How small firms can compete in the talent shortage

Firms with fewer resources and smaller budgets are finding solutions other than increased salaries. 

It’s well known that there’s a talent and skill shortage in accountancy, so how are firms with fewer resources supposed to compete?  

Many firms are receiving low numbers of applications or are finding existing talent doesn’t the possess required skills to meet new business objectives. Indeed, recruitment consultancy Search revealed an accountancy skills gap of 22% last year, and nearly three quarters of accountancy firms surveyed by Hays Accounting and Finance at the end of 2022 said they had experienced skills gap issues over the past twelve months. 

This isn’t likely to let up any time soon – IRIS Software Group this year warned of a decline in the number of newly qualified accountants and accountancy students across the UK and Republic of Ireland.  

Accountancy firms are asking themselves how to recruit new talent and also retain their existing staff. 

Larger companies have responded by increasing salaries both for new starters and for existing employees. The 2022 UK Salary Guide from recruitment firm Robert Walters showed accountancy firms were planning to increase pay by 10-15%, with biggest rises going to new starters.  

But for smaller firms with fewer resources and smaller budgets, competing on salary is a bit of a non-starter. How then can they begin to compete to attract the best talent?  

We asked small accountancy firms how they’re tackling the issue.

We don’t try to compete – we attract the right people by being flexible 

Stephen Leonard, FCCA ACA MAAT, Partner, J L Winder & Co 

I don’t necessarily think we are ‘competing’ with bigger accounting firms. Rather, we are operating in an economy and labour market which is very different to that of 5-10 years ago and this has been magnified by the COVID situation. Remote/hybrid working has had an impact along with a greater push towards work-life balance. 

Locally, we have a major employer who is currently on a huge recruitment drive and is paying 50%+ on top of normal wages for entry level/support roles and much more for specific skills. We do not try to compete with their wage levels – it would be futile and not cost effective for us. There is also the risk that current employees may be tempted away. 

However, this does mean that the numbers of applicants for new roles within our practice are smaller. I believe it’s our responsibility to attract the right people not only by offering a decent salary but also through taking a flexible approach.   

It’s about truly engaging with your people and listening to their aspirations. Good leaders will listen to their people and appreciate the unique skills that each individual brings, while making learning and development opportunities available for all who do wish to accelerate their role. 

Salary is the ‘blunt instrument’ that has been seen as the only way to attract talent. While ‘money makes the world go round’, people also need the time, flexibility and support to be able to get on the carousel of life; to take the ride and not be chained to the same desk for eight hours a day simply because the salary is good. 

Verdict: Never assume that salary is the major factor. Instead, we should tailor our approach to our employees and not worry about the perceived competition might be doing. 

Firms that are alert to what candidates want will find it easier to attract the right talent  

Joanne Thorne, Technical Compliance Manager, Caroola Accountancy

While most people may cite larger salaries and career progression as being their number one criteria to move jobs, there are some other factors that remain just as important.  

Working for a company that has a good reputation or offers a better work-life balance can be just as desirable. 

Sometimes, larger companies can even intimidate job searchers, making them feel like just another number without adding a personal touch and the type of ‘family feel’ small companies can offer.  

Some candidates may also prefer to remain part of the smaller and more intimate team and receive better quality mentoring, which will set them on their career path in the long term. 

The job market is changing, with hybrid or complete homeworking now becoming an assumed right. This new model gives companies access to talent that previously may have lived too far away to be attracted by a lower salary. So those companies that are alert to what job-seekers deem important and can adapt accordingly are much more likely to attract the right talent for them. 

Verdict: Companies that are alert to what job-seekers want are more likely to attract the right talent.

We can afford to compete on salaries 

Victoria Morley FMAAT, Director, The Business Hut  

Salary is just one part of the proposition. Benefits such as flexible working, unlimited holidays, health/dental care, birthdays off, social events and health & wellbeing support are all extra incentives that can tempt talent into a firm. Flexible working is especially attractive.  

