The Accounting Profession's Labor Crisis: Damage Control.

• Author: Williams, Albert S.

This is the second in a series of four articles dealing with the profession's most prominent crisis: a current staff shortage and a future bleak in terms of a trend reversal.

The staff shortage that the profession is currently coping with is likely to get worse--possibly much worse. Facing a current 20 percent decline in accounting majors in college, a decline in the number of CPA exam applicants, and a decline in interest among high school students in entering the profession, it stands to reason several things will happen. Expect--

* Significant encroachment by others in the profession, not only of staff, but equity members, too.

* Continued salary and benefit pressures from prospective employers outside of the profession.

* An ongoing challenge by current and future staff members reassessing the decision to embrace public accounting.

To survive, a practice needs to create an environment that makes it difficult for staff (including owners) to leave. A byproduct of this step is the same--positive environment will assist in attracting new staff. Keeping current and attracting future employees is a multidimensional challenge. Why students choose--or refuse--public accounting and what is likely to motivate them to stay can be distilled, I believe, into four key categories. Here are the significant issues I believe must be addressed.

Salary and benefits

Salary, repeatedly, has surfaced as a major issue for the profession. Potential members of the profession are confronted by a salary differential of $8,000 to $10,000 (and occasionally more) between the starting salaries at CPA firms and those offered by other professions. Coupled with the salary issue is the fact that most CPA firms offer a benefits package that most often lags behind offers that prospects might receive from the non-public accounting sectors. In addition, many face the additional cost of another year of college to meet the 150-hour requirement. Considering the financial impact, it is not surprising they are opting for other fields.

To have a significant chance to retain the better current employees and owners and attract new ones, the profession must be competitive. To offer a competitive salary, the money has to come from three possible sources: increased fees, the owners' current profits, or improved practice efficiency. Most likely, it will be some combination of the three. If you have not already eliminated unprofitable services and clients, and even clients that are...