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Reasons for the Acute Talent Shortage in Accounting
Episode 3924th April 2024 • Accounting Talent Podcast • Rob Brown (Accounting Influencers Roundtable - AIR)
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Welcome to the Accounting Talent Podcast, dropping every Thursday to accounting professionals, finance specialists, software vendors, tech providers and influencers in the accountancy, CPA and bookkeeping space. To participate in our international virtual speed networking events for the accounting community, go to https://accountinginfluencers.com/events and book your place at the next gathering. Great to build your personal brand and make valuable industry connections.

On this episode of The Accounting Talent Podcast, host Rob Brown is joined by Jeff Phillips, CEO of Padgett Business Services and founder of AccountingFly, to dive into the alarming talent shortage facing the accounting profession. Statistics reveal around 300,000 fewer accountants and auditors in the US over the past two years, a staggering 17% drop. The root cause? A weak value proposition from the profession, offering less attractive compensation, flexibility, and work-life balance compared to industries like tech. This perception is driving college students away from accounting towards seemingly greener pastures in investment banking, consulting, and tech firms.

Accounting firms face intense competition for talent, not just from each other but from aggressive employers in other sectors with enticing perks and career paths. However, there is hope. By rethinking their value propositions, exploring untapped talent pools like offshoring, remote work, freelancers, and developing innovative hiring/training approaches, firms can regain their appeal to the next generation of accountants. The profession's future hinges on its ability to revamp its employer branding and talent strategies.

"The accounting profession is not going to die. It's not going to wither on the vine. There is lots of talent out there and there are options and hope." - Jeff Phillips

Key Takeaways:

1. There is a shortage of accounting talent, with around 300,000 fewer accountants and auditors in the United States over the last two years, representing a 17% loss. [00:11:50]

2. The accounting profession is facing a brand and value proposition problem, as the compensation, flexibility, and work-life balance are perceived as weak compared to other industries like tech. [00:04:30]

3. College students are choosing alternative career paths like investment banking, consulting, and tech companies, which are seen as more attractive than "boring old accounting." [00:14:55]

4. Accounting firms are not just competing with each other for talent but also with more aggressive employers in other industries, offering better perks and career paths. [00:16:50]

5. There are solutions and untapped talent pools that accounting firms can explore, such as offshoring, remote work, freelancers, and non-traditional hiring and training approaches. [00:20:30]

You can watch this episode and more on our YouTube Channel

https://www.youtube.com/watch?v=6SRPUQ5V_18

Join the Accounting Influencers community and get invitations to our international speed networking events to build your personal brand and network in the accounting, finance and tech world: https://www.linkedin.com/company/accountinginfluencers

Thanks to our sponsors:

ACCOUNTINGFLY. Accountingfly connects employers with top U.S.-based accounting talent through a variety of services including dedicated searches, Always-On Recruiting, and freelance placements for seasonal or temporary needs. They specialize in remote accounting recruitment, recognizing early on the significant advantages that remote work offers to employers, job-seekers, and their own operations. They pride themselves on their track record of matching the right candidates with the right opportunities and building a robust team of industry experts. Additionally, their partnership with Going Concern—an esteemed source for accounting news and insights—further enhances their ability to stay on the cutting edge of remote recruiting by tapping into a natural pipeline of job seekers.

If you'd like to sponsor the show and elevate your brand with our audience, reach out to show host Rob Brown on LinkedIn and his team will reach out to fix up a chat to explore.

Transcripts

Rob Brown:

This is the "Accounting Talent Podcast" with Rob Brown.

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I'm wondering if accounting is

going to die because we haven't

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got enough talent and that the

profession is withering on the vine.

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Jeff Phillips, do you have the answers?

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Jeff Phillips: The accounting

profession is not going to die, Rob.

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It's not going to wither on the

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Rob Brown: are

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Jeff Phillips: and hope.

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Rob Brown: going to go into that today.

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It's wonderful to have you on.

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You're joining me as a co

host for a few episodes.

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Now, Jeff, do you want to just

introduce yourself for the audience?

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Because I've got a real live talent expert

on here that does this for a living.

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So tell us what you do.

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Rob, I'm the CEO of Paget.

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We are a US based

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tax and accounting franchise with

over 300 offices in North America.

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So on one hand, I run an accounting firm,

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but prior to that I founded

Accountingfly, which is a boutique.

