Job Security in Public Accounting
With news of the recent layoffs at various large accounting firms, I thought it would be good to discuss the idea of job security in a public accounting firm setting and the factors that contribute to a lack of job security in a profession that has been historically known for having great job security. The discussion around your role in a public accounting firm starts with two very familiar terms: Supply and Demand”. Let’s jump in!
The “It Depends” Disclaimer
Your role at your firm is surrounded by your unique set of circumstances that have an impact on how secure your job is. You may be very well liked among management, have a great relationship with a key client, or just have a more flexible role in the organization that allows you to be less susceptible to a layoff. Additionally, firm size plays a huge role in how essential to the organization you are and the amount of opportunities available to you. Your role and pay at an organization can be expressed as the intersection of the available supply and demand for your particular set of skills, and your job security will fundamentally shift as these things change. Let’s learn more about them:
Supply - What You (and others) Bring to Your Firm
How easily can you be substituted or replaced at your firm? Depending on your level and set of skills, the answer can range from “I can be outsourced” to “I cannot be replaced at all.” Recently, the availability of workers for certain positions has expanded due to remote work and outsourcing, but that isn’t the whole story for experienced professionals. There will always be a certain amount and certain level of work that must occur domestically and those positions are much less susceptible to layoffs because of it. The supply side of the equation is what you as an employee can control the most. While you cannot control the number of people your employer hires, you can (somewhat) control your own contributions to the team and work to become a more technical team member that cannot be replaced as easily. That deeper level of understanding typically comes with years of experience, and you should take learning opportunities as you can handle them to deepen and diversify your knowledge pool.
Demand - How Your Firm Can Use You
At the end of the day, public accounting firms are designed to make money. Firms do this by amassing a pool of professionals with varying levels of experience, and engaging clients to perform different services for them. Typically, firms have different service lines of assurance, tax, and different types of advisory work to offer to their clients. Firms need different levels of expertise and specializations to fulfill the needs of their clients. Because of this diversity of needs, a tax associate and an audit manager are not interchangeable. This separation of demand by service line creates an interesting problem for public accounting firms, especially ones with advisory services. How do firms adequately staff engagements, retain a strong pipeline of talent, and remain profitable? This question is a moving target at every firm, and it can be difficult to find a good answer. The most volatile part of the demand equation is engagement staffing. Firms face two big issues when it comes to engagement staffing:
How can the firm complete this engagement as economically as possible? Usually the answer is current staff being more efficient and utilizing offshore resources where possible.
Will the engagement even happen? Some service lines have inherently uncertain pipelines of work, with the most common example being transaction advisory services depending on M&A activity. Firms need to have staff on hand with the relevant experience and expertise to handle such engagements, but also can’t afford to keep someone on staff for too long if they don’t generate any revenue.
Larger firms are always planning for growth but are also winning and losing work all the time. If a firm plans for growth and hires more staff but that growth never happens, it ends up with too many underutilized staff that eventually get let go because of the firm’s lack of opportunities. The best thing you can do to keep yourself off of a layoff list is to help your firm secure new opportunities if possible. Not only will you look good for supporting business development opportunities, but those new opportunities will keep you and others busy.
What’s the TL,DR? How Do I Maintain Job Security in Public Accounting?
Public accounting firms depend on their employees and their clients for long-term success. As an employee, you should do your best to make yourself indispensable to the firm by building good relationships with your clients and coworkers, while also developing yourself to have both a deep and diverse pool of skills to make yourself effective in as many client-serving ways as you can. That diversification will look different at every firm, and it’s important to realize what skills and opportunities are in demand and available at your firm. Lastly, it’s important to remember that some firms operate at such a large scale that a single employee may not be able to do anything to prevent their layoff. If you don’t want to be one of the people facing that kind of circumstance, it’s probably best if you do some research before accepting an offer from Big 4 firm.