Matt Wood – VP, Client Services at Personiv was recently invited to join MarketScale's Daniel Litwin to discuss how companies can determine whether or not outsourcing is the right move for them on the Information and Technology podcast Litwin hosts:
Link to the episode, Here.
Is There Really an Accounting Talent Shortage?
Litwin and Wood began by discussing a topic that's gotten a lot of play over the past few years: the infamous shortage of qualified accounting talent and whether it's having the deleterious effect its widely reported to have.
As someone with an extensive background in recruiting operations, Wood was well-equipped to speak to the realities of why that shortage exist, how it came to be – and how to mitigate the toll it can take on organizations as they try to grow their accounting teams despite it. The talent shortage, according to Wood, is not only very real but the result of over two decades of economic shift and the accompanying change in the attitudes around career fulfillment and progression.
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In 2008, for instance, he noticed that young professionals entering into the workforce had to re-examine what they wanted out of their careers and make concessions along the way in order to stay afloat in a floundering economy. For accounting professionals, that may have meant entering a different field of work entirely, or by managing their own career trajectory by leaving organizations that didn't have a clear path upward.
For workers who managed to find a steady position in a time of high unemployment, that sometimes meant staying put in order to maintain security – something Wood can see happening again soon.
"Now that we're seeing another shift in the economy, we're now going to see more and more people who are reluctant to make changes," Wood told Litwin. "They're comfortable where they are; they know their place in their current company, and it's going to cost more to have somebody take that risk and be willing to leave their company to come join your firm."
Listen: [PODCAST]: Why a Shortage of Accountants Could be on the Horizon
Retention remains a problem as well, and it has its own associated hidden cost to companies, according to Wood, that has less to do with money: burnout. As teams shoulder their own work and the work of departing colleagues, they're also working with management to find, interview and onboard new hires. The ripple effect this has is far-reaching – slowing monthly close, distracting from day-to-day operations and increasing turnover among teams that have taken a big hit, morale-wise.
Recruiting vs. Staffing Agencies vs. Outsourcing: Deciding Which is Right for You
Despite a lack of qualified talent – and accounting talent that's willing to stick around -- there's plenty of work to do. As someone who managed recruitment operations for organizations of varying sizes before coming to Personiv, Wood was able to explain the pros and cons associated with three common hiring model solutions.
Using In-house Recruitment to Hire Accounting Talent
Wood knows why organizations find in-house recruiting so appealing. When it all works, it works really well. Recruiters hoping to hire within this model have a few advantages, like:
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A deep understanding of the company's culture and potential culture fits among candidates
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An understanding of specific team needs for shortlisting those applicants
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An easier onboarding process once a hire is made
However, the drawbacks associated with the model can sometimes exacerbate hiring challenges when recruiters are faced with:
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Overextension in companies where multiple business units recruit from a single department
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Pass-through opportunity cost associated with running potential hires by team leads
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An overall increased time-to-hire
And of course, for many midsize companies, the drawbacks are even greater – some organizations may not even have a Human Resources department or even an individual tasked with recruiting.
Finding a Staffing Firm to Fill Gaps in Accounting Departments
For those organizations, and for others that are simply at the end of their respective ropes with the revolving door of in-house hiring, a staffing firm offers an attractive way to get off of that escalator.
Wood knows the disadvantages of using a staffing firm intimately, however. "This is a cycle I've seen throughout my career: organizations will say 'Okay, we have to let our in-house team focus.' They'll start seeing the cost of recruiting and bring in that staffing firm. Then they start seeing the money spent there and say, 'Okay, we've got to bring this back in.'"
That's not to say that for recruiters working within the model there are no advantages, however. There are, and they can include:
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The ability to focus solely on the needs of your company or team
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An ability to deliver well-qualified talent based on an understanding of your industry
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An assumption of all of the risk and cost associated with the hire because they remain the staffing firm's employee
It's certainly far from a perfect solution and by definition, it's not a permanent one, which is just one of the disadvantages of using a staffing firm to fill accounting talent gaps. Others include:
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High associated cost because the firm is passing everything from salary to overhead on to you
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High turnover when staffing agency firm hires find more lucrative contracts, even when the difference is only a dollar or two
It's clear that companies looking for a stopgap or who only need a few hours of additional accounting help a month or even quarter, staffing agencies can be a good fit. It isn't very sustainable for companies that need a long-term solution, though.
Deploying Lean Accounting to Stay Competitive by Outsourcing - When Is It the Right Move?
That leaves outsourcing, explains Wood, who outlined the advantages of the model for Litwin:
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Access to affordable talent that isn't confined by regional salary averages
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1:1 resource allocation that allows in-house teams to communicate directly with offshore counterparts
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Allows for the reinvestment of time and money into the organization for a competitive advantage that's felt immediately
Where it's less likely to work, admits Wood, is in organizations that need a fractional resource: that extra assist during year-end close, for instance, or a workload that clocks in well under part-time, when measured in hours.
Get Started: Finance & Accounting Outsourcing 101
Today's technology makes outsourcing more effective than ever, too. Wood points to the past two or three years, which have seen companies shifting to remote setups for employees. The recent acceleration of the switch is clearly attractive to finance leaders that have to make every dollar count, Wood pointed out, citing the 74 percent of CFOs and Controllers that recently told Gartner they hoped to make it a permanent working model going forward.
Wood also addressed the largest concern he gets from clients exploring outsourcing as a solution for the very first time, and they may not be quite what you expect: "We get people saying 'Oh, I'm not big enough for that. That's for Fortune 500 companies...that's not for me.'"
Wood explains that this simply isn't true and hasn't been for some time. Outsourcing is an extremely viable solution for companies with lean teams, who may only need one or two additional full-time hires.
"Lean accounting teams do have access to this accounting talent," he told Litwin. "At Personiv, we can give you the advantage large organizations have had for years."
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