There is a crisis in the management accounting profession, and it’s one that threatens to have a major impact on the world’s economy.
Around the globe, there is a talent gap in the finance function that prevents businesses from achieving optimal performance. While companies are seeing many accounting applicants with basic skills—entry-level tax and audit work, for example—there is a dearth in the proficiencies needed to lead teams and drive business forward. This lack of highly-skilled labor is making it nearly impossible to adequately fill key accounting positions inside organizations, hampering performance, growth and economic expansion.
Left unsolved, this “entry-level economy” will have serious implications for businesses across all industries and sectors. Needless to say, the ramifications are enormous. If businesses cannot adapt to these changes, it will affect their ability to grow and expand.
Why It Matters for Manufacturing Businesses
As competition in manufacturing has become more intense, technology has rapidly changed and customers have become more demanding, it’s more important than ever that the industry’s accountants are keeping up to speed with all that is demanded of them. It’s no longer adequate for the manufacturing industry’s CFOs and accountants to be merely bean-counters whose top skill is creating spreadsheets. They must understand strategy and have a thorough knowledge of how the entire business works.
As Ben Mulling, CMA, CPA, CITP, and the CFO of TENTE Casters Inc., told me, accountants hired right out of college don’t understand that, as a management accountant for a manufacturing company, “They need to work with IT, engineering, production and operations. It’s not even about technical accounting skills. The link between accounting and IT is especially critical, and accountants need to learn how to work with that department in order to access important information for making business decisions.”
When the manufacturing industry has accountants that aren’t properly educated, companies experience increased overhead and debt because they have to hire more people to fill the gaps. Hiring entry-level staff (because they’re cheaper, after all) means putting unqualified people in decision-making roles for which they aren’t properly trained.
What You Can Do
There are solutions to this problem. While academia must build management accounting and business skills, like strategy formulation and analysis, planning and execution, and leadership into the curriculum, employers also have a job to do in helping employees prepare for long-term career goals.
It’s essential businesses invest in professional development to train accounting professionals in sales and marketing, production and distribution, leadership and other skills. Many manufacturing organizations (such as Cummins) have found that mentor programs, internship programs, apprenticeships and certification support have created accounting and finance talent with the ability to provide value across departments and provide decision support at the management table. Expanding accountants’ knowledge base will grant them the ability to adapt when abrupt changes occur. Ultimately, it will translate into greater performance and profitability for companies.
Filling in the gaping hole in our talent pool is a challenge. IMA (Institute of Management Accountants) has been researching this talent gap for a quarter century and last year launched the Competency Crisis community as an online gathering place for accounting and finance stakeholders (students, academics, professionals and employers) to discuss solutions. Its goal is to address these competency issues and encourage each stakeholder to do their part.
As business leaders, we can all play a role in solving the competency crisis. Educators, students, professionals and employers must work together to redefine the skills that accountants need on the job. Through this collaborative undertaking, we can put an end to this crisis and keep our businesses vibrant and sustainable.
Jeff Thomson, CMA, CAE is president and CEO of IMA (Institute of Management Accountants), one of the largest associations focused exclusively on advancing the management accounting profession.