Long before the Great Resignation was a thing, large accounting firms struggled with high turnover and regular raids on their ranks, often from their very own clients. Now firms must also cope with a decreasing number of college students interested in the profession.

“We are seeing a decline in enrollment for students pursuing a degree in accounting. In the past year or two, that decline has been dramatic at some large universities that produced the most graduates, 50% in one year,” said Sharon Lassar, director of the school of accountancy at the University of Denver’s Daniels College of Business.

DU’s drop has been smaller, but accounting enrollments remain below where they were five years ago. For a variety of reasons, some not entirely clear, the accounting profession is no longer winning over the young adults of Generation Z in the way it did prior generations.

“Students these days are looking for careers with purpose or where they feel they can have an impact on society. It is hard for young people to see the importance of providing good accounting information to protect our capital markets and our economic activity, ” Lassar said. But she adds the profession is vital to a well-functioning economy.

While the University of Colorado Boulder hasn’t suffered a drop in accounting graduates, the program isn’t keeping pace with higher enrollments at the Leeds School of Business, said Steve Rock, associate professor of accounting and chair of the Professional Effectiveness Division at Leeds.

Rock said students need 150 credit hours to qualify to take the exam to become certified public accountants, or CPAs, a key certification to advance in the field. If they aren’t coming in with college credits completed in high school, that can add an extra year of study. With the wage premium that accounting used to offer shrinking or going away, more students are doing a cost-benefit analysis and choosing other business majors.

“Accounting students typically earned the highest salaries coming out of the business programs. All other programs have been increasing their salaries. There is no longer that salary premium,” Rock said.

Accounting firms also had a reputation for hiring the strongest business school graduates and working them hard to see who would emerge from that “tournament,” Rock said. But those survivors, once they developed expertise in a given company or industry, are highly sought after in the corporate world. A job at an accounting firm often serves as a stepping stone to bigger and better things rather than a career destination.

Before the pandemic, the employee turnover rate at the largest accounting firms averaged 17% a year, and one in six firms experienced turnover rates above 20%, according to the CPA Journal. High turnover was built into the business model, but in a tight labor market with fewer entrants, that approach simply isn’t sustainable.

“It can be a big grind in terms of hours. Folks, as they progress through their careers, are looking for more work-life balance,” Rock said. And across all industries, the pandemic has caused people to reexamine what they were willing to put up with.

Accounting firms have become more aware of the need for a better work-life balance, are more accommodating of remote work arrangements and have recruited across a broader spectrum of candidates as they try to create a more welcoming environment for women and other underrepresented groups. And they are still coming up short.

“The shortage of talent has become so severe now that the service providers, the accounting firms, are in the position of being able to turn away work,” Lassar said. That is hurting the public sector, which relies on a request for proposals to secure vendors, especially hard.

KPMG’s cultural shift

Last year, more than 24,000 people in metro Denver worked as accountants or auditors, and Denver’s concentration in that occupational group is 76% higher than the concentration found in the U.S. workforce, according to the Occupational Employment and Wages Statistics from the U.S. Bureau of Labor Statistics.

Mike Bearup, managing partner of KPMG’s Denver office since 2010, has developed a reputation as an executive able to manage the labor challenges the accounting industry is facing, so much so that KPMG promoted him to managing partner in charge of culture for all its U.S. operations in July.

Bearup is handing the reins in Denver over to Brandon Wilcox, himself a long-time veteran at the firm who has been in the city since 2009. Under Bearup, the Denver office has doubled its headcount over the past 12 years and is the top destination for KPMG staff transfers.

Culture may sound like an amorphous term, especially in an industry used to dealing with hard numbers, but it has become a key ingredient in recruiting and retaining workers, Bearup said.

Measured globally, Deloitte was the world’s largest accounting firm last year with 345,370 employees, followed by EY, formerly known as Ernst & Young, with 312,500, and PwC with 295,731, and finally KPMG with 236,000 employees, according to the website Statista.

In metro Denver, KPMG counts 1,120 employees, second only to Deloitte. That number includes 377 auditors, making it the leader in that field locally. But the largest line for the firm in terms of employment is consulting, in part because of the KPMG Ignition Center, which Bearup helped launch in Denver in 2015.

The center, now deployed firmwide, brings employees with different skill sets together and provides them with cutting-edge technology. It emphasizes taking a more collaborative approach when it comes to helping clients operate more efficiently through automation, artificial intelligence, blockchain and other innovations.

“Advising has grown like crazy in Denver,” Bearup said.

Some of those same technologies are also being deployed to make accounting jobs more interesting by eliminating more time-consuming and repetitive tasks. Artificial intelligence programs, for example, can comb through lengthy leases and pull out the key phrases useful to an auditor, saving mindless page-turning. Software programs can also model complex changes in tax laws, allowing tax specialists to provide more refined recommendations.

A big emphasis in accounting right now is environmental, social and governance, or ESG. Companies, for example, must report more detailed information on their environmental impact on the climate. That requires devising new methods and standards for measuring those impacts and reporting them.

“Our people here in Denver are passionate about it,” Wilcox said, adding that the newer field meshes well with the desire of many young adults to make a positive difference in the world.

To adjust to the new realities of remote work, the company has adopted a policy of “flex with purpose.” Employees are asked to come in when there is a purpose or need for them to come in, but otherwise given the flexibility to work remotely if they prefer, Bearup said.

But there is also a realization that being away from the office can make it harder for new hires to absorb a workplace culture and bond with their coworkers. To that end, the company hosts a monthly BBQ and brings in a barista weekly. Maybe nobody wants to do Monday through Friday in the office, but what about Tuesday to Thursday?

Just as accounting firms help their clients think more creatively when it comes to finding solutions for the challenges they face, they will need to innovate when it comes to how they recruit and retain talent.

“The labor shortage is here to stay,” Bearup acknowledged.