The War for Financial Talent: A Perfect Storm
Written by Ken C. Schmitt, Published in the Carlsbad Business Journal, September 2007
It is simply a matter of supply and demand. With the local unemployment rate now sitting at a low 4.8% and a fundamental shift in the rules governing financial reporting, the supply of financial professionals has been greatly diminished at a time when the demand is at historic highs. It is imperative that San Diego’s businesses take a long-term, proactive approach to the recruitment and retention of top financial talent.
Demand
The last few years have seen a significant rise in the number and complexity of financial regulations. Born out of the bursting of the tech bubble and the subsequent corporate scandals, the trend towards heightened regulation began in 2002. The Sarbanes Oxley act, or SOX, was signed into law in July 2002, and promised to reshape corporate governance, financial reporting and internal controls for publicly held businesses. In addition to SOX, new SEC guidelines have altered the methods by which companies account for stock options, estimate corporate taxes, and reconcile U.S. guidelines with international accounting standards. In terms of human capital, this increased complexity has caused corporations of all sizes and their external auditors to increase the number of new hires while targeting well-rounded financial leaders.
Supply
As the dot-com craze heated up in the mid ‘90’s, many would-be accounting students opted to pursue degrees in business, hoping to secure funding and monetize their business plans. According to the American Institute for Certified Public Accountants, (AICPA) between 1995 and 2002 the number of accounting graduates dropped by more than 27% to a 25-year low. Only recently did this trend begin to reverse itself. Salaries for entry level accounting graduates has increased 26% nationally since 2000 and is projected to be in excess of $46,500 for 2007. In fact, for the past 3 years, the #1 major across the country was accounting as it is now being regarded as a “hot career”. Adding to this downturn in supply is the shifting demographic trends. As a group, Generation X (born 1965-1980), is half the number of the Baby Boomers (born 1946-1964). While the size of Generation Y (born 1981-2000) nearly matches that of the Baby Boomers, it will take a number of years before the supply of accounting graduates is able to meet the demand.
The Solution
In order to address this imbalance, organizations will need to commit more time and resources to their hiring process. Every company should create an Employee Value Proposition (EVP) in order to distinguish their organization from the competition. An effective EVP answers the question “Why should a prospective employee join our organization vs. another?” It is incumbent upon each employee involved in the hiring process to have a succinct, compelling and consistent response to this question, incorporating it into their interviews.
A well-developed EVP allows an organization to identify qualities that are unique to their company. These qualities include areas such as their specific product or service, work/life balance and upward mobility, the use of cutting-edge technology, market-leading compensation packages, or green initiatives. The real key, however, is not only identifying these traits, but actively marketing them to everyone who comes into contact with the company. The corporate website, advertisements, marketing materials, career fairs, job postings, sponsorships and new-hire packets should all communicate the same message.
The national trends related to the supply and demand of financial professionals are largely uncontrollable. However, integrating an effective Employee Value Proposition will help ensure that the organization can attract and retain the best employees, ultimately lessening the impact of today’s war for financial talent.
For more information about effective Human Capital Management, contact Ken Schmitt of TurningPoint Executive Search 760.434.5401 or visit http://www.turningpointsearch.net/.