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Recruitment company, about 12 years

old now, and we match CPAs with

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CPA firms and accounting teams

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with a twist.

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We only place US based remote

accountants into those employers.

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I guess I've been involved with over a

thousand hires over the past 12 years.

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Uh, so,

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I have learned a lot about

hiring, keeping talent, um,

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through a lot of trial and

error over, over, over a decade.

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Thank you.

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Well, it's great to have you with us

because over the next few months, we're

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going to be going into a lot of the

challenges and threats to accounting

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and diving into where the shortages

are coming from and what is going on.

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But we're also going to be bringing some

hope, Jeff, aren't we, that there are

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solutions to this, working solutions,

practical solutions that firms can

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implement to bring that talent into the

firm and get the growth that they want.

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So a little bit of hope's

a good thing, isn't it?

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there

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Jeff Phillips: Our value

proposition needs work

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Rob Brown: And there are

some labor market issues,

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but firm owners, partners,

CFOs have so many options

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that they may not be aware of that they

can deploy and we're seeing it play out,

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Rob, on a daily basis, both at my firm

and And also at my staffing company.

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Jeff Phillips: company.

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Rob Brown: So in this episode, we're

gonna outline the problem and, uh, talk

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about the staffing shortage in accounting.

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I want, I'm gonna ask you in a moment.

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Why is there a problem, Jeff?

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But just for the audience, we're going

to put two articles in the show notes.

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One is from the Fast Company

and another is from shrm.

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org.

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And these point to the talent shortage

with numbers, with statistics.

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And they are one or two years old, but

it's more prevalent now than it was.

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So let's dive into that.

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Why is there a problem with

talent in accounting, Jeff?

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Proposition

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Jeff Phillips: Our value proposition needs

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Rob Brown: Rob.

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Jeff Phillips: Rob.

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Um,

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Rob Brown: by that I mean what

the value proposition, the

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profession is offering talent.

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And on a firm by firm basis,

decisions need to be made about, um,

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how to change that value proposition.

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So right now I categorize it as weak

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and it's

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not supported well by the fact that, um,

we do have fewer people in the profession

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than we have had in the

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past.

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That doesn't mean it's,

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it's, it doesn't mean that it's,

uh, it's a lost cause at all.

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It just means you've got

to change your tactics.

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Well,

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what is the talent value proposition?

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If I was being really cynical, it

is, join the accounting profession,

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work 70 hours, 80 hours a week in

a dark room locked to your desk.

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You might see a client occasionally,

but you'll be working with lots

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of numbers and spreadsheets.

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I know that's not true, but that

is the perception in some quarters.

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Give us your view of the current

value prop for talent in accounting.

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I'll

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start with what the The value

prop is that is, uh, I'll start

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with what the positive is.

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Jeff Phillips: is.

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Rob Brown: Accountants are

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business consultants.

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Accountants are trusted advisors.

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Jeff Phillips: Um,

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Rob Brown: is a profession that

is only going to grow in demand.

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Here in the U.

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S.

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there are 31 million businesses.

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They've all got to pay taxes.

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They all need

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financial related

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insight.

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They all need advice.

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They

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need audits.

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They need

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what we call advisory services.

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Jeff Phillips: The,

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Rob Brown: the the brand of

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Jeff Phillips: of

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the

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Rob Brown: the CPA and the brand

of the ACCA and the enrolled agents

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are so trusted compared

to other professions.

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Jeff Phillips: It's a,

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Rob Brown: a, it's a strong

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brand and a strong market.

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And as I feel like almost

everybody knows that would be

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watching this or listening to it,

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Jeff Phillips: it,

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Rob Brown: we hit where we have a weak

value proposition is in compensation.

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flexibility and work life balance,

being on call versus being off

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call,

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issues

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around remote work that were

brought around from the pandemic

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Jeff Phillips: Um,

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Rob Brown: there before.

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And so the negative value proposition is,

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Jeff Phillips: around a weaker

brand around compensation.

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the perception of long hours, the

perception of it, that it's boring, um,

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Rob Brown: perception that I'm going to be

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Jeff Phillips: be

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Rob Brown: to a desk

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Jeff Phillips: desk

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Rob Brown: and doing tax

returns the rest of my career,

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Jeff Phillips: my career.

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Rob Brown: And

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perception

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that I don't have a long term career, that

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Jeff Phillips: path,

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Rob Brown: it's a great place to start,

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but I want to get it, but we want to

get out of it as soon as possible.

