Why Do People Leave Public Accounting?
Why Do People Leave Public Accounting?
A question that I get asked often is “Why is turnover so high in public accounting?” People leave public accounting at various levels for a variety of reasons, but there are some underlying themes that tend to emerge among those making their exit. Today, I’m going to share with you some of the main reasons I believe people leave public accounting, which can be broken down into two categories:
The Basics - Reasons why people leave jobs in general, that are magnified in public accounting
The Details - Reasons why people may leave a job at a public accounting firm specifically
The Basics
The Hours
In 2022, not many people want to work more than 40 hours in a week if they don’t have to, and with advances in modern workplace productivity, many people probably would love the introduction of a 4 day work week (but that’s a completely separate topic). Under a standard working arrangement, working in public accounting means working extra hours to meet client schedules and deadlines. These extra hours are usually not compensated with any defined overtime and public accountants are expected to put in the work during busy season as a part of their job responsibilities. Everyone in public accounting usually knows what they are getting into when they sign up with their firm and hour expectations are constantly communicated to staff during busy season, but everyone has their limits. Eventually, the long working hour requirements take their toll on people, who will leave for a job that demands less hours.
The Stress
Working busy season hours on their own can be stressful to some, but for many, the real stress comes from other aspects of the job. These other stressful aspects can include juggling multiple clients, working towards a specific deadline, and working in teams where the communication and working styles of the team members are not compatible. While the hours of public accounting are pretty well known to everyone coming in, the other contributors to stress are mostly unpredictable and uncontrollable. Working with a certain manager or staff accountant can make or break an engagement in terms of stress, and the same goes for good and bad clients. This stress is magnified when the fast-paced work environment of public accounting changes engagement staffing and scheduling at the last minute, leaving everyone unprepared for whatever comes next. It should also be noted that the stress can trickle down from management. One overwhelmed manager having a bad day can leave a bad impression on a senior, who can do the same thing to their staff. Most people who work in public accounting have experienced their own bad day or have been impacted by someone else’s bad day, and there’s only so many bad days someone can handle before wanting to move jobs.
The Relative Pay
For most jobs, there will come a time when the skills an employee learns will make them a valuable asset in the job market to the point where recruiters will start tempting the employee with job opportunities that pay more. Historically, public accountants have enjoyed exit opportunities where industry companies are willing to pay more than the public accounting firms for proven talent (those who have hit a specific milestone such as senior, manager, or have a certain number of busy seasons completed). When a public accounting employee gains a certain level of experience, these opportunities start coming up and for some it’s an offer that’s too good to pass up. This aspect of pay difference between public firms, industry, and other public firms is always fluctuating with the demand for accounting professionals in the labor market, which has been and will continue to be an interesting conversation for the foreseeable future.
The Details
The Office Politics and Performance Metrics
Because so many people come in and out of public accounting firms, there can be somewhat of a social aspect to the job that can have a serious impact on compensation and career progression. This can include obligations as little as occasional happy hours to undertakings of what can only be described as professional ass-kissing to get on certain people’s good side. While I personally haven’t seen the latter of these two things, I’ve heard stories of favoritism impacting salary, bonus, and promotion opportunities at other firms. While being sociable and likable is somewhat of a job requirement in a client facing role, employees should not feel like they have to play office politics to get ahead. In addition, public accounting firms often use performance metrics to evaluate employees for raise, bonus, and promotion purposes. These metrics (such as utilization and job realization) stay in the back of an employee’s mind and add additional stress to an already stressful job. When I talk to people who leave public accounting, they are happy to tell me that they don’t have to deal with things like hitting billable hours or realization goals and are given the freedom to get the job done in a way that makes sense to them.
The Exit Opportunities
It is no secret among accountants that public accounting is boot camp and training for greener pastures in industry. Many people come into public accounting with the intent of working at a certain size firm for a certain number of years to get some experience and possibly a Big 4 brand name and then get out. No amount of pizza parties or team bonding activities will change this aspect of public accounting because it’s been a part of the public accounting model for years. Accounting firm Partners know it, recruiters know it, and even some of my college students know it before they even start their internships. While their reasons for wanting to leave public accounting may be a combination of all the basic reasons listed above, the premeditated strategy of going to work for a certain company to work for a couple of years to get some training (and possibly some brand recognition) before moving on is something that public accountants excel at.
The Endgame
Traditional public accounting firms tend to run on a rough “up or out” model where most staff are progressing their careers by taking on more responsibility to get promoted up through the company. Typically, when that upward progression is no longer wanted or achievable by the employee, they will usually leave the firm for other opportunities. Everyone has different goals in their life and therefore each person will have different criteria for when to leave their public accounting firm. For those who aren’t aiming to become Partner at a traditional accounting firm (which is most people), there will come a point where they realize one of the following:
I don’t want to work these hours every year for the rest of my life
I don’t want to manage other people
I don’t want to do business development
I don’t want to work in this service line (audit/tax) long-term
I don’t want to work with these clients any more
I can’t see myself being admitted as a Partner here
I mention this reason separately from exit opportunities because these are the types of situations that drive people out of public accounting who would otherwise enjoy the job if it could fit their lifestyle. Personally, I think I’m good at what I do as a public accountant, but the working hours and the parts of the job I don’t enjoy doing take a toll on my physical and mental health. Once that burden becomes too great, it will be time for me to move to another firm or to industry to create a situation that works for me, and I know there are others that feel the same way. Because of this model, people will leave public accounting (despite not minding many aspects of the work) for a different job that addresses their needs better.
Naturally, everyone will have their own reasons for staying or leaving a firm. Some people even make Partner! But the Partner track is not for everyone, and the unique combination of opportunity, advancement, and working conditions that draws people into public accounting will also drive most of them away eventually unless the accounting firm addresses the above issues. With a looming shortage of accounting graduates, firms are starting to realize that changes may need to be made to keep enough employees for long enough to comfortably service their clients, but only time will tell if the right measures get taken.