The accounting shortage is hurting your bottom line
The 2024 Finance & Accounting Talent Market Outlook reveals a stark reality: 83% of senior leaders report an accounting talent shortage, up from 70% in 2022.
While the visible costs of this shortage—recruitment expenses and unfilled positions—are apparent, it’s the hidden costs that are silently eroding companies’ bottom lines.
When accounting positions remain vacant, the ripple effects are far-reaching. Existing staff shoulder heavier workloads, leading to burnout and decreased job satisfaction. This isn’t just an HR issue; it’s a financial one. A Gallup study found that actively disengaged employees cost the U.S. between $450 billion to $550 billion annually in lost productivity.
The impact on morale translates directly to output. As Joel Vander Weele, notes in his “Without adequate financial analysis and planning, organizations struggle with budget management, cost control, and strategic planning.”
He says this can result in “suboptimal” decision-making and financial performance.
Perhaps most alarmingly, the talent shortage is compromising financial accuracy. According to Gartner, one-third of accountants admit to making “at least a few financial errors every week” due to capacity constraints. These aren’t just minor slip-ups; they’re potential landmines.
Take Tupperware, for instance. The company recently disclosed that significant attrition within its accounting department has strained its resources, creating gaps in skill sets and leading to material weaknesses in financial-reporting controls. This isn’t an isolated incident. Advance Auto Parts faced similar challenges, struggling to file a quarterly report on time due to staffing shortages.
These examples underscore a broader issue: the increased risk of financial misstatements and restatements. Such errors can undermine investor confidence, potentially leading to financial instability and negative impacts on stock prices.
As existing staff feel the pressure, the risk of turnover increases. According to a study by The Work Institute, employee turnover costs U.S. businesses $600 billion annually. This figure includes not just the obvious costs of recruiting and training new employees, but also the lost productivity during transition periods and the potential loss of institutional knowledge.
The effects of the accounting shortage extend beyond internal operations. Disengaged employees may provide poor service, failing to meet customers’ needs. A study by the Temkin Group found that organizations with engaged employees have three times the return on assets compared to those with disengaged employees. This suggests a direct link between employee engagement and financial performance.
Moreover, an Aon Hewitt study revealed that companies with highly engaged employees have a total shareholder return that is 18% higher than those with low engagement. Clearly, the accounting talent shortage isn’t just an operational issue—it’s directly impacting companies’ bottom lines.
Adding complexity to this issue is the changing nature of accounting roles. As Vander Weele points out, management accountants now need proficiency in data analytics, strategic thinking, and sophisticated financial software. This shift in skill requirements has created a gap between the competencies of current graduates and the demands of modern management accounting roles.
Addressing this talent crisis requires both short-term actions and long-term strategic thinking:
Long-term, finance leaders need to embrace finance transformation. This involves automating simple tasks, leveraging generative AI, addressing data problems, and implementing new technologies. It’s about creating a finance function that balances meaningful work experiences with work-life balance.
The accounting talent shortage is more than just an inconvenience—it’s a significant threat to companies’ financial health and operational efficiency. From decreased productivity and increased errors to higher turnover and reduced customer satisfaction, the costs are real and substantial.
As we navigate this challenging landscape, it’s crucial for finance leaders to take proactive steps. By understanding the full impact of the talent shortage, implementing both short-term fixes and long-term transformational strategies, companies can mitigate risks and position themselves for success.
The road ahead may be challenging, but with strategic planning and investment in both people and technology, organizations can turn this crisis into an opportunity for innovation and growth in their finance functions. The time to act is now—before the hidden costs of empty desks become too high to bear.