Job Seekers Want To Know: Why a CPA may trump an MBA

By: Tracy Levine, Principal, Advantage Talent Inc.

Every other week The Renaissance Executive Transition Forum, composed of top Executives who are highly educated and highly accomplished, meet for networking and peer mentorship.  In recent months the topic of how some Senior Financial Job Descriptions have changed has brought about much debate.  Job Descriptions for many Finance positions are now including the following:  “CPA required or preferred.”  Other job openings even include experience with a “Big 4”  or Large Regional Public Accounting firm required.

As one recent ex-public company executive shared with the group, it doesn’t make sense that a job I have done for over 20 years, may be out of reach.  The most outraged and stunned are the Senior Executives that have earned an MBA.

These Executives argue their case vigorously.

“I’ve done this job for years which should make a CPA irrelevant.”

“I have an MBA with solid work experience which should be at least equal to a CPA with experience.”

“Requiring a CPA is a way to promote age discrimination.”

“If I could just get around the ‘dumb’ HR Managers and/or Recruiters to a real ‘educated’ person, the lack of the CPA would be a nonissue.”

Several people who do not have a CPA have in the past held and done exceptional jobs as internal accountants, assistant controllers, controllers and chief financial officers.  These same candidates could continue to do fabulous jobs but the world economic paradigm has shifted.  The U.S. has just experienced the worst economic downturn since the Great Depression.  American’s want the gatekeepers to have accountability.  Regulatory Authorities, such as, the Securities and Exchange Commission, the FDIC and the IRS are busier than ever.  Accountability and measurable expertise has become a key concept in today’s economy.

Meet the new Rock Stars: Certified Public Accounts (CPA)

Certified Public Accountants (CPA) muscling in on MBAs

Meet the new Rock Stars: CPAEarning an MBA is a very significant accomplishment.  However, in today’s economic reality an MBA is not always viewed as an equivalent to a CPA.  A CPA in several instances is getting paid more than an MBA.  If a person has a JD and a CPA or an MBA and a CPA, they have the “Willie Wonka Golden Ticket”.  Getting an undergraduate accounting degree coupled with a CPA License takes as much time and work as earning an MBA.  The current requirement is 5 years of undergraduate classes.  After graduation, the person has to pass a 4 part exam and complete a one year apprenticeship to obtain their CPA License.  And while both the MBA and the CPA continue to gain real world experience, only the CPA continues to take classes for Continuing Professional Education (CPE) credit to supplement their real world experience.  The CPA cannot keep their license active if they do not take CPE Classes.  A CPA License is not just a piece of paper, as many non-CPA Senior Financial Executives argue, anymore than an MBA is just a piece of paper.  Both are only earned through hard work.

Why does all of this matter? Changes in Corporate Governance

In a past blog, I wrote about how the switch to IFRS will affect corporate governance.   Under the final rules the Securities and Exchange Commission makes it clear that just because someone was already serving on an Audit Committee did not mean they could automatically be grandfathered in as the Audit Committee Financial Expert in IFRS Accounting.  It further states that the fact that a person has experience as a public accountant or auditor, a principal financial officer, controller or principal accounting officer or experience in a similar position would not, by itself, justify the board of directors in deeming the person to be an Audit Committee Financial expert. (http://www.sec.gov/rules/final/33-8177.htm)

Just like the Audit Committee Financial Expert, Senior Financial Executives may not get to be grandfathered in as the experts when all eyes are on GAAP, IFRS and corporate accounting.  Some Boards may take the position that it is of great relevance for a company to hire someone with a CPA and public accounting experience.  As the old adage goes, “Nobody was ever fired for buying IBM.”  Even though it has been assumed the rule only applies to the auditors, any accountant filing a report with the Securities and Exchange Commission (SEC) is required by law to be a Certified Public Accountant (CPA).  This may include senior level accountants working for or on behalf of public companies that are registered with the SEC.  Technically the assistant controller, the controller and the CFO are all involved in the accounting, the creating and filing of the financial reports that are submitted to the SEC.

Shareholders are now quicker to sue Board Members for any financial missteps.  Regulators are becoming more aggressive.  The Board is not and will not be able to continue business as usual.  A litigious environment coupled with aggressive regulator investigations does have an effect on the way the Board views the Finance and Accounting Executives being hired by the Corporation.  Therefore, Senior Financial Executives should not find it shocking that the Board may prefer to hire candidates with a CPA and “Big 4” or large public accounting experience.

The Senior Financial Executive’s are correct that their job encompasses more than accounting.  However, Corporate Boards and Chief Executive Officers are very aware that the shareholders, the regulators and the general public are not in a happy or forgiving mood.   Shareholders feel like they were blindsided by the massive banking and corporate failures over the past couple of years.  Both Shareholders and Regulators want Senior Financial Executives to provide financials that are accurate and provide transparency into the health of a corporation.  Certified Public Accounts are viewed as the experts in providing what the shareholders and regulators are currently demanding.

Trends In Accounting Employment

By: Tracy Levine, President – Advantage Talent Inc. and Michael Levine, Principal – Advantage Talent Inc.

What have employment trends been like for the accounting industry in both Georgia and nationwide in past years?  Looking back to the period from 2003 through early 2008, the trend was very positive for accountants in both ‘Industry’ and ‘Public Accounting’.  In mid-2008, many