Susan Muldowney | March 2023
This article was current at the time of publication.
A chronic skills shortage over recent years has forced many firms to pad out employees’ pay packets to attract and retain talent.
The challenge for accounting firms is that while salaries continue to increase, data indicates wages in accounting are growing faster than in many other industries.
Money may not be everything, but with high inflation, it undoubtedly now matters a lot more than before.
The expectation among job candidates for higher wages may put further pressure on the bottom line of some accounting firms – especially smaller practices.
Now could be the time to creatively reconsider the remuneration you’re prepared to offer current and prospective employees.
Salaries on the rise
Matt Cowgill, Senior Economist at human resource consulting company SEEK, says that while the employment market has somewhat cooled since the middle of 2022, demand for talent remains high.
“The unemployment rate is still 3.5 per cent, which is around the lowest it's been since 1974,” Cowgill says.
“It’s a very tight labour market and if you’re in demand, your bargaining power is stronger.”
He says that while there were 8.1 per cent fewer job ads overall on SEEK in January this year – compared to the same time in 2022 – job ads for the accounting industry rose by 3.7 per cent over the period.
“So, while there’s a bit of moderation in the market overall, job ads for accountants are still up on where they were a year ago.”
He also stresses that salaries are continuing to rise.
“Going on the ABS [Australian Bureau of Statistics] measure, the wage price index rose by 3.1 per cent over the year to the September quarter,” he says.
“That is well behind inflation, but it's rising faster than it was before COVID.”
SEEK’s advertised salary index confirms growth in pay packets.
“We saw advertised salaries rise by 4.7 per cent over the calendar year to December 2022,” Cowgill says.
“For accounting specifically, it was a little higher, with advertised salaries rising 4.9 per cent over the calendar year.”
Where are the skills gaps?
Given supply and demand, higher salaries may be required to attract candidates with the most sought-after skills.
David Cawley, Regional Director at accounting and finance recruitment agency Hays, says public practice firms are experiencing skills gaps in key areas such as audit because accountants aren’t “staying in the field long-term”.
“The long hours and tight deadlines see many move into commerce and recycle their analytical and people skills in another finance role,” Cawley says.
“Professional practices face a massive talent gap and it’s clear skills shortages will continue to plague employers,” he adds.
“Even as job vacancy activity corrects down from last year’s historic highs to more normal levels, the extent of the skills shortage is such that it will remain a key challenge – as it has been before.”
“I joined Robert Half 25 years ago,” Gorton says. “Tax accountants were in high demand then and they’re in high demand now. And that’s because they’re a rare breed – there’s high demand and low supply.”
How can small firms compete?
KPMG’s CEO Outlook 2022 reveals that respondents have been preparing for a mild recession, either by implementing or planning a hiring freeze this year.
While public practice tends to be a closed shop, Cawley says the freeze may present a recruitment opportunity for smaller firms.
“Small firms can consider candidates at the management level who are looking to return to professional services after a few years in the commercial sector,” he says. “It’s a good strategy to have in your candidate attraction toolbox.”
However, he warns that small firms may struggle to compete with the salaries offered by larger practices.
“Ultimately, budgets can only stretch so far,” he recognises. “So, even as cost-of-living pressures rise, the higher salary increases will only be offered to select candidates with the strongest and most relevant skills and experience.”
However, where small firms can compete with the big end of town is through a strong benefits package.
“This especially includes more flexibility around hybrid working and work-life balance,” Cawley says.
Gorton agrees, saying that more companies are rejecting the hybrid model in favour of the traditional five days in the office.
“We’re seeing a lot of companies saying, ‘we’re not hitting our forecasts, we’re paying for real estate, [so] we want our people back in the office five days,” she says.
“This is not what workers want, so it presents a real opportunity for smaller firms who are genuinely flexible to stand out.”
Gorton also emphasises that practices need to identify their “unique selling point” to attract new workers and retain top performers.
“What do you have to offer employees? Why would somebody want to work at your practice over another one that might be able to pay a higher salary?
“This may come down to your strong work culture, the access you can provide to technology, or the opportunity to upskill and learn across different practice areas.”
Likewise, Cowley notes that offering a salary that’s in line with competitors of a similar size is vital but, once you tick that box, attracting candidates will ultimately come down to the extra benefits on offer.
“Showing your purpose and the job’s stability is important, too,” he adds.
“We’re also seeing some smaller firms improving their offering with wellness days and birthday leave.”
Other ways smaller firms can stand out from the pack:
- Relevant on-the-job training
- Payment of CPA Australia membership fees with support to sit exams or apply for a Public Practice Certificate
- Employee assistance schemes
- Payment of bonuses aligned to firm KPIs
- Equity options.
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