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The skills crunch: How did it get so bad?


From the great resignation to quiet quitting and the lost generation of talent, a perfect storm has capsized the profession’s attempts to solve the skills shortage. While there is hope, it’s not going to be easy.

13th Jun 2023
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Ask any accountancy firm what their biggest challenge is at the moment and odds on most will say it’s the skills shortage. 

Even the pioneering accountancy firms entering the Accounting Excellence Awards said the biggest roadblock in their growth ambitions was finding the right talent and retaining them. 

No doubt about it, hiring is hard. According to flinder co-founder and Accounting Excellence award winner Alastair Barlow, the reason hiring is hard is because the talent pool is smaller and as a growing business, it is looking for more immediate solutions from part-qualified candidates rather than graduates.

“We need managers and part-qualifieds now, not in three years when they’ve gone through a training cycle,” said Barlow. 

The story so far

But this is hardly a new phenomenon. The warning signs have been flashing for quite some time. The problem can be traced back to 2008 when large and small accountancy firms responded to the global economic spiral caused by the financial crash by reining in their training programmes and budgets. Ever since then, the profession has paid the price with a lost generation of talent.

Then as the years passed, new challenges emerged and each time the profession never really got on top of the skills shortage. So by the time the profession eventually woke up to the extent of its recruitment woes, digitalisation and Making Tax Digital (MTD) had exposed how far accountancy firms had sleepwalked into a situation where they lacked skilled people to tackle the new challenges. 

More competition

But as technology has displaced traditional skills and roles in the profession, there is greater competition for careers than there was even 10 years ago with roles in data analytics, data scientists and technology developers. 

“There seem to be fewer people coming into the profession because there are other competing professions for the same talent or same skill sets that people have, like data analysis and analytical skills. So there’s a diluted pool,” said Barlow. 

The competition for talent has only been exacerbated due to the number of accountancy firms sprouting from here, there and everywhere, with IRIS research suggesting that since 2008, there has been a 40% increase in small practices and bookkeepers to 77,000.

Student numbers stagnating

While the Financial Reporting Council (FRC) reported last year that membership of the accountancy bodies has grown to 390,000 in 2021, the number of accountancy students entering the profession in the UK has remained stagnant with only a small rise of 0.3% to 161,000. 

Barlow can only see the skills shortage getting worse due to the real risk that in five to 10 years’ time, the baby boomer firm owners will look to retire or shut up shop, causing a mass exodus of professionals from the profession. “It will squeeze us even tighter because we’re not getting enough people flowing into the profession.” 

How are firms responding?

With the competition for talent so fierce, and the rise of the great resignation and quiet quitting, firms have responded by focusing on differentiating themselves in the market.

Barlow said that through building a brand, flinder has a better chance than its competitors of finding talented people because it is able to attract and retain talent through having a clear and defined vision for the future of the profession, a general culture of progression and learning how to be challenged and softer incentives like unlimited holidays and ski trips. 

“I think having a brand that stands for something is really important. I think you need to create some sort of differentiation, otherwise, it’s just a lottery then to hire people,” he said. 

The same is true for Kreston Reeves. “Gen Z wants to join an organisation that has a purpose, which isn’t just there for profit, and actually wants to be part of the community,” said Andrew Griggs, senior partner at the award-winning firm. 

For Kreston Reeves, this means holding itself accountable against four of the UN Sustainable Development Goals, which has translated into high employee retention rates. 

The new ways of working and automation

Aside from investing in people management, firms have embraced new ways of working to tackle the skills shortage. 

The pandemic in March 2020 may have created a situation where the Covid generation missed out on the valuable experience of learning by osmosis and added to the talent crisis, but it also opened the eyes of firms to new ways of working and accelerated the adoption of digital tools and hybrid working. 


But while firms can reduce the challenges of recruitment through having the right culture, putting in the right training structures and having a vision, it’s always going to be harder than if you’re building robots. And for many firms, automation is increasingly becoming the answer. 

“Technology is getting better,” said Barlow. “In a people business, we will need talent and obviously people, but I think technology, particularly artificial intelligence, will become even better and more profound and this will help ease some of that burden and ease some of the [skills] challenges.”

