings for all 25 skill areas, including both technical and non-technical skills.

Skills_GapTwo of the three biggest gaps are for non-technical skills: leadership and strategic thinking/execution. Three more non-technical ones are within the top ten widest gaps: change management, process improvement, and business acumen (see chart).

“I can go out and find a good accountant,” says Ben Mulling, the CFO of Tente Casters and a spokesman for Competency Crisis. “But I’m not looking for that. I’m looking for someone who’s going to fill manager roles in three to five years, somebody who thinks the right way. Nobody’s going to come in with all the skills you want, but it can be difficult to find a person who has the frame of mind to see things from a macro level and take charge.” He adds, “I no longer want someone to tell me they can do debits and credits. My ERP system does 99% of that.”

Mulling, who landed the CFO role at Tente Casters in 2008 at age 28, notes that a young person he hired last summer for a senior accountant role studied for IMA’s Certified Management Accounting designation while in college and received the certification as a senior. “To me that demonstrated leadership,” he says. “If I know that somebody is going to try to set himself above others that early in his career, that says a lot to me about his work ethic, character, and ambition.”

The skills shortage has three primary culprits, Mulling observes. First, the focus of college accounting curricula is out of balance. “For every course that teaches you how to look at an organization from a macro level, that teaches you about management accounting, there are nine others that teach you about debits and credits and GAAP rules so that you can be a public accountant,” says Mulling, who teaches college accounting classes on the side. “But you’re probably going to be in public accounting for three to five years, so your degree is not in the same direction that your career is going to be.”

Second, the youngsters themselves have some culpability for that, in that most of them come out of school content with starting out in public accounting and earning a CPA certification rather than seeking to acquire a broader skill set.

Third, employers aren’t aggressive enough in developing young talent. What’s needed is a conscious effort to provide them with career paths: “in three years you should be doing these kinds of projects, in five years you should have these certifications, and we’re going to involve you in cross-departmental projects so you can develop communication and leadership skills.”

“There’s blame all the way around,” Mulling says.

The survey report suggests several questions CFOs could ask themselves to get a grip on where they are with the hiring of entry-level professionals and where they want to go:

  • Has finance raised its competency requirements for entry-level jobs to unrealistic levels?
  • Does finance need to increase its willingness to invest in developing entry-level hires?
  • Are there too few entry-level management accounting and finance professionals in the labor market in part because organizations lack — or fail to publicize — clear career paths?
  • Is finance underestimating the non-technical competency deficiencies among entry-level talent?
  • In considering entry-level competency gaps, does finance adequately consider interventions designed to lessen the problem (like defining career paths, mentoring, offering internships, developing relationships with professors, etc.)?

Mulling says he finds the first question, about possibly unrealistic expectations of entry-level workers, the most compelling. “I do think the bar for those candidates has been raised, especially because of information systems and the huge amounts of data we collect and analyze,” he says. “It may be unrealistic for us to say, ‘This is what I want,’ and get exactly that person, for the amount of money we want to spend.”