With fewer college graduates turning to the accounting profession and older accountants retiring en masse, the accounting profession faces an unprecedented challenge in talent management. As Jeff Phillips, CEO of Padgett Business Services and founder of Accounting Fly, warns: “By 2030, there will be 50 million more knowledge worker jobs than there will be people to fill them globally.”
In a recent Federal Tax Updates podcast episode, Jeff joined hosts Roger Harris, EA and President at Padgett, and Annie Schwab, CPA and Franchise Operations Manager at Padgett, to explore the seismic shifts occurring in the accounting profession’s labor market. This talent crunch is already impacting the accounting profession, with near-zero unemployment eroding traditional value propositions.
Jeff notes, “We are running at pretty much 0% unemployment. The technical number is 1.8%. But what that means to me is everybody that wants a job in our profession has one.” This creates significant challenges for firms needing to replace staff or expand their teams to meet growing client needs.
To address this crisis, accounting firms must radically rethink their approach to talent management. This revolution centers around three key areas: embracing remote work, implementing innovative compensation models, and providing clear career development paths.
Embracing Remote Work
Remote work is no longer optional. As Jeff emphasizes, “You can’t get this done without leaning into the idea of remote work. You just can’t.” By opening up to remote work, firms dramatically increase their talent pool.
Jeff illustrates this with a compelling example: “Let’s say you need to hire a CPA. There might be 600 CPAs in Tulsa, Oklahoma. But we know there are 670,000 CPAs in the United States. So open up your job search to all of America and you go from 600 options to 670,000 options, or 1.2 million options if the position doesn’t requre a CPA.”
However, managing remote teams comes with challenges. Annie points out, “I do think that it takes time to change your mindset, to change your workflows. Standardized workflows will become crucial when you have remote employees.”
Innovative Compensation Models
Competitive salaries are just the starting point. Today’s accounting professionals are looking for flexibility and work-life balance. As Annie notes, “You can’t say, ‘we’ll only make you work 60 hours a week during tax season.’ That’s not going to get you anybody.”
Jeff shares an inspiring example: “There’s a firm that decided they were going to reverse engineer their entire firm so that no one worked more than 40 hours a week all year, including busy season.” While it took them a few years to reach that goal, they did it. And this radical change significantly improved their ability to recruit and retain top talent.
New Organizational Structures
Talent management strategies evolve, and so must accounting firms’ organizational structures. Jeff introduces a “diamond on top of a triangle” model. The diamond represents permanent full-time staff and leaders, while the triangle beneath represents a combination of offshore talent and domestic freelancers.
This structure allows firms to access a wider talent pool, improve flexibility, and better manage workload fluctuations. For example, firms can use offshore talent for predictable, repeatable tasks while leveraging domestic freelancers for project-based work or to fill temporary gaps.
Of course, managing such a distributed team requires investment in transparent communication systems and standard operating procedures. Jeff emphasizes the importance of inclusion: “An offshore team needs to be a part of your team’s culture. They need to be involved in your team meetings. They need to have one-on-ones with their manager. They need swag from your firm. They need to feel like they’re a part of the firm and not a throwaway resource on the other side of the world.”
Technology plays a crucial role in making this work. As Annie notes, “We have firms that are completely remote and very productive and profitable.”
Overcoming Challenges
Implementing these changes has its challenges. As Roger observes, “As an industry, we must accept that the world around us has changed. And the advice that we gave ourselves or others 20, 30 years ago is not going to work today.”
Firm owners may need help with the loss of direct oversight. As Annie points out, “I think it takes the firm owner sort of a minute or so to understand that they might lose a little bit of control over this employee or, you know, their fear of maybe this employee won’t be productive.”
However, Jeff argues that remote work can improve oversight with suitable systems in place: “We have an owner in Padgett who uses Karbon and can tell you in 30 days if the hire is going to work out or not, just by looking at his project management board. He’s not spending time micromanaging or managing by walking around. He’s running a system, and he can tell if people are handling their responsibilities or not.”
Embracing the Future
The evolution of talent management is reshaping every aspect of how accounting firms operate and serve their clients. The message for tax practitioners and firm owners is clear and urgent: adapt now or risk being left behind.
As Roger concludes, “We would have lost out on an opportunity to have someone as talented as Jeff if we didn’t embrace the fact, which was new to us, we’re almost a 60-year-old company, and all of a sudden our CEO was going to be in Pensacola, Florida, when we have space in Athens, Georgia.”
The staffing shortage is here, and it’s time to take action. Firms that successfully navigate this reality can access a wider talent pool, improve efficiency, and provide better client service. Don’t wait—start revolutionizing your approach to talent management today. Listen to the latest Federal Tax Updates podcast episode for complete details.