In the Public Accounting vs. Industry blog series, NCACPA member Abby Smith outlines how a career in public accounting is different (or in some cases, not so different) from one in industry when it comes to: work-life balance, technical resources, training, development of business acumen, human capital, control of information, and stress level. Abby offers a balanced perspective, drawing on her experiences in both worlds.
A new post in the series will be added every Tuesday through the end of April.
By: Abby Smith, CPA
There are hardly any differences when speaking to professionals in public accounting or industry on the general topic of human capital. Everyone I spoke to indicated that they felt the profession as a whole is understaffed. Upon digging deeper though, there are differences that exist at the various levels of experience needed to make a robust accounting department.
Based on my own experience with the college recruiting process, there are no surprises when it comes to entry-level positions in industry. Public accounting firms round up the majority of college graduates. Industry professionals spend a fair amount of time conjecturing as to the best ways to deal with the common issue of recruiting staff. Public accounting firms spend massive amounts of money on college campuses wooing students, hosting dinners, and sending their most charismatic speakers to talk about the benefits of their firm’s robust training programs and structured progression of promotions up the corporate ladder.
Industry professionals are on the cost side of the business as opposed to the revenue-generating side. Consequently, budgets are scrutinized differently and do not typically include extravagant dinners or fancy hotel rooms for recruiting. Industry professionals passively post openings on college career center websites, attend the career fair annually, and preach about paying students more money while promising to work them less. Many industry professionals have given up campus recruiting efforts. The money and time spent selling your life to students—hoping they will want what you have and work for your company—can be so demotivating when students walk the other way. It is easier to wait one or two years when even the best and most qualified candidates who go into public accounting burn themselves out or find that all the promises of an amazing experience just do not pan out in every circumstance. Then, many times, those candidates transition to an industry position confident in their decision and appreciative of the work and opportunities available. The irony is that many management-level professionals in industry indicated a concern that senior associates are performing entry-level tasks.
I remember one of the selling points public accounting firms used when I was in college. Partners in public accounting firms talk about how they graduated from college, went to work for their firm, and progressed through the levels of senior, manager, senior manager—right on to partner. This is not representative of the career path for the majority of public accounting professionals, but also not rare to find the CPA with such a linear career path. Try to find a career path like that for someone in industry. I know thousands of industry professionals but I only know of one person that made it to a position in senior leadership through career progression within the same company.
Public accounting may not have a shortage of interns and first-year associates, but there is a mass migration out of public accounting that happens one to two years after professionals go to work in a public accounting firm. I heard many times in public accounting that senior associate is the most difficult position, which could be why that position is so scarce. The senior associate provides the majority of the on-the-job training for first- and second-year associates through guiding projects as they progress and reviewing notes of work completed. While public accounting firms provide immense amounts of training, no classroom can substitute for actual work performed on the job. I found that first- and second-year associates with the most chances to work with good senior associates are the most likely to stay on board and become public accounting senior associates themselves. Once a firm gets into a pattern of not having enough good senior associates, it is a difficult cycle to break. Managers try to compensate by two-stepping projects (i.e. working directly with staff). Sometimes this can be beneficial, but it is difficult for someone that has been working for 6 or 10 or 15 years to explain concepts or anticipate questions to a newly-minted accountant.
I remember my first couple of years out of college feeling like I was constantly swimming through muddy water. Few things made sense and I couldn’t figure out where anything went. A manager tried to explain something to me and it made me feel very stupid when the manager was explaining what I was trying so hard to understand as if it was just natural intuition to her. After being in management in public accounting, I can also comment on how hard it is to remember extreme minutia when trying to explain a task to a first year. The process of explaining a task to someone that has no concept of the work (while it seems like common sense to you) can be exhausting, and forgetting to explain one simple step to a first year can create hours of unnecessary work and a virtually unusable product. Senior associates are needed to translate what a manager needs to be done and what a first year needs to do. So where are the senior associates? I found them in industry.
Management and senior leadership positions are in a category all their own. Senior leadership positions in any one company in industry and partnership positions in any one public accounting firm are limited. Matching the right person to the right position is difficult so there are typically too many or too few managers at any one place. Somehow, even after so many people leave public accounting, there can still be a significant number of managers that progress through the ranks. Many staff and seniors leave to go into industry but get back to public accounting for a variety of reasons as managers. If top management is heavy in a particular company in industry, it is not uncommon for some managers to leave to go back into public accounting while they continue to build skill sets, progress, and transition to a different company where managers are lacking and their skills are needed. Some managers transition into public accounting with the hopes of making partner.
Before I transitioned to an industry position, it seemed that opportunities for senior leadership were more readily available in public accounting because there are so many partners at any one firm. An entry-level partner is only the beginning because there are opportunities to be Office Managing Partner, Geographic Regional Partner, Service Line Leader, and the list goes on. I was once told there were nine levels of partner to reach Chairman of the public accounting firm where I previously worked.
The titles are skewed in industry so it is much more difficult to ascertain what positions are equivalent and equally desirable. Industry titles typically include director of “X,” vice president of “X,” and chief officer of “X,” but there is no consistency across companies as to how the titles are used or which positions report to which other positions. In my current company, leadership includes directors, senior directors, vice presidents, and senior vice presidents of finance subject to the specific area (i.e. Senior VP Finance, Head of Tax). The senior vice presidents of finance report to the Chief Financial Officer who reports to the Chief Executive Officer. Directors in industry are not so different than partners in public accounting. There is only one Senior VP, Head of Tax in industry but there is also only one national service line leader for tax in public accounting. There is only one CEO but there is also only one Chairman. When talking to various people about their thoughts on career progression in industry, the focus seems to be on the Head of Tax, CFO, or CEO positions and the limited availability of having a single position within any one company in industry versus having a large number of partner positions available in any one company in public accounting.
The less uniform use of titles across industry accounting departments is at odds with the structured title hierarchy used in public accounting firms. This inconsistency affects top quality candidates looking for clear career trajectories. A simple education on titles and career progression at the collegiate level could greatly reduce the superficial differences between public and industry and result in more uniform understanding of the opportunities available in the accounting profession as a whole.
Stay tuned for next week’s post when I cover control of information!
Abby’s career began in 2005 at a small public accounting firm in North Georgia, where she largely worked with clients in the music and entertainment industry, as well as in real estate. In 2007, Abby joined a regional public accounting firm based in South Carolina, where she focused on pass-through entity taxation for partnerships and subchapter S corporations in the health care, real estate, agricultural, and not-for-profit industries. Abby joined KPMG in 2010 to focus on alternative investments, a melding of pass-through taxation and not-for-profit unrelated business taxation. Since 2014, Abby has worked with TIAA assisting with US tax compliance, structuring objectives for alternative investments, and specifically building out TIAA’s REIT expertise and US tax analysis of financial instruments.