By Kelly Urich.
As demand for accountants rises and the talent pipeline shrinks, small firms are facing an uphill battle to compete with industry giants for new hires.
Ken Bills, associate professor of accounting and information systems and the Plante Moran Faculty Fellow at the Eli Broad College of Business at Michigan State University, examines how small accounting firms recruit university students in a labor market dominated by the Big Four public accounting firms — Deloitte, PwC, Ernst & Young, KPMG — in an upcoming paper publishing in The Accounting Review.
Bills offers insight into how recruiting strategies may shape the accounting profession, especially as demand for accountants increases.
Why is recruiting talent becoming a growing challenge in the accounting profession, particularly for small firms?
Over the last 10 years, the number of certified public accountant candidates has dropped by more than 25%, and universities have reported substantial declines in both bachelor’s and master’s degrees granted in accounting.
At the same time, roughly 75% of American Institute of Certified Public Accountants members are at or near retirement age, and accounting jobs are projected to grow by 6% annually through 2033, faster than the average for all occupations.
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This combination of shrinking supply and increasing demand has created a significant talent shortage, putting considerable pressure on accounting firms to fill their annual hiring needs with qualified graduates. The challenge is even more acute for small accounting firms because, unlike the Big Four and other large accounting firms, they have limited size, resources and brand recognition, making it more difficult to attract and compete for new talent.
Your research explores how small accounting firms compete with large firms, like the Big Four, when recruiting students. What are the biggest obstacles these smaller firms face?
The biggest obstacles small accounting firms face are limited brand recognition, the dominance of the Big Four accounting firms on university campuses and few resources dedicated to recruiting.
Concerning the dominance of the Big Four on campuses, participants in our interviews pointed to the pay-to-play environment that exists on many campuses, faculty steering students toward the Big Four and fewer opportunities for smaller firms to interact with students.
The pay-to-play environment reflects the perception that firms that contribute more to a university in the form of scholarships, professorships and building donations receive preferential access to students. Participants also described numerous instances in which faculty encouraged students to seek out and accept offers from the Big Four over those from smaller firms. Together, these factors reinforce the structural disadvantages small firms face in the university recruiting environment.
What strategies do small accounting firms use to attract students and stand out during the recruiting process?
To compete effectively, small firms imitate Big Four recruiting practices to build familiarity and signal legitimacy, while also using differentiation strategies that highlight their unique strengths and advantages that contrast with larger firms. Their targeting strategy, however, is shaped by a sense of fatalism as they expect to be overlooked by top students and thus concentrate on students that are considered more attainable or those less influenced by social pressure to pursue Big Four careers.
How do small firms define success in recruiting, and how might that differ from larger firms?
Small firms tend to define successful recruiting in terms of meeting their hiring targets and seeing strong subsequent performance from those hires. They place less weight on hiring the “top” candidates prioritized by larger firms. Additionally, adapting to the view that many top candidates will not consider their firms as a first destination, small firms adopt a long-game approach to recruiting. They invest in student engagement to create familiarity and build relationships that may pay off in the future. The eventual hiring of experienced candidates whose relationships with the firm originated during campus recruiting is likewise regarded as a successful outcome.
What should students know about the opportunities that small accounting firms can offer early in their careers?
Students should take every opportunity to learn about small accounting firms, including their strengths, cultures and the career paths they offer. Small firms often provide opportunities and lifestyle benefits that are not always available at larger firms. Students can also learn from small firms’ long-term perspective by recognizing that, regardless of where they begin their careers, building networks and establishing relationships can open doors for them in the future. Very few professionals spend their entire careers with a single employer, so investing in networking early can pay meaningful dividends in the future.
Kelly Ulrich is with the Michigan State University Broad College of Business. https://broad.msu.edu
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Tags: Firm Management, Hiring, staff, talent
