In the late 1990s, IT professionals were in short supply. Organizations, driven by uncertainty over the impending Y2K rollover, went on a hiring spree, beefing up their IT teams to stave off the threat of costly errors or interruptions in their operations. The demand for IT expertise was so great that, having drained the pool of available talent, companies resorted to poaching staff from one another to protect themselves.
Ten years later, we’re seeing similar turmoil taking place, this time in the field of accounting. You’ve probably experienced it yourself if you’ve attempted to recruit a CFO or experienced accounting professional over the past 18 months. Or, you’ve likely noticed competitors and other organizations across the region are aggressively courting your finance and accounting staff. Certainly, we’re seeing more demand for accounting professionals from our clients. The number of accounting-related searches our firm is conducting tripled over the last three years. Starting salaries for mid-level accountants have experienced a 45% increase during this time. These are unprecedented developments in a profession where the supply of talent has traditionally outstripped demand. And while there are similarities with the IT recruitment frenzy of a decade ago, there is one notable difference: the accounting crunch is based not on a potential looming crisis, but the aftershock of one that has already unfolded.
It was the accounting scandals of companies such as WorldCom and Enron in the early part of this decade that helped spur the current demand for financial talent both regionally and across North America. Most investors will recall how these publicly traded companies grossly misrepresented information on their financial performance, resulting in their complete financial collapse, a loss of public trust, and numerous lawsuits. They also inspired regulators to tighten financial reporting requirements over the past six years, starting with the introduction of the Sarbanes Oxley Act in the U.S. in 2002 and, later, Bill 198 in Canada.
Regulation not only created new and more stringent guidelines for detail and accuracy in financial reporting, it also now holds CEOs and CFOs personally accountable for actions affecting their corporations’ shareholders. In other words, they could now go to prison for inaccuracies in corporate financial statements. Faced with this very real threat, companies that previously maintained lean financial teams have scrambled to add talent to ensure they are in compliance with the new regulations. Though demand has grown significantly, the supply of people entering accounting programs has not. The economics of talent at work.
Here in Atlantic Canada, particularly Halifax, the problem has been compounded by the growth of the city’s financial services sector. Though the pace of growth has slowed recently, these companies have taken approximately 150 mid-to-senior level accountants out of the market over the past three years. The result has been a domino effect as the region’s large companies lure talent from other, smaller Atlantic Canadian firms to ensure they comply with the demands of Bill 198. Meanwhile, accounting firms, seeing more opportunities for corporate consulting, have greatly enhanced the benefits, salaries and career paths they offer, so they can attract and hold on to their financial professionals. The current market is so tight that our firm and many Atlantic Canadian companies have started sourcing talent from across Canada. Besides making the recruitment effort far more competitive, companies are now also faced with added expenses — everything from moving allowances to increases in salaries.
Though the demand for accountants will continue to outpace the supply for the foreseeable future, the good news is that we appear to have hit the low. Some companies have adjusted to recent legislation, even going so far as to implement, as Royal Bank has done, their own internal Chartered Accountant training programs. Others have put the issue on the backburner, instead hiring accounting firms to handle their reporting requirements. With no sign of increased enrolment in accounting programs, compensation will continue to rise as companies compete for available talent, but the increase is unlikely to be as dramatic as recent growth.
Given this scenario, Atlantic Canada’s companies will need to be more resourceful in attracting and retaining financial professionals. What does that mean for you? It could be as simple as calling potential candidates you talked to during your last recruitment effort to see if their situations or interests have changed. You could ask employees for names of former classmates and co-workers at previous employers, and then pay them to help you recruit those individuals. Or you could seek out a qualified HR consulting firm for recruitment and retention advice and strategies to enhance your employment brand. Whatever you do, ensure that the work environment and benefits you provide are competitive with those offered by organizations across Canada. After all, you have to position yourself as being the best if you want to attract the best — and prevent others from poaching the talent you have today!