A talent survey produced jointly by the US Institute of Management Accountants (IMA) and the American Productivity & Quality Center (APQC) showed the skills gap, described as a "competency crisis", in entry-level management accounting and finance has exacerbated and expanded worldwide.
At the end of 2014 APQC and IMA surveyed employers at a manager or director level on their view of management accounting and finance talent.
The survey was part of the Competency Crisis initiative, a community set up in 2013 to adress the skills gap in the accountancy profession.
The responses showed "significant gaps" between the skills required by roles in the industry and those presented by entry-level candidates.
For the purposes of the survey, entry-level candidates were defined as those holding a bachelor’s degree with under three years of work experience.
Rather than identifying training or education as the source of the discrepancy between applicants and role requirements, however, APQC and IMA pointed to shifting requirements on the employers’ side as the principal factor.
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"Combined with other research and reporting, these results suggest that organizations have elevated and expanded the skill requirements for finance positions in particular, and for entry-level roles in general," stated the report.
The findings were confirmed across businesses of varying sizes, locations, role specification and workforce size, according to the survey.
APQC and IMA assessed 25 technical and non-technical skills, reporting gaps in each; the largest discrepancies appeared in abilities including: leadership, planning, budgeting and forecasting, strategic thinking, managing cost, internal financial reporting and performance management, as well as change management.
Among the consequences of such shortcomings, IMA and APQC identified increasing challenges in hiring local entry-level management accounting and finance talent.
A compounding issue can be found in candidates’ perception of the career path offered by management accounting: 34% of employers added they believed job-seekers are put off by the lack of a defined career path within organisations.
A similar proportion reported a shortage of professionals in local labour markets. Difficulties in finding talent are also having a negative impact on business.
The amount of resources needed to fill entry-level positions is increasing: 48% of respondents reported requiring more time to fill positions, 32% complained about increased recruiting costs and 29% said they had resorted to hiring less qualified entry-level management accounting and finance professionals.
Moreover, according to respondents, difficulties in filling entry-level positions are having a negative impact on morale among their mid-career and existing entry-level employees, with data showing a correlation between heightened hiring challenges and lower job satisfaction.
Stormy skies ahead
Looking to the future of the profession, the report concludes participants "are moderately concerned about a shortage of quality-level talent".
While 23% of respondents said they were very concerned about a skills shortage at entry level over the next 2-3 years, the figure increased to 37% when considering a 5-10 year span.
Among the possible solutions that inspired the most support from respondents were the development of better defined career paths (45%), increased mentoring (36%) and internships for management accounting and finance students (34%).
IMA and APQC also pointed to the possibility of developing necessary skills among university students and then refining them on the job. To this end, the associations suggested a partnership between schools and organisations involving professors, finance professionals, industry representatives and the students themselves.
Internally, according to IMA and APCQ, the survey also points to insufficient collaboration between HR and finance departments within companies.
The bodies suggested a lack of HR influence "may limit finance’s ability to appreciate the magnitude of the Competency Crisis and to identify and implement effective solutions."
An industry-wide challenge
The report’s findings are echoed throughout the accounting industry, as recruitment and succession planning are rising among the foremost business challenges facing the profession globally.
The upcoming retirement of the baby-boomer generation is a challenge few accountancy firms are ready to face.
A May 2014 survey of succession planning among 1,819 Global Accounting Alliance members found only 31% had a formal or written succession plan in place.
Writing for The Accountant last year, Peter Simons, technical research and development specialist at the Chartered Institute of Management Accountants highlighted an emphasis shift from possessing technical skills aimed at producing "good accounting information" to having the ability to apply these skills in the context of the business in a more engaged fashion.
As 2015 picks up steam, it seems the profession still has a long way to go before it can rely on its ability to attract and retain the right kind of future leaders.
As RSM International chief executive Jean Stephens told recently International Accounting Bulletin, The Accountant’s sister publication: "Does auditing and accounting draw the best and the brightest?
"No, and that’s worrying for me, because where are the leaders going to come from?"