Welcome to The Ledger where we sum up the latest finance and accounting news and trends for you. On this week’s entry, we’re diving into the topic of the labor shortage that’s not only plaguing the global economy but also impacting the accounting industry. Read on to explore why a shortage of talent is the biggest obstacle to business strategy success, how an accounting shortage poses a risk to reporting, what the short term and long term pictures of talent shortage are and why the accounting industry is facing a reckoning.
The Labor Shortage: A Barrier to Business Strategy Success
Since the onset of the pandemic, companies have struggled to retain (and find) top talent. Add in the Great Resignation, an increase in employee demands, inflation and rising wage costs and you’ve got the perfect storm. Not only did Covid change workplace dynamics and tactics, it also posed a risk to business leaders, especially going into the new year. A recent Trends in Transformation survey showed that struggles with talent acquisition was a key stumbling block for all respondents. So how can leaders pivot to meet the needs of their organization, employees and clients? Here are the top drivers for this year and beyond:
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Expanding digital and technology advancements. To remain competitive in this tumultuous market, businesses need to focus on operational efficiency.
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Make outsourcing a part of your business strategy. 31 percent of respondents said that outsourcing is a top priority for reducing costs.
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Financial reporting will be impacted by automation. 33 percent of respondents said that general ledger and financial reporting will be the business area most significantly impacted by by increased automation.
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Fostering an engaged leadership. 46 percent of those surveyed believed that engaged leadership is the most critical area to successful transformation this year.
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The talent shortage is the leading hindrance to company growth. Last year’s labor market caused a snowball effect – from employee resignations to salary increases.
For more on how organizations can respond to this year’s unprecedented labor market, read the full article on benefitnews.com.
Accounting Labor Shortage Incites Financial Reporting Risks
There’s nothing like a lack of workers to make things even more challenging during an already chaotic season. And with accounting professionals leaving the industry in droves, leaders are scrambling to fill the gaps and deliver accurate financial statements to stakeholders on time. As Bruce Pounder, executive director of GAAP Lab, mentions: “If you choose to file on time there is absolutely going to be an elevated risk that your financial statements will be materially misstated… that’s not good for anybody.” Unfortunately, hiring has not kept pace with the continual resignations. So how are firms responding? Many are turning to outsourcing while others are relying on technology to streamline their work. Gary Boomer, a strategist with Boomer Consulting Inc., touches on this subject: “I’m worried about the firms and their shortages… it only puts more pressure on the people that are there.”
To read more about how having a shortage of talent creates a risk of internal control failures and more, check out the full article on news.bloombergtax.com.
From a Short-Term Staffing Problem to a Long-Term Business Concern
What lies on the horizon for companies this year? Between a disrupted economy, the Great Resignation and now, a talent scarcity, business leaders are itching to know the reality of what’s ahead. In the short-term, many experts predict that inflation will slow to a halt, work arrangements will soon become a non-issue and the labor market will resume back to normal. Seems like we’re getting back to pre-Covid days, right? Think again. The long-term dilemma poses a different outlook – one where a talent demand can’t keep up with existing workforces and the lack of people entering the job market. In short, the talent shortage is no longer a short-term issue. However, leaders need to focus on their most urgent needs, whether that’s saving money or investing in your current employees.
To get a better understanding of the short-term and long-term picture of the talent shortage, head over the forbes.com to see the full article.
Accounting Industry Wake Up Call: Shining a Spotlight on Salary Growth
If anything positive came out of the pandemic, it’s the hot labor market. With record-breaking shortages and turnover, companies are being forced to boost pay in order to secure top talent (and beat out their competitors). According to Liz Kolar, executive vice president of Surgent Accounting & Financial Education, ”The accounting industry for some reason has just not moved with the rest of the country in terms of offering competitive salaries, and this has been going on for over a decade.” And it’s not just higher wages that are in demand – many businesses are giving their employees more time off, the ability to work remotely and to have flexible schedules. It’s a paradigm shift that’s affecting professionals at every career level. So what’s causing the rapid rise in salaries? The primary culprit is a shortage of new accountants. However, the rise of wages is not sustainable for the long-term. Teresa Mackintosh, CEO of Trintech, said it best: “You can’t keep just escalating wages or making the higher offer or offering perks and things like that. That just only works for so long.”
To dive deeper into why the accounting sector is facing a reckoning, check out the full article on news.bloombergtax.com.
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