For small to midsize companies, having a football-teams worth of accounting staff members might seem like overkill. Sure, managing a department comprised of 12 people – Accounts Payable Specialists, Accounts Receivable Specialists, Bookkeepers, Auditors, and Tax Accountants - is great to put on your resume, but at the end of the day, is it a financially sound decision for your business (and can your budget handle it)? The question becomes, how large of a team should you keep in-house? What's the key to right-sizing your accounting team?
Another issue that comes up is – can you even find those team members you want when building out the accounting dream team. For years, CFOs and accounting executives have struggled to fully staff their teams, relying heavily on hiring new team members either through in-house recruitment strategies or by offloading that task to a staffing agency. And while some have found the hidden gem of outsourced accounting (or virtual accounting), talent remains one of the biggest issues facing accounting leaders today.
If you’ve ever typed in ‘What size accounting team should I have?’ in the search bar on Google, you’ve probably come across a myriad of answers that leave you even more confused than when you first started. The fact is, there’s no right or wrong answer because every accounting team is different, and the needs of a company vary from business to business. Moreover, a concern that spans across each industry is whether or not your team is inefficient. If you have an ineffective accounting team, chances are, you either have a small team that’s overwhelmed by the workload or a large team that’s producing work that can be done solely by one person. Either way, we’re here to help you weigh the pros and cons of right-sizing your accounting team, whether that’s a small team or a large team.
Looking for more on hiring? Check out our 3-Part Series: Accounting Staffing Vs. In-House Team: What's Right For Your Business?
Right-Sizing Your Accounting Team With a Small Team
Keeping your team small offers many benefits to your department as well as many challenges that can’t be overlooked. As Jeff Bezos, CEO of Amazon once said, “If you can’t feed a team with two pizzas, then there are too many people.”
The Benefits of a Small Team
Strong working relationships. With smaller teams, your coworkers may also be your friends. Cross-collaboration is also more common since many members of your team are bound to do more than their standard job responsibilities.
Prioritization. What needs to get done, gets done. Team members are more focused on tasks that take precedence rather than shifting their focus to back-burner projects.
More efficient. A small team means employees are more creative on how they complete tasks, whether that’s utilizing other members on the team or investing in technology that can fulfill those needs.
The Challenges of a Small Team
Overwhelmed by workload. When employees are forced to wear many hats, it can actually hinder their effectiveness. They’ll spend more time researching how to do something instead of actually doing the task. Many small teams also require an all-hands-on deck approach, leaving no breathing room for other projects.
Budget constraints. Having a small team means there’s not extra cash laying around to allocate to different resources and tools (including hire a new person to fill a much-needed role).
Lack of policies and procedures. When a team member leaves, the team suffers from the departure of that person’s knowledge (especially if that person never documented their process – a common problem dubbed Tribal Knowledge).
Right-Sizing Your Accounting Team With a Large Team
We talked about the pros and cons of a small team, but what about a large team? Is having a larger team for your accounting function better or worse? As Steve Jobs, founder of Apple, once said, “Great things in business are never done by one person; they are done by a team of people.”
The Benefits of a Large Team
Easier to offload work. The more people you add to your team, the easier it is to divide and conquer projects.
More opportunities to streamline. An accounting executive of a large team has more opportunities to do whatever they want with their team.
Structured process. You don’t grow a large team overnight. Building a large team takes time and because of that, you have the opportunity to test what works and what doesn’t work, including processes.
Stability. Large teams tend to be more profitable (positive cash flow) and are more reputable, which allows them to maintain a financially healthy business.
The Challenges of a Large Team
Layoffs. It’s easier to cut five AP roles and leave one remaining on a large team than it would be to cut the only AP role in a small team. (Read More: Overcoming Your Biggest Business Challenges)
Miscommunication issues. When a diverse set of skills (and people) come together to work on a project, disagreement is bound to arise – it’s inevitable.
Pigeon-holed into a role. You may have an employee that excels at their role so much so that it’s difficult for them to excel in their career by moving up or into something they like better. They’re a valuable asset to their current team (and to you as a manager) but this limitation can cause employees to feel bored and burned out. This inhibits not only team growth, but also personal growth for that employee and can ultimately lead to turnover if left unchecked.
Employees are not producing at a level that warrants a job. Team members that aren’t pulling their weight on the team tend to cause the whole team to spin out of balance. If one team member is having trouble meeting deadlines, then the whole team falls behind.
Wasting money on salaries that could be spent elsewhere. Imagine having 10 AP roles and having to allocate money and resources towards each of those roles. Now imagine cutting half those roles, while maintaining the same level of productivity at half the cost. This leads us to the final option – outsourced accounting.
Best of Both Worlds: Outsourcing - Accounting Team Right Size
There’s no perfect number to determine how many employees you should have on your accounting team. In fact, the early work of Maximillian Ringelmann, a French agricultural engineer, showed that the more people who pulled on a rope, the less effort each individual contributed.
If you’re a smaller team and looking to expand your workforce or maybe a larger team looking to downsize while also maintaining productivity, outsourcing (or virtual accounting) is the only solution that makes logical sense (and is a financially sound decision).
If you’re looking for the Magic 8 ball to tell you whether right-sizing your accounting team means growing your team or restructuring your team, then you’re looking to the wrong source. Here at Personiv, we have over 35 years of experience helping accounting and finance teams do just that – build the right accounting team – and we can help you too. Get in touch with one of our experts to explore what team size is really right for you, and how you can make the switch toward partnering with a virtual accounting talent provider.