No one wants to work anymore! Public Accounting Edition #1
“No one wants to work anymore!” is a phrase that has been repeated time and time again over the course of history. Many times, this phrase is an indicator of changing economic conditions and shifts in core workforce values from generation to generation. Recently, I’ve been hearing some stories in my network about how some people are steering clear of certain roles in public accounting and I thought it’s a great opportunity to examine why people are no longer finding these roles attractive. Today, we are going to speculate as to why no one wants to work anymore (in public accounting) as a partner!
Disclaimer - There’s a lot of buzz lately about the accounting profession as a whole having a supply issue with new students and CPAs. While that is a major issue for the profession and some of the ideas listed below may overlap with the general trend of declining graduation rates, today’s article will aim to focus on why people aren’t interested in being a partner at a traditional public accounting firm.
Partners do a lot of work and get paid a lot of money, but is it worth it? To many people, including myself, the answer is no. Many members of the younger millennial and generation Z cohort don’t see the partner role as something to aspire to as a long-term career path. While everyone has their own reason, here’s a few reasons why these experienced professionals don’t want to be a traditional partner at a public accounting firm:
Partner Politics - Traditional accounting firms are a partnership, which involves working with multiple other partners that have their own specializations, networks, and books of business. This model provides a great framework for partners to do work more efficiently with shared resources while referring work to one another to have a more profitable operation overall. All the benefits are great, but they come at the cost of the administrative burden of working with so many professionals at once. Some prospective partners even feel the pain in the early stages when they need to be voted into the partnership! The internal political pressure to keep the right people happy while also serving clients is not worth it in the eyes of many.
The Buy-in Model - Another significant deterrent for younger professionals considering partnership is the buy-in model. In many accounting firms, becoming a partner requires a substantial financial investment. This "buy-in" serves as a contribution to the firm's capital and can run into the hundreds of thousands or even millions of dollars, depending on the firm's size and profitability. Younger millennials and generation Z have seen their fair share of financial crises, global pandemics, and revolutionary technologies that could affect an investment in a public accounting firm. When you combine that uncertainty with the fact that many prospective partners would need to go into debt to finance their buy-in, you get a not very appealing investment in my opinion.
The Working Hours - Long working hours have long been associated with public accounting, and they continue to be a significant reason why younger professionals are hesitant to pursue higher levels of public accounting, especially partnership. The partner track often demands an even greater time commitment and can lead to a work-life imbalance that many are unwilling to accept. Young professionals, particularly millennials and Generation Z, have been prioritizing work-life balance more than ever in recent years. They seek flexible work arrangements and value their personal time, neither of these factors are associated with partnership at a traditional accounting firm. The prospect of working excessive hours, including weekends and holidays, as a partner can deter them from pursuing this career path.
Now, you may be thinking that this has always been the case, and it has always taken a special kind of person to be a partner at an accounting firm, and you would be correct! The problem that the professional will face is that when firms don’t have enough personnel at the bottom and enough candidates for partner positions, changes will need to be made to keep these businesses alive. If current partners want to be able to pass on their legacy and partnership interest to future generations, they will need to make changes to the partnership model. I predict that the firms that adapt their business model to facilitate the desires of the younger generations will be the ones with the most options when it comes to top talent for the future generation of partners.