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I think a lot of debts before they

are fixable, just business model

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changes, but the fact remains, and

you'll see in the Fast Company article,

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and you'll put in the, show notes,

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Jeff Phillips: in the, in the,

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Rob Brown: the, Sherm are people to

our competitors, and our competitors

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Jeff Phillips: people

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and we're losing people to our

competitors and our competitors are

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Rob Brown: companies that offer

a set of employment options that

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Jeff Phillips: options

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Rob Brown: the profession does.

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We're losing people to in house

positions, we're losing people to

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outside of accounting altogether.

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Jeff Phillips: accounting altogether.

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Rob Brown: When I think of my career, I

trained as a maths teacher in the end.

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I taught secondary school mathematics,

but I did start out as an accountant.

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I took a degree in accounting.

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I didn't complete it.

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I do have a diploma in accounting,

but back then when I didn't know quite

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what I wanted to do, I was comfortable

with numbers and I was attracted by the

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respect of the accounting profession.

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There was good coin in it, so you knew

you would get some good compensation.

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I was attracted by the rigour

of the profession, it was robust

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and it was hard to get in.

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So there was kudos there.

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Also the security, I never

heard of unemployed accountants.

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So we come into it with

those expectations.

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Yes, it's hard work.

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We don't want it to be a breeze and

there needs to be a barrier to entry.

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But as you start to compare it to say

the legal and the medical profession,

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who study just as hard for the

qualifications, you might argue,

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and other professional services.

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The accounts that seem to be dropping

down in compensation, and you're right,

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there is a leeching out of the profession

into industry, into finance, into tech,

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into doing their own thing, are coming

out of the labor market altogether.

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So, the brand of accounting does seem

to have a problem, and I'm wondering

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if that's just happened overnight,

or did the pandemic accelerate that?

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Have we been grinding away

at the brand for years?

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How have we got here?

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Jeff Phillips: We've been

grinding away at it for

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Rob Brown: Right.

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Jeff Phillips: And I

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think if you look at the small and

mid market in the United States,

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partners are making great money.

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Um, owners of small firms are doing okay.

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But the, the model has always been,

we can hire at a lower compensation

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Rob Brown: very long hours, very stressful

career, and it always is that consumer, in

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this case, which is the employment base,

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rising up to it, and they're seeing

in high school and in college that,

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that yes, it's secure, but it's, it's,

Uh, it lacks the thrill it lacks a

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Jeff Phillips: but it's, Uh, it

lacks the thrill or it lacks a

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Rob Brown: long term

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Jeff Phillips: prospect

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Rob Brown: lacks,

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Jeff Phillips: it

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Rob Brown: uh, well, you know, I think

just, I spent, you know, if you're in

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the United States, you've got to get a

four year degree, and you add a master's,

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Jeff Phillips: you've got to get a four

year degree, then you add a master's

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and so it's a five year degree.

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So we've got 150 hours, then you sit

for the CPA exam make a salary that

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is pretty equivalent to a lot of

entry level work, Rob, that doesn't

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require a master's or the credential.

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Cool.

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And so I think it starts there.

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And if you zoom out just for a

second, there's a labor problem

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too, that we're dealing with.

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Um, Ferry is a massive recruiting

firm and they came out with a study.

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in 2017 that tells us that globally

:

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Rob Brown: knowledge workers

then there will be jobs

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that

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are trying to hire them.

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We're just

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growing our knowledge work,

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Jeff Phillips: Uh,

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Rob Brown: market, labor We

are growing the knowledge work

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Jeff Phillips: work economy

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Rob Brown: than there is a

labor pool to fill those jobs.

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I used to show that slide at speeches

and presentations and everybody would

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yawn and say this doesn't affect me.

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Well, now we're feeling it.

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And I think the great resignation

that occurred as a result of that

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Jeff Phillips: as a result of the 2020

pandemic globally accelerated that.

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So we have a labor market problem.

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Rob Brown: That's not just

accounting too, is it?

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To be fair, there are many other sectors

that are suffering with that, but

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equally, there are some sectors that are

attracting the talent, maybe from the

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accounting talent pool that are doing

well and offering a good employer value,

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employee value proposition sectors, but

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specifically in accounting,

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it states that, it's probably, Trump

listeners states there's only 660, 000

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Jeff Phillips: you think I can

only speak to the United States,

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but it's probably true everywhere

you have listeners, are about 1.

