When KPMG US laid off 5% of its workforce last month, the firm’s official statement made mention of “historically low attrition” as a contributing factor, meaning firms were no longer bleeding talent as they’d been just a year before. KPMG was not unique in experiencing this, it’s something we’ve been hearing since late last year: generous industry offers were starting to dry up and perhaps a bit freaked out by the state of the economy, would-be jumpers stayed put. Too many would-be jumpers. Add to that, firms aggressively hired in 2022 when attrition was higher assuming that the staff exodus would continue at those levels. Obviously it didn’t.
In May, EY Global CEO Carmine Di Sibio told CNBC’s Squawk on the Street that his firm “pretty suddenly” went from 20 percent attrition to 12. “So therefore a lot of companies, including ourselves, have found ourselves with more people than we need at this point in time,” he said. EY cited strong employee retention rates and “overcapacity” when the firm laid off 3,000 people earlier this year. There’s no reason we shouldn’t believe Carmine but cynical observers might want to acknowledge that the failure of EY’s Project Everest plan — and more specifically, the $600 million hole it left in EY’s finances — was likely a significant factor and unrelated to staff retention.
It looks like US Big 4 firms aren’t the only ones seeing historically low attrition. This is from the business paper Pulse talking about turnover at Korean firms:
According to industry sources on Sunday, the number of newly hired certified public accountants (CPAs) at the Big Four last year was 1,993, while the number of departures was 1,235. The ratio of departures to new hires, which reflects the trend of staff turnover, was 0.62. This figure remained around 0.8 in 2020 and 2021, but significantly dropped by over 25 percent at the end of last year.
Among the individual accounting firms, Samil PwC, known for having the lowest turnover rate among the Big Four, reportedly maintained a single-digit turnover rate at the end of June. On average, the Big Four firms have a turnover rate of around 15 percent.
It was also revealed that Samjong’s [KPMG] turnover rate dropped to the early 10 percent range in the third quarter of last year.
“While the workload has decreased, the staff turnover rate has significantly declined. We now need to consider the efficiency of labor management, including personnel costs,” said an official from an accounting firm.
Said Pulse, salary increases and decreased demand for accountants in the market are why staff turnover is so low. Makes sense and again, it tracks with what we’ve observed in the US.
There were around 1,050 new hires in 2019, around 750 in 2020, around 1,140 in 2021, and around 1,340 last year. However, this year, the dominant forecast is that even including the Big Four and other major local accounting firms, it will be difficult to reach 1,000 hires.
The layoffs will continue until
morale attrition improves. In the meantime, can we all agree the accountant shortage is over? They’ll start complaining about it again when the economy gets better.