Risk vs reward.
You probably heard that expression, or some variation, on day one of your very first business class. If you aren’t willing to accept some calculated risks in your business decisions or life, you may put an artificial ceiling on your prospects.
Another way to look at it is that there is a trade-off between security and potential.
Unless you work in the federal government (ahem), an organization’s growth potential, and the professional who acts within it, will experience the push and pull along the journey of life events. There are times to take greater risks, and there are times to assume greater security. 2022 vs 2023 is a good example.
Risk is priced into decision-making all the time, and if we assume a relatively efficient market hypothesis, the adjustments get made in real-time most of the time.
So why then is there a shortage of accountants?
With greater demand in the profession, as there is now, and with the availability of market information, available supply should move to meet the demand as long as the price point intersection works for both sides. But that isn’t what is happening, as CFOs continue to face talent shortages, even as nearly four in five accounting grads are confident in their career choice.
My wife, who has been in audit advisory services for most of her career, saw the ease of the calculation when she entered the profession at one of the Big Four. “I’m risk averse,” she said. “I’m willing to accept a lower long-term ceiling if this profession provides me greater stability.” And this makes total sense.
But now, according to data points, the average starting accountant salary is around $58K per year, and for those with more than 10 years of experience, only about $71K. While working at a Big Four or a major regional firm will likely have a higher upward trajectory, including management potential, this level of increase that takes a decade to reach on average still falls well short of the starting salary in various engineering jobs.
And yet the need for accountants — especially those second- and third-year accountants that get the grind work done — has only increased in an era of heightened regulations. The consequence is a smaller, less qualified talent pool.
As with other industries with a baseline of labor demand yet no consistent adjustments in qualified supply (such as the trucking industry), there are no easy answers.
Unless, of course, someone figures out how to program the office Roomba to do quarter-end reconciliations.