Automation is not becoming the only answer for firms struggling with the skills shortage, with others freeing up time internally through outsourcing and offshoring. And this goes to show how the skills shortage has shaped the profession, where something like offshoring was once considered a “dirty word” in the profession but is now a solution du jour. 

What’s next

The harsh reality is that accountancy firms are in desperate need of talent, and that fact isn’t going away anytime soon. So what’s the answer? For now, at least, the answer might be a little of all of the above. 

There doesn’t seem to be a silver bullet in solving this crisis in the short term, but there are many examples of practices thriving through using the routes available to bridge the skills gap and grow their practice.

This article is an extract from our new editorial special report: “Alternative guide to solving your skills crunch”. Download it here to discover practical strategies and real-life examples for recruitment, retention and using outsourcing and automation as alternative solutions.

Replies (13)

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By JustAnotherUser
13th Jun 2023 14:05

Flinder £50,000 – £60,000 (experience dependent). London
An accountancy qualification (ACA, ACCA, CIMA) or equivalent.
Office based.

The average salary for a accounting manager is £60,736 per year in London

Quick search on Reed...
£62,000 - £72,000 per annum
£75,000 - £90,000 per annum
£60,000 - £70,000 per annum (assistant manager)
£65,000 - £80,000 per annum
I could go on....

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By Hugo Fair
13th Jun 2023 17:11

The tone, message & accuracy of this article wouldn't be altered if every instance of the word accountancy (or accounting) was replaced across the board with any other profession - not just law or medicine, but even architects or engineers (and of course financial analysts, IT system designers, etc).

In other words, the causes (and potential solutions) are societal and deep-rooted so tackling them from an insular perspective will not treat the malaise - although it may help individual practices whilst they remain small (and hence nimble) enough to react faster than the herd.

And *that* is what I hear when the above exemplars talk up their successes ... good for them, but it's not a set of curative actions that can be handed out universally.

Thanks (2)
Replying to Hugo Fair:
John Toon
By John Toon
13th Jun 2023 21:58

Not sure I'd describe KR as small and nimble, but it is all a matter of perspective

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Replying to johnt27:
By Hugo Fair
13th Jun 2023 22:12

... and it's also all relative.

According to KR had just 47 employees (compared to many hundreds for immediate competitors - and of course 1,000+ for the top 12, all the way to PWC with 30,211)!

So not your one-premise 3-5 staff operation, but the perfect size to retain a single vision whilst still being able to 'turn on a sixpence'? It'll be getting harder for them now.

Thanks (1)
Replying to Hugo Fair:
By zebaa
14th Jun 2023 12:08

Not just professions Hugo, trades too. The basic problem is that training is expensive and the trainee can leave once he / she is trained. Clearly you can not force someone to remain in a firms employment, but I suggest other methods could be looked at. Perhaps a 'super' tax allowance for REAL training. My experience of government sponsored training is that it is often of poor quality & structured in such a way as to make it accessibly to only large organizations.

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By Maslins
14th Jun 2023 11:12

Makes me sad so few firms seem to be bothered to take on trainees. All relying on someone else to train them up, then try to poach them.

Thing long term folks. People are often loyal to firms that gave them that first step on the career ladder. The big leg up they needed.

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By rockallj
14th Jun 2023 12:45

Perhaps treating your current staff better would be a start with some firms…………..

Thanks (3)
By Sue Murby
14th Jun 2023 14:43

I think that many people find the work boring. Not everybody gets to meet clients. Back in the late 70s I worked for a small practice which specialised on artists, authors and politicians. Many of them well known within their field. The founder couldn't paint but was interested in art and he was independently wealthy so did not charge large fees. Before retiring he took on a junior partner who had worked for one of the top 3 firms doing Shell audits etc. year round. This man had a nervous breakdown and left the top 3 firm. He married an artist and so found the firm that I later joined. He didn't pay the going rate, nor did he charge the going rates. But the work was interesting because of the clients.

After 5 years I moved to another top 3 specialising in the taxation of the partnership, rather than partnership tax. The only clients that I met were were current or retired partners. By this time I had some private clients, all artists or crafts people and was allowed to keep on with it - no competition.