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1 million accountants

in the United States.

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There's only 660, 000 CPAs.

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Right.

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And there's a, in America, we have

about a three and a half percent

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unemployment rate right now.

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Usually accounting and auditing

in America is about half that.

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So something like one and a half

percent, one to eight percent.

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What that means here is that everybody

that wants a job is employed.

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So lots of your listeners have posted a

job on ZipRecruiter or Indeed and gotten

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a lot of applicants, but no accountants.

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And that's why.

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So, you know, what I've learned through

this process is There are, the value

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proposition as an industry is weak.

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but can be changed.

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We have full employment.

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And so what can you change

in order to have a successful

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and predictable hiring result?

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That's the question that

ought to be on people's minds.

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Rob Brown: But let's move to that shortly.

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I just want to.

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Move beyond the emotions

that are clearly in this

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conversation.

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And you and I speak to a lot of

leaders in accounting and talk

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about the brand and the challenges.

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Talk to the FEM owners that

they're wanting to grow, but

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they can't find the people.

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But let's put some facts behind this.

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Just pick out a couple of the stats

from this Sherm article and this

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Fast Company piece that you actually

commented on at the time, Jeff.

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What are some of the headline stats

here that we should be mindful

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of?

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Jeff Phillips: Yeah.

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I thought the Sherm

article was interesting.

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This is the Society of Human Resources

Management and it's pointing out there

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were something like 300, 000 fewer

account or 300, 000 accountants and

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auditors that left their positions over

the last two years in the United States.

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Rob Brown: 300, 000.

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Wow.

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Jeff Phillips: so that's about

a 17 percent loss of employed

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accountants from its peak of 2019.

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So you can trace our current predicament

to sailing into the pandemic.

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I think the, the issues, the value

proposition issues, lower wages,

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longer hours, less flexibility were

there and we were complacent, right?

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But then as you get

into 19, 20, 21 and on.

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That accelerated that, that exposed

that weakness that we had in the value

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proposition.

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Rob Brown: But a lot of people might

argue, Jeff, that that's the baby

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boomers that are leaving, that they're

at retirement age, they're selling up,

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they're moving on, and so naturally

there's going to be that churn.

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17 percent does sound a lot, but a

younger accountant's leaving too.

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Jeff Phillips: You're right, Rob.

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So this, a large part of this

picture was, I'm a baby boomer.

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I'm ready to retire sooner

than I thought I was going to.

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But this Sherm article also points out

that accountants, you know, between

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25 and 50 years of age are leaving

the profession at a faster clip than,

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um, they had ever before as well.

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It's smaller, right?

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So that gives us a little bit of

hope, but it's still significant.

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And I think that's, that's

where we have to pay attention.

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Rob Brown: Yeah.

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Okay.

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So we, we know we've got people leaving.

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Uh, there's a start on job growth as well.

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It's 6 percent a year

for the next eight years.

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So the accountant numbers are going down

and, and the job vacancies are going up.

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That's not something that

stacks up mathematically.

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Jeff Phillips: It's not, this is why

that corn ferry study was so important.

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It's telling us as knowledge workers,

we're going to have more jobs

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than we have people to fill them.

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And that is exactly the

case in the United States.

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And it's, the industry is only growing.

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The demand for what we do is

growing and growing and growing.

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and the labor pool is sort of

staying the same and marginally

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leaving in the, in the, in the age

groups that we are concerned about.

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Rob Brown: But Jeff, my thinking here

is, okay, people leave every profession,

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every industry, every sector, but

there's always people coming through.

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So are there any barriers to entry

that are stopping people taking

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accounting degrees or coming into

public accounting or taking chartered

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accounting qualifications here in the UK?

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What's stopping that

influx at the bottom end?

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There's

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a slight

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downtick in the number of people

that are taking the CPA exam.

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There's a slight downtick in the

number of people getting a cab.

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So our supply is a little bit

smaller in the United States, way

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more complexity on the tax side.

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But there, what's happening is

students are just seeing better

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careers outside aggressive industries.

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They're seeing that in investment

banking, consulting, paper 2.

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Jeff Phillips: bit smaller and yet we're

all getting more customers, more demand.

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Not to mention over here in

the United States way more

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complexity on the tax side.

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I think that they're, I think what's

happening in, in, in, in stepping

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away from numbers for a second is

that college students are just seeing

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a better career path and by better

career path, I mean a better life.

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a better financial upside, the perks that

come with more progressive industries.

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seeing that, they're looking at

investment banking, they're looking at

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consulting, they're looking at going

into work in high tech companies,

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and they're comparing that to, you

know, boring old accounting, and so

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Rob Brown: So, they are

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Jeff Phillips: making that equation for

themselves that I'm better off choosing

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this more, know, attractive career path.

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Rob Brown: Yeah, when we use the phrase

the war for talent, traditionally,

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we might say the war for talent

is between accounting firms.

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The big four, for instance, always try and

put cream off the top talent coming out of

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universities to recruit for their firms.

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But the war for talent now is that

accountants or would be accountants

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are looking at different career

paths and saying, well, I don't

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even want to go into accounting.

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Just like a competitor

for Apple is Amazon.

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It didn't used to be because they were in

different markets, but these entertainment

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providers now are all competitors.

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Even.

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Take a hotel.

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The Radisson Hotel or the Hilton Hotel

is a competitor for accounting firms.

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Insofar as people will walk into

the lobby and have an experience.

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They'll have a customer experience.

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Or if you have a website online, you

compete with Amazon because they create

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an experience for you in buying or seeing

stuff online that really, really works.

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So, there's so many competitors out

there beyond accounting firms themselves.

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for this talent.

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And you mentioned consulting.

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That is a massive one.

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And these upwardly mobile tech companies,

that is another massive one where they

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can almost be Google type employers

and give you a really interesting,

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meaningful, exciting, varied career path,

that accounting, whilst it might do,

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doesn't seem to be able to articulate.

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Jeff Phillips: is competing

against high tech.

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It's not just firm A is

competing against firm B.

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I mean, we should dig into how to compete,

but yes, we as a profession competing

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against much more aggressive employers.

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I'm reminded of a story, Rob.

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I at a CPA firm conference

eight or nine years ago.

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and was in a room full of CPA

partners at wonderful middle market

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firms here in the United States.

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And I wanted to talk about their

value proposition to talent.

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That was what they asked

me to come and speak.

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What I did was I

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Rob Brown: And she explains to CPA

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Jeff Phillips: officer of a Silicon

Valley a company that's a, that's a

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billion dollar unicorn now, but it,

it plays in the accounting space and

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she explained to the CPA partners,

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Rob Brown: partners, their

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Jeff Phillips: around flexibility,

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Rob Brown: flexibility, HR

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Jeff Phillips: leave, just

general HR policies that

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Rob Brown: that

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Jeff Phillips: trust

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Rob Brown: and trustworthiness.

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Jeff Phillips: general HR policies

that are investing heavily in

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the career path of their people.

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And I could feel the tension in the room

because there was such a large resistance.

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I remember, I remember hearing, I

remember hearing like audible sighs when

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she would talk about paternity leave.

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Who, who could imagine

such a radical idea?

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And I got up on stage after she spoke.

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I said, this is who

we're competing against.

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It's not that people don't

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Rob Brown: It's that we're

selling the wrong product.

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And our experience of working inside

your firms is the differentiating factor.

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How do we sell it better, right?

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How do we, how do we change

the experience for the town?

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What?

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Jeff Phillips: I see a lot

of opportunity in that.

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Rob Brown: In another show, Jeff,

I want to talk about the, the

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implications for the employers.

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What does this mean for accounting firms?

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What does this mean for the

future of the profession?

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And I also want to dip into some of the

solutions we will over coming weeks.

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Uh, but just give us a little bit of

hope here as we draw to a close on this

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episode of, Okay, there are problems,

but some firms are dealing with it.

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There are mechanisms, there are

systems, processes, means by which to

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bypass, overcome the talent problem.

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So give us a little bit of hope here.

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Jeff Phillips: The CPA brand here

in the United States is the, is the

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most trusted professional brand.

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that there is.

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There are 31 million

businesses and growing.

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The demand for the accounting

services is growing.

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We, we work in a phenomenal,

um, profession of business

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advisors and financial

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Rob Brown: You're preaching

to the converted though, Jeff.

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All of our listeners, watchers, they

know that because they are in this game.

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We need that message to

get to the people that are

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not

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in accounting that could be or

considering leaving perhaps.