However, as a small practice, salary is something we can compete on. The key is ensuring fees are pitched right and costs are minimised as much as possible. Our overheads are much lower than bigger accountancy firms, so we can afford to compete on salaries, offering them at or above market average.  

We’ve not struggled to recruit: we engage with a local recruitment agent that specialises in our industry and they support us in attracting candidates that fit with our philosophy and culture. We also invest time in ensuring our social media presence is active and representative of how we work: a modern practice with a personality. This leads to potential candidates contacting us with CVs. 

As a cloud-based practice, we encourage hybrid working. The majority of our workforce are parents so we understand the importance of flexibility and we have a relaxed attitude towards working patterns and hours as long as work is completed on time. This has been a big factor in talent choosing us over other firms. Money doesn’t always motivate: being human and supporting our staff with maintaining a good work-life balance is just as important. 

Verdict: We can afford to compete as long as our overheads are low and our fees are sufficiently competitive.

We compete on employee engagement and satisfaction 

Lydia Read-Potter, FMAAT, BookSmart Accounting 

Small firms like ours won’t always be able to compete on financial packages but we can compete on progression, employee satisfaction, flexible working and making employees feel valued. 

We have struggled to find the right people in the past, but when we do, we look after them and do what it takes to keep them in the business. They have the freedom to grow with the company and become an integral part of our success. 

When putting together additional benefits and perks, I always try to think about what I wish I’d had when I was employed. So we offer our employees flexible working around family commitments, autonomy over working hours and location, staff training, social events, quick and tangible progression as well as the chance to be part of the growth and success of the business. We also offer bonuses for new clients brought into the business, Christmas bonuses and performance-related pay increases as well as branded workwear and personalised mugs.  

Verdict: We may not be able to compete on salary but we can compete on employee satisfaction and engagement.

Invest in career development opportunities 

Neil Parsons, Managing Director, Wolters Kluwer Tax & Accounting 

Many smaller firms are able to offer competitive salaries because they have opted to make investments in technology to optimise their workforce and maintain a competitive edge. This has enabled them to make higher investments in a smaller number of people, while still servicing a large client base.  

We practice careful hiring practices, making sure new hires are a good cultural fit. It’s important to us that candidates ensure we’re a good fit for them as well – it has to work for all parties. Our people frequently remark on the great culture of our business and this is, in part, due to us prioritising learning and development, mentoring and advancement. 

For those that can’t compete on salary alone, the focus can be on offering more meaningful work, stability and increased career development opportunities. Candidates are also looking for employers who invest in learning and development, job shadowing, mentoring and other career support initiatives. The firms that offer this type of commitment to their employees are demonstrating that they can compete with the larger firms in top talent acquisition and, critically, retention. 

Verdict: Firms who can’t compete on salary can instead invest in career development opportunities to attract and retain talent.

As a very small team with sustainable fees, we can offer competitive salaries 

Richard Pilmore FMAAT, Director, RLTP Ltd  

We are a small team of four and we do feel we offer competitive salaries. We’re able to uphold this with the fees that we charge – as it then allows us to pay our staff better than some small practices. 

We focus heavily on quality and customer service, rather than being a cheap provider. Unfortunately, I see in the industry that it can be a race to the bottom when it comes to pricing, which leads to employers not being able to pay good wages. 

We’ve been extremely lucky with recruiting and staff retention helped by competitive salaries and company-wide perks. For example, we offer a flexible working pattern, birthday leave and staff training. We currently have a member of staff on a payroll apprenticeship course, and are looking into supporting another employee through their ACCA qualification.  

We also pay overtime: I know industry-wide there is an expectation that staff will work longer hours and not receive any additional pay for this, but we feel it’s important to value staff by offering overtime pay.  

Verdict: Keeping a lean team and charging competitive client fees helps us offer good salaries. 

Annie Makoff is a freelance journalist and editor.