Spotlight on retention: business and industry moves to keep talent in-house.

• Author: Ascierto, Jerry

While retaining the best and brightest continues to be difficult for many public accounting firms, the issue looms just as large for those in business and industry.

In just a few short years, CFOs and controllers statewide have seen a tremendous shift in the supply and demand of qualified finance and accounting staffers--and for the first time, many are competing with public accounting firms for the same scant pool of candidates.

"The pool of qualified candidates certainly has dried up," says Alexander Georgiev, CPA, controller for CBS Studio Center in Studio City. "Up until the last two or three years, I could put an ad in the paper or on a website and I would get a barrage of applicants and at least a half dozen excellently qualified applicants.

"But those days are long gone."

While many in business and industry were surprised by the shortage, this labor issue is nothing new for accounting firms. In a 2005 CalCPA survey, 45 percent of public accountants listed "attracting and retaining quality staff' as their firm's most pressing concern, while only 23 percent of accountants in industry listed the same as their company's top concern.

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THE SUPPLY CHAIN RATTLES

A perfect storm in the supply chain has been brewing for a number of years. The number of accounting degrees awarded in the late 1990s and the early part of this decade was significantly lower than the previous decade.

Starting in the 1976-77 school year, colleges and universities pumped out more than 50,000 bachelor's and master's degrees in accounting every year, steadily building until it reached a climax of 61,220 students in the 1994-95 school year. But in 1998, those figures dropped below 50,000, reaching a low of 44,695 in 2001-02, according to the AICPA's The Supply of Accounting Graduates and the Demand of Public Accounting Recruits report.

This diminished supply of students is now entering the workforce, at a time when Sarbanes-Oxley requirements are keeping all available qualified hands busy.

"You combine the lack of candidates with the sudden demand for talent in the public accounting sector and it all adds up to an extremely tight labor market," says Georgiev. "For the first time in my 14 years here, we are competing for talent with not only our direct competitors, but the accounting firms as well."

A recent survey of hiring managers by Robert Half International, the Employment Dynamics and Growth Expectations Report released at the end of August 2006, gives shape to the labor crunch. A year ago, 55 percent of hiring managers said it was difficult to find qualified candidates. In this year's survey, 81 percent said that recruiting is equally or more challenging today.

With such a dog-eat-dog labor market, it's no surprise that companies are doing more to block the exits and keep key staffers happy.

The study also found that employee turnover rates are increasing, and as a result, 30 percent of hiring managers say their firms have instituted new policies and programs to increase staff retention rates in the...