The Close With Krumroy: Episode Four

In this episode of The Charles Aris Podcast, Krumroy shares what he’s seeing in the marketplace, including the status of recent graduates in auditor and accountant roles.

Read the full transcript:

Welcome to the close with Krumroy! This is Ryan Krumroy from Charles Aris Executive Search. I want to say thank you so much for tuning into this podcast. This go around, I’m excited to share some thoughts with you folks today. Hopefully some of this is helpful and as you know, as many of you know, if you’ve spoken with me in the past, is that we’re a top retained search firm, and we do an enormous amount of work in the finance and accounting space. Charles Aris has been around for an awful long time, 54 years at this point in the world of executive search. So, we’d love to hear from you. I’d love to hear from you if you have any thoughts or comments on this particular podcast. We’d love to get your take in the comments below or I’d be more than happy to have a conversation with you as well. We’re always looking to expand our relationships and have folks on our radar that would need to be on our radar from the career development standpoint.

With that being said, I want to talk with you folks a little bit about a podcast that I heard recently on Marketplace. And I’ll try to put a link in the comments below as well, so you can maybe listen to that when you get a chance. But the podcast was pretty interesting. They were talking about a local publicly traded company, local to me in Raleigh, N.C. They filed a form 12b-25. It is effectively a notification of late filing. And the reasoning that they gave behind that was rather concerning but not surprising to me. The reason for that notification of late filing is because they had significant turnover in the accounting department and they couldn’t ‘attract, develop and retain sufficient resources’ to get their filings done on time.

So, as many of you in this space have noticed, it’s been really hard to attract finance and accounting talent, especially for the last year or so. In fact, I’ll say in the last 17 years that I’ve been doing work in the finance and accounting space at the executive level, I think this has been one of the hardest years in finding the talent needed. So, a Wall Street Journal article showed that there actually has been a 17% decline in the number of accountants and auditors as of the end of 2022. A 17% decline is a 300,000-person deficit. The AI CPA actually from 2012 to 2020, showed that the sheer number of accounting-degreed folks coming out of colleges declined 9%.

Alright, so yeah, that’s a significant reduction in the total number of auditors and accountants, the number of graduates. And I think the reality is, is that for a number of years, folks didn’t really look at the accounting ranks as being a super sexy career choice and we’ve seen other areas that took a number of those folks that kind of would have gravitated towards those roles. Data analytics especially is becoming more and more attractive to college graduates. So, corporations this is speaking to you. You guys can do a better job, we can all do a better job, of really creating compelling career visibility on what impact accountants have on the total success of businesses out there in the marketplace.

This is a pivotal role. You all know that it is. In fact, this publicly traded company headquartered in North Carolina can’t continue to exist as a publicly traded company if they don’t fix this problem. And so really understanding those implications is huge. Now on our end, I’ll just tell it what it is, I’m finding myself having to make more outbound calls, more aggressive outreaches, more repeated outreaches to try to get those folks, those passive candidates, on the telephone. My clients that retain us to go and find executive talent are not looking for active candidates that are looking for career opportunities. I’ll be fair with you, very few people that are really good, what I call A-level talent, those folks aren’t looking for opportunities. They might be willing to listen and have a conversation. Especially someone who is repeatedly deliberate about reaching out to them continuously, and they’re like, you know, this guy is not going to go away. Sounds like he really wants to speak with me. They’ll have conversations more times than not, with that, but they’re never going to respond to your posting. They’re never going to, you know, say, hey, maybe I should send in an application for that particular company. So, what we’re finding, and I would really suggest to you, is that the strategy of post-and-pray for your HR department is not going to fill your gaps. It’s not going to fill your seats with people that you’re going to need to have to quote your public filing.

I would highly recommend that you figure out what is the strategy that we’re going to go down to find top-level talent for the next five years. This is not a situation that is likely to resolve any time in the near future. We’re not going to magically have 100,000 recently retired accountants and auditors all of a sudden magically reappear in the workforce. Maybe we get 10,000 or 20,000 of them, but of the 300,000 that have been lost, those folks aren’t coming back in the workforce, and the sheer number of graduates that are coming out of these programs, you know, they have higher demands, their compensation is going to need to be higher, they’re not going to be willing to work as many hours as traditionally in the past. You know, 20 years ago, folks came out of an accounting degree, and they knew it was going to be a grind. They knew that those first few years in public it was like, hey, I’ll do whatever is asked of me and it’s just, you know, like, this is just kind of expected earning my stripes kind of circumstance. So that edginess, that tolerance that has changed. I’m not going to comment on whether or not I think that’s a good or bad thing. That’s for you to decide, but it is the reality.

So, thinking about as a corporation and your ability to find that level of talent, proactively seeking people out, finding those graduates before they graduate, figuring out how do I mentor and develop? How do I really put in the efforts to show a compelling career potential, an ability to really impact the business is going to be important for you as an executive business leader.

So, folks, look, the reality is, is that you need to have a good strategic partner to find some of that talent out there in the marketplace. Someone that’s got that dogged determinism to track down the right level of talent that you need. Certainly, we’re a great option and I won’t sugarcoat it, we’re a phenomenal option in that space. But if you’ve already got a trusted partner out there, build that relationship. Expand that relationship with them. They understand that this is only going to become an increasingly significant reality that you’ll need to face as your company continues to scale.

The world that I play in primarily working with private equity investors is they’re buying up more and more family-owned and privately held businesses. The level of sophistication and the cadence and the bar typically goes up and increases. And with this many private equity firms’ kind of evolved and growing portfolio operating companies out there, it’s going to make the ability to attract talent it’s a fiercely competitive landscape right now.

So, folks, I hope this has provided some interesting insights and has probably validated some suspicions that you’ve had along the way. And we really appreciate you tuning in. Hopefully this podcast is helpful for you. And again, I thank you so much for your interest in Charles Aris and your listenership here as well. Please be sure to hit the like button on the link here below on YouTube wherever you’re watching this. And we’d love to hear from you in the future. Again, this is Ryan Krumroy from The Close with Krumroy. Have a fantastic week. Thanks so much.