Some of my clients have been with me for 40 years and I have followed their careers with interest. I don't think that I'd follow the career of a plumber or shop keeper with the same degree of interest.

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By turchyna582
14th Jun 2023 19:31

Perhaps going back to basics, as I did when I first started my own Practice in 1980.
Recruit good GCE/GCSE school leavers, who can also demonstrate extra-curriculae experience in the community (charity work, Scouts/Guides, Sorts Clubs etc.
Give them 2 years day release for BTEC National Business Studies (or ONC Business Studies as it was in the 1980's).
They gain general Business knowledge across the important basic elements (Law, Ecomomics, Book-keeping/Accounts) and have a qualification in its own right at the age of 18. They also have built soft skills, working with colleagues and to some extent exposure to clients too.
At age 18, then put them through Professional exams - Accountancy or Company Secretarial or Financial Services (enables cross selling of those skills for the Practice)
At age 21, with at least AAT or equivalent; they can handle start ups, all HMRC and CRO registrations, a range of different business Record keeping, Accounts production, Tax Calculations (personal and corporate), Payroll preparation: and all of these done manually, not having software to do it for them! Above all they have good work ethic, and are capable and usually keen to have equity interests by the age of 30.
Absolutely no chance of that in a major Regional Practice.
They are much better 'products' and more suitable than any Honours Graduate (even in Accounting), who is just starting their career without any useful experience or work exposure.

Thanks (2)
Replying to turchyna582:
By mattiemort
15th Jun 2023 10:20

Just a small point - the school leaving age is now 18.

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By turchyna582
15th Jun 2023 11:22

Fair 0bservation Mattiemort.
That said, my comments were based on my historical approach of using the trainee's own committment to establishing a career as soon as possible, and selecting trainees who had application skills and work ethic; rather than the present 'expectation' that Graduates are the ideal solution.....albeit they have Nil work experience.
Many Graduates also have no idea what they wish to do (even at age 21 +), and some also (supported by better financial support mechanisms than in the 1980's), are able to simply 'wait for the perfect job' to appear.
Hence the increase in Apprenticeships generally in recent years, though I would question ANY 'apprenticeship' that is only of 1 year duration (as in many adverts).
I believe that the approach (albeit officially commencing at 18 rather than 16) WILL produce better employees for the Practice.
For what it is worth,I also see the potential (with remote working and Online study being available these days), that such a scheme could be effected for a 16 year old (as a bone-fide Part - Time employee). From the 1960's onwards (when I left school), Saturday jobs for school pupils were available in almost every business sector.......and many small Practice owners do work at weekends.
Yet today, even though we have a 24/7 Global market available for 16 year olds to 'do something constructive' in their career as soon as possible, the personal committment does not seem to be there, as their time available for Social Media is deemed a greater priority. .

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By indomitable
16th Jun 2023 17:01

Agree with the article which is why I have outsourced a large chunk of what we do overseas

Since COVID I had huge issues recruiting high calibre staff and the ones I did recruit who appeared great on paper were not up to it for various reasons mainly in my view they just weren't hungry enough

I don't know what's wrong with society but I think it has something to do with people feeling 'entitled'. People just expect too much, there is no hunger anymore. Easier to be an 'influencer', you will earn more money.

I don't get that attitude with my outsourced staff, they appear to be happy and eager to work.

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04th Jul 2023 10:33

Bookkeeping is marketed as the perfect job for mums. Mums need part-time hours that fit around the school run. We can bring so much lived experience but are being cut out of "proper finance roles" because we have kids and can't work full-time. I've competed for entry-level part-time roles with fully qualified accountants who are returning to work after maternity leave and don't want full-time hours (guess who got the job).

If there were more part-time roles in this profession, you could mine the skills and experience of working mums who are currently forced to apply for stereotypically "womans work" because that's all that's available to us during school hours.

I know it's a change of perspective, and that this can be very challenging in a sector that typically resists change, but you're missing out on a huge number of skilled and intelligent employees who could progress from bookkeeper to management faster than a school leaver if there were only the part-time roles to facilitate this. Instead many of the people who trained with me have given up on a career in finance because progression was not possible with young children.

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