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Jeff Phillips: Well, I think the

hope is what we tell and how we

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communicate our value proposition

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Rob Brown: Yeah.

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Jeff Phillips: to be

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improved, number one.

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Number two, there are There are

pockets of talent that CPA firms are

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Rob Brown: an exciting time.

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Jeff Phillips: accounting firm owners

that don't think deeply about onboarding

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and how to create a amazing um, employee

experience inside their firm so that they.

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stay.

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to call it the new talent stack.

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There is just a new way of thinking about

who we hire what we tell them to, to, uh,

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them excited about this career journey.

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Rob Brown: Quickly, if employers

don't get talent right, there's

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a lot of complacency out there.

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We've got a great firm.

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We've got a great brand.

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People will want to work for us.

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We've been going millions of years

and there is that almost ignorance of

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:

the talent problem because they think

they're always going to fill vacancies.

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But that's starting to happen

now where it isn't being filled.

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So the implications for employers

are severe now and will get ever more

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severe, but all for maybe a few brands.

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Jeff Phillips: Ultimately owners of

firms care about their enterprise value.

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What's, what's my succession plan?

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What will I exit for?

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Rob Brown: Yeah.

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Jeff Phillips: The

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ability to predictably and reliably

hire talent into a firm is one

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:

of the value drivers of the, of

the exit price of a business.

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And.

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where we've got to work and there are

systems and processes there where you

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can win and it directly affects Whether

or not you sell your firm whether or

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not you sell your book of business your

practice your partnership So it's critical

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Rob Brown: Jeff, we'll sign off there,

but give us a flavor of what kind of

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:

things we're going to be talking about

on the Accounting Talent Podcast over

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:

the next few weeks, because you've got

a whole list of topics, juicy topics

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:

that you want to get into, and real life

examples that are really, really working.

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:

So what's on the agenda

for our listeners and

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:

watchers?

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Jeff Phillips: the agenda is do we win?

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I have the privilege of watching

employers win on a daily basis.

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I'm inspired by their stories and

I appreciate you asking me back

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to tell some of those stories,

but we're going to, we're going

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:

to talk about who are we hiring?

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Where are they living currently?

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How are we going to find them

and bring them into our firm and

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create an awesome culture for them?

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How are we going to address remote work?

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What are we going to do about offshoring?

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:

How are we going to properly

integrate new hires into our teams?

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:

In this new hybrid environment,

how are we going to make sure those

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:

employees that we don't see are

productive and we feel confident

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:

that they're getting the job done?

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Uh, how are we going to

trust those employees?

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:

So I, I think what you'll see is we're

going to lay out a sequence of topics

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:

that are useful to every employer in

the accounting profession that I hope

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they feel inspired and confident.

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And what they do is they take

practical checklists from this that

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will, that will move the needle

forward for them a daily basis.

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:

Rob Brown: And you said every employer in

accounting, I'm thinking of the succession

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:

plan and the way people grow into careers,

we're all probably going to be employers

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:

at some point, we're building teams,

we're building departments and functions

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:

and service lines, and we're moving up

the career ladder, which means we're more

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:

managers, bosses, leaders, then at the

bottom rung of the ladder, so I guess the

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target for this show as we build it up,

Jeff, is anyone in leadership or would

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:

be leadership positions in accounting?

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Jeff Phillips: Anyone that is

a leader in this profession

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going to have to be involved in

hiring, outsourcing, delegating.

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You can't grow a business

without other people, especially

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in the business we're in.

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:

We're not selling widgets at scale.

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We're selling the time and expertise

of professionals, those professionals

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are essential to growing our

business, accomplishing our goals.

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:

Rob Brown: Well, Jeff Phillips,

we are excited about you

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:

joining us for this journey.

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We've got so many things to discuss.

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I'm thrilled that you'll be our co host.

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I'm Rob Brown.

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This is the Accounting Talent Podcast.

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Weekly episodes coming out

every Thursday, tune in and tell

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:

your friends about the show.

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Also check out our associate sister

show, the Accounting Influencers Podcast.

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Jeff appears on that as well.

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We're currently doing a series

on the future of accounting.

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These are four personal panels with some

of the top experts and leaders, thinkers

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in the world that have something to

say about where accounting is going.

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And we will touch on a little bit of

talent thing, but this is your show

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:

to focus on accounting and on talent,

the challenges and the solutions.

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:

Thank you for listening.

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:

We'll see you next time.

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