As more accountants retire from the profession, they are not being replaced by new practitioners. A recent Wall Street Journal article shone a spotlight on a disturbing trend: the number of college students graduating with a bachelor’s degree in accounting dropped by almost eight percent from the previous year, according to a study by the American Institute of Certified Public Accountants. The decline represented the largest year-over-year drop since the mid 1990’s.
Our readers know that accountants play a crucial role in business. Adept in ‘the unique dialect of numbers’ as one pundit elegantly phrased it, accountants are able to translate numbers into reliable narratives of financial success or failure while auditors play a key role in ensuring trust and confidence in capital markets. A robust pipeline of new talent is vital to a successful business ecosystem.
The WSJ article investigated a series of factors that are contributing to the decline in accountants, including salaries, heavy workloads and requirements for continuing education credits in order to earn and maintain a valuable Certified Public Accountant credential.
The accounting profession is not standing still. Leading accounting firms are taking steps to address the situation by rethinking their business models, financial structures and employee incentives. Employee Stock Ownership Plans (ESOPs) figure prominently for one of the biggest accounting firms in the US, BDO USA. BDO’s partners voted to establish an ESOP in summer 2023 for its 10,000 US employees and see the ESOP as a beacon to help them attract and retain talent.
We examined BDO’s decision in a blog and noted comments from Wayne Berson, BDO USA’s CEO. “We’re dealing with a much more severe situation today than five years ago in this industry, which has not attracted enough people into the firms,” Berson stated. “The younger generation wants a piece of what they are helping build.”
“We knew we weren’t getting enough people, and our people team started studying the generational differences,” he continued.. “People want to work where they have meaning and purpose — and the ESOP creates a shared sense of purpose and responsibility.”
Accounting Today reported that one of its Top 100 firms, Grassi, of New York, is turning to employee ownership with an ESOP to strengthen its bond with employees, reward them for their efforts in building the firm and maintain its independence.
“It aligns our employees and makes them owners of the firm,” Grassi founder, CEO and managing partner Louis Grassi told Accounting Today. “It takes everyone to the next level, and clearly what it really does is get everyone rowing in the same direction, so no one’s wondering what’s going on with their firm.”
The accounting field, facing a ‘silver tsunami’ of retiring baby boomers and a shrinking pipeline of graduates entering the field, needs to draw upon its business acumen and problem-solving prowess to address the challenge. The Menke team applauds the innovative thinking demonstrated by BDO and Grassi and looks forward to other firms pursuing opportunities with employee ownership.
As Louis Grassi said, “We audit a lot of ESOPs and are very familiar with the space, and we’ve seen all of them be very successful. As we looked at our future, we said, ‘That’s where we want to be.’”
