Accountants excel at analyzing numbers and developing strategies based off them.
The way University of North Carolina at Chapel Hill professor James Johnson sees it, the numbers describing the demographics of the United States leave accountants little choice today but to embrace diversity and new business practices. Johnson spoke at an AICPA governing Council meeting.
“Our communities are going to change dramatically,” Johnson, director of the Urban Investment Strategies Center at UNC, said in an interview the week before the presentation. “Our businesses are going to change dramatically. And that requires the accounting industry to change, because in many respects, it does not look like America, particularly at the upper tier.”
Nonwhites made up 25 percent of accounting employees but just 10 percent of partners at CPA firms in 2012, according to the 2013 AICPA Trends survey that measures firm demographics. Women also have struggled to advance, as they represent 44 percent of accounting employees and just 19 percent f partners at CPA firms.
Johnson, William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship at UNC Kenan-Flagler, sees six disruptive demographic trends that will require change.
- The South rises again. Population growth in the South has been outpacing growth in other regions for decades, Johnson said. From 2000 to 2010, 52 percent of the 27 million net growth was in the South—most of it in Texas, Florida, Georgia and North Carolina. The best opportunities for business growth are likely to be in this region, which is highly culturally diverse, Johnson said.
- The browning of America. Virtually all (92 percent) of the 27 million in net population growth in the first decade of the new millennium was nonwhite, Johnson said. About 56 percent of the growth was Hispanic. Meanwhile, the non-Hispanic white fertility rate over about the past 20 years has been about 1.9, below the 2.1 needed for replacement, Johnson said.
- Marrying out is in. The percentage of people married to someone of a different race grew from 3 percent in 1980 to 8 percent in 2010. This, too, means the racial and ethnic diversity of the population will grow.
- The Silver Tsunami is about to hit. Baby Boomers began reaching age 65 on Jan. 1, 2011, and will continue to do so at a rate of between 8,000 and 10,000 a day for 19 years, according to differing estimates. And advances in technology and health care mean this huge segment of the population will live longer. This will make elder care an even bigger responsibility than child care for workers in the future, Johnson said, and will demand new levels of flexibility in the workplace.
- The end of men? According to one estimate, from 1969 to 2009 the median wage for men fell by $13,000, adjusted for inflation, Johnson said. Men have made up less than half of the college undergraduate population since the mid-1990s, falling to 45 percent by 2004. Disability, incarceration, and insufficient skills to make the transition to an information economy are among the factors holding back men, Johnson said. Women historically have struggled to advance in the accounting profession, but this fundamental shift makes accommodating and promoting women in the workplace a necessity for the future, Johnson said.
- Cooling water from grandma’s well—and grandpa’s, too. A rise in the percentage of households where grandparents are raising grandchildren also creates a greater need for flexibility in the workplace, Johnson said. Many of these grandparents are younger than 50, Johnson said. “We have relatively young people in the workforce that are faced with those kinds of issues, and so again, agility and flexibility has to be the order of the day because you’ve got to accommodate life,” Johnson said.
These demographic shifts will challenge the way the accountancy profession has operated, Johnson said. Allowing for flexibility in the workplace can be difficult in professions that are deadline-oriented, where taxes are due on a certain date no matter what, for example. But Johnson said the accounting profession will have to evolve to continue to thrive.
Johnson’s tips for the accounting profession include:
- Embrace immigrants and immigration. Young people are more likely to immigrate than older people, according to Johnson. “We’re going to need all these people to sustain Social Security, to sustain Medicare and Medicaid, and to pay our bills locally because … the Silver Tsunami is about to hit,” Johnson said.
- Recognize that consumer markets and new businesses are going to be far more diverse. Immigrants on average are more entrepreneurial than established residents in a location, according to Johnson. “Accountants are going to have to have far greater cultural competence than they have now because of the different population that they’re going to be working with,” Johnson said. “And the culture of doing business varies from one culture to the next.”
- Develop culturally sensitive succession plans. “Where are you going to find the people, and how do you ensure knowledge succession from that generation to the next generation?” Johnson asked.
- Prepare for change in low-growth regions. The concentration of population growth in the South means accounting firms and businesses in other, slower-growing regions may have more difficulty growing. “Some of you in other regions of the country may have some challenges … or your practices are going to change because of the kinds of industries and the like that will be there,” Johnson said.
- Look for talent where no one else is looking. Talented minority candidates at elite schools are in such high demand that they can work almost anywhere they want, according to Johnson. He said discerning employers will find talented young people at schools without big names—and they won’t face as much competition to hire them.
- Listen to the Millennials. Many younger workers may have different lifestyle choices than some older workers are accustomed to, Johnson said. But even if they like to work different hours while listening to music on their earbuds, they are the future, and Johnson said they are not afraid to go work somewhere else.
Businesses might be able to succeed for a bit longer using older, stricter work models for their employees, according to Johnson. But he said the changing demographics in the workforce demand a new way of doing things.
“Again, agility, flexibility, accommodation is the order of the day,” Johnson said. “If you try one-size-fits-all, it’s going to be my way or the highway, you’re going to be on the highway all by yourself."
By Ken Tysia, senior editor of the Journal of Accountancy, where this article originally appeared.