November 29, 2021

Public Accounting Firms Don’t Need to Increase Salaries to Retain Staff Says Guy Who Obviously Never Worked In Public Accounting

In the 12 years since this website was founded, we’ve heard a lot of complaints from accounting students and early career public accountants. A LOT. Many things have changed since 2009, but one thing has remained consistent all these years and it’s the overwhelming sentiment that public accountants are paid far too little for the work involved, which has always been and likely always will be the No. 1 complaint we hear.

It’s something we’ve discussed when reflecting on the profession’s diversity problem, for one. When top-tier business students are thinking about their career paths, accounting is usually at the bottom of the list. The firms can talk all they want about “prestige,” but really the only people who care about that are the firms themselves because let’s be honest here, “I work for PwC” isn’t impressing anyone at the bar. Accounting firms can’t (or won’t) compete with investment banks, and when they try it comes up embarrassingly short. So why on Earth would diverse candidates gravitate toward accounting of all things? Well, as we can tell from the profession’s feeble attempts to lure these candidates in and subsequent hand-wringing over why no one wants to be an accountant, they don’t.

Across America, people from every industry are walking away from their jobs. And why not? Over the last 18 months we’ve all learned that life is too short to slave away in a job you hate, and certainly too short to do so for offensively tiny pay. We’re seeing it in public accounting as teams are stretched thin by more and more people saying “F you I’m out,” meaning already purposely understaffed groups have to spread the work around even more to make up for the shortage. It’s one thing when the firm understaffs on purpose, it’s quite another when they’re bleeding staff because people are simply walking away.

A Journal of Accountancy article this week addressed exactly this, advising firms on how to retain staff in these uncertain times. Unfortunately, at least one person they got a quote from doesn’t understand how any of this works:

But employers should also keep in mind that turnover is also driven by dissatisfaction. While in many sectors, such as leisure and hospitality, employees are leaving jobs in search of higher wages, in other areas, such as accounting, they have different motivations for leaving, said Joe Brusuelas, chief economist at RSM US LLP.

“The change that I’m observing is not linked to pricing. It’s not linked to compensation. It’s more about employee satisfaction, viability, and interest,” said Brusuelas, who is based in Austin, Texas.

Yes, accountants are paid more than back of house staff at a crab house in Florida. We can all agree on that. That doesn’t mean they’re paid well.

The guy who coined the term “Great Resignation” sadly cosigned this idea that accountants aren’t leaving their top tier firms over money, which means firms will continue to scratch their heads in absolute confusion as to why people aren’t sticking around:

It’s hard to say how much this phenomenon will affect the accounting profession. There is not yet good data to show how different industries are being affected, said Anthony Klotz, Ph.D., a management professor at Texas A&M University in College Station.

Anecdotally, however, turnover does appear to be high in white-collar professions, Klotz said. “Based on the conversations I’ve had with workers and organizational leaders over the past several months, the resignation backlog, burnout, epiphanies, and remote work” are causing employees to leave jobs “across all industries, including the professional fields,” he said.

OK so he’s got the idea. Burnout especially. Let’s read on:

Klotz observed that “broadly speaking, some employees only stay in their jobs because they cannot afford to leave.” That’s not true for most accountants, who earn good wages and thus have more freedom when it comes to making career changes, he said.

Bruh. You lost me.

You’ll note that the Big 4 exodus is so bad KPMG UK pointed to staff turnover as one factor for why their audits are so bad. So it is happening and we know because we have eyes that it’s happening.

Here’s the problem. It’s not strictly money that drives staff away. It’s that they do not feel adequately compensated for their work and for the expectation that they will make said work their life. Plenty of people are perfectly content working for less money if they’re happy at their job, yet public accounting offers neither for most people. Here’s a Reddit post I came across the other day that about sums it up:

College grads listen up, this is why public stinks:

You are put on an engagement and have specific amount of billable hours you must meet (let’s say 55 per week) and then the work takes you 65. You do all of this work and eat that 10 hour difference and then the manager complains that it’s taking too long and “we need to be under budget on this client.” HOWEVER the partners just care about how many billable hours you can work so they just want you to work as long as possible. So kids, you are stuck between a manger that doesn’t want you to work long hours but get the work done correctly and quickly, and then a partner that complains you aren’t billing enough. You can’t make everyone happy.

Now you might say “well I’m a high performer and I get my work done correctly and quickly under budget! No problems! Right?” WRONG. You, my precious little partner track employee, will just get even more work so you can bill more. Congratulations! You are a high performing employee and here is your reward! A 5% difference in raise (after taxes equivalent to about 3k compared to Johnny next door who is average and gets to go to sleep 3 hours before you do everyday. Is that 3 hours 5-6 days a week worth that 3k in pay? You decide. Either way they work you to death and then make taking time off the biggest hassle in the world. Personally in my office we couldn’t take off busy season (as usual, nbd) but then they would add blackout periods half of summer and other times so in reality you can only take off about 5 months out of the year. That’s fun!

I live with other big 4 consultants and believe me kids, we in audit work WAY harder than they do for less money. It’s a joke. Public accounting isn’t the right path to go to out of school. They prey on the desperate and dumb college grads and convince them that it’s there way or they are worthless. For all of my friends at big state schools, don’t you ever wonder why half of your professors are ex-big 4 managers? It’s because they realized public accounting works people to death and they needed to get out so they chose academia which has decent pay and good life balance. Their sole job is to convince you to go back to big 4 and public accounting because those same firms literally sponsor half of the accountancy programs in colleges in the nation. If you do want to go to big 4 go for consulting because in my personal experience (YMMV of course) their lives are soooo much easier and they are paid more.

Make sense now? Oh what am I talking about, obviously all of this makes sense to you guys, you’re the ones living it. And hopefully the ones brushing up your resumes. There’s never been a better time to tell the firms to stick their ping-pong tables where the sun don’t shine and make your way to those greener pastures you’ve been dreaming about since the day you signed your offer letter. I’m willing to bet 10 years from now salaries won’t be much better and they’ll still be sitting around talking about how Generation XYZ wants fulfillment and opportunities for growth and environmentally-friendly straws in the cafeteria in lieu of bonuses. Go forth and be adequately compensated for your time, fren.

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15 Comments

  1. Spot on! Exactly what happens. Most older accountants consider a two year stint at one of the big 4 firms a necessary introduction to the field and once completed, a rite of passage. It’s kind of like additional schooling in a way. But once you have two years under your belt, RUN.

  2. I worked for PwC right out of college and it’s a great internship position to get the hours to become a CPA, on top of one of a kind experience you don’t get in private industry. Looks great on my résumé, and I got plenty of jobs in private working for PwC clients. I’m not sure why your grapes are so sour. 👎👎👎

  3. Hi Adrienne,

    This article was so interesting! I work for a top 10 firm and have since I graduated 3 years ago.
    Some of your points or things you point to are accurate (time off isn’t a thing that comes easily) but I think, at least for my firm there are some pros you didn’t mention. However this may be because I work in the bizops side of public accounting.
    3 pros to consider:
    1)I can work fully remotely, if I choose
    2) I make my own schedule, if I get my charge hours in no one cares
    3) Public accounting firms offer a wide range of experiences (tax, audit, bizops, data analytics, and wealth advisory) that a private company doesn’t necessarily offer.

    Public isn’t for everyone but they aren’t paying the worst in the industry either.

    But!! I agree! No one should feel they have to work a public job to be able to get a private job.

    Thanks!

  4. Yes accounting graduates should be looking towards small to medium size regional and local firms. There’s a great need for them in this area and there’s a much greater life work balance there. And more importantly you get to help real people in the community and neighborhood as opposed to working for big corporations.

    1. We’re hearing that mid-size firms aren’t having the same retention problems as Big 4 too, which means fewer “acting seniors” filling in the gaps. So that’s another reason for new grads to consider going smaller firm.

      As it stands, Big 4 is still an excellent resume item and I’d never say accounting students should avoid those firms entirely, but it’s interesting to see how the dynamic is changing. Being a resume item is not enough in this market. Students should definitely consider all options available to them.

      1. My advice is to put in a few years at the Big 4, if you can, to get the name on your resume. That name will carry you a long way in your career. After a few years, the smaller firms will pay top dollar to steal you away. Many opportunities will arise in private industry as well. The Big 4 treats their staff like shit, because they can. You’re getting a big name pedigree in the deal.

    2. A/P Managers and Division Assistant Controllers at gigantic global corporations are real people too. You won’t get to work with them if you go to a 2nd tier firm.

  5. Left public 19 years ago, it was the same, but as a hiring manager for internal audit with a private firm I want people coming out of public because they have been trained well and battle tested. 2 to 4 years of suffering can be worth it.

  6. I love this article because I am a senior at CSU and have no idea where to go after college because I’m afraid of the big 4a workload as I am a mother of 3. I don’t want to be slaving 12 hours a day because I need to make time for my kids but I also don’t want to miss salary opportunities. Tough decision.

  7. When I was a manager at a Big 4 back in the day, the Kool-Aid I used to sell to the kids was that turnover is a good thing. It means you are developing skills at the firm which are highly valued in private industry. If your skills weren’t in high demand, you would never be able to leave the firm because no one would offer you a better and higher-paying job. I think this is probably true, and its a different perspective on turnover at the Big 4, but it still makes me laugh when I say it.

  8. Working at the Big 4 is analogous to joining the military. Many do it for one “enlistment” in order to get the training, prestige, resume-points, and the satification of doing important things while working alongside great people. You can get some or all of that in places besides the military, but finding those places is a crap-shoot and none of those places come with the same universal respect and recognition. Just like the military, in the Big 4 you sacrifice work-life balance. Just like the military, the Big 4 sets the standard for the industry. Where would aviation be without the US Air Force? Where would US GAAP and audit analytics be without the Big 4? Just like the military, the majority who join the Big 4 leave after a few years to spread their experience to the outside world. Just like the military, the flux is largely determined by pay, benefits, operations tempo, and the current macroeconomic situation. Just like the military, changes in recruiting and retention bonuses lag the flux by one to two years. Just like the military, the Big 4 has “up-or-out” rules for retention, and just like the military these rules shift with the retention needs.

    1. The military helps your resume??? You are joking – right. Did nothing for me but tell potential employers how old I was. And btw – I was active duty for 14 year – enlisted and officer – top NEC and Line Officer designation.

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