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Accounting Firm Leaders Cite ‘Rising Salaries’ As The Second Biggest Problem Facing Their Firms

Accounting Today has published “The 20 biggest problems for firms in 2023” and no one will be surprised to find out that the war for talent ranks #1 among the firms AT surveyed. Talent actually has its tentacles in a number of problems on AT’s list and spills over into several items–capacity issues, burnout, retention. Hell, half the list is related to talent. Writes Dan Hood: “[S]taffing is by far the most serious concern (so massive, in fact, that it has fragmented into a handful of major issues and takes up five spots on our list).”

Since we’re all sick about talking about the talent shortage, let’s take a look at the second biggest problem for firms in 2023: Rising salaries.


2. Rising salaries

Scarce supply and high demand can only mean one thing: higher prices.

“Rapidly rising compensation rates in our industry — and poaching from large, national firms” are serious problems for firms, according to Erica Ishida, president and COO of Ohio’s Apple Growth Partners.

Firms have to pay talent so much more, in fact, that many of them share the concern of Glen Swanson, CFO at MHCS in Iowa, about “maintaining profitability while having to significantly increase salaries.”

Raising salaries to levels that would put accounting back in the game as an attractive major to students is indubitably a hardship for firms. F.

We have said this before but raising salaries now would hurt a lot less had firms done a better job of doing it over the last decade and a half or so. You know, incrementally. Instead, firms skated by year after year as computer science lured the would-be accountants away with its shiny technology and superior starting salaries. Suddenly 15 years have gone by and new hires are making basically the same money their predecessors — who are now partner age — made when they were hired in the early ‘aughts. That’s changing now, thankfully, but it should have been done a decade ago.

While we’re here, let’s look at accounting’s biggest issues in 2017 (Accounting Today):

Firms continue to face a myriad of issues that affect the way they work, including increased regulation and global complexity, a shift in the workforce, and new client demands for value-added services.

More recently, though, new issues have emerged that have actually put into question the role and value of accountants in general, such as artificial intelligence and robotic process automation, which has really shined a spotlight on the profession. The Boston Consulting Group predicts that by 2025, up to one quarter of jobs will be replaced by either smart software or robots. A separate study from Oxford University suggests that 35 percent of existing jobs in the United Kingdom are at risk of automation in the next 20 years. Among the top 10 percent of jobs most likely to be automated: insurance underwriters, tax preparers, loan officers, credit analysts, and accounting professionals.

Ah to go back to the days when they were threatening to put you out of work! If only firms had been more proactive about the salary issue, they’d have five better problems to focus their efforts on in 2023. Like automation, succession planning, and how to get more Papa John’s coupons.

6 thoughts on “Accounting Firm Leaders Cite ‘Rising Salaries’ As The Second Biggest Problem Facing Their Firms

  1. Spoke with a former Big 4 auditor that had started in my same shoes in the year 2000 making $55k. What was my starting salary 20 years later? $57k…I’ll let y’all do the math on what that 55k would’ve been worth today. Firms have been behind the curve on salaries and now have to play catch-up post Covid.

    1. Same market and cost of living? I joined a Big 4 in 1999 – starting salary was only 40K,but in a low cost of living market. I was hired from college so had plenty of friends to compare salaries with – they were all about the same.

  2. I’m 65 yo, been in public & industry accounting for most of my working life. When I ‘put my dues in’ at accounting firms some 40 years ago, it was the same story we’re hearing today for accountants. We were treated as little more than an expense, and firms seemed determined to pay us as little as possible (among other negatives). Like many, I left the firms behind and opened my own practice, never to return to working at a large firm. I’m not particularly vindictive, but the big firms are getting what they deserve. I’ve been warning college students for decades about this…

    1. I am same age and agree with what you commented. Students should do a couple/few years in public that experience is invaluable. Then when ready make your move to your own practice or move to industry as a Controller or CFO. My income over the years is many times over what a public accounting firm would pay. Workload is similar, long hours, deadlines, headaches, etc.

    2. Amen Brian! Many of these firms treat their people like Shi!, over work them, under pay them and then whine about a talent shortage! The fact is, very few of them care if their people drop dead. Many are like a domestic abuser, always wining about women leaving them or the turnover in their household, and never want to look in the mirror do they!

  3. It’s not like they can’t afford it. When Big 4 equity partners make $1M. Come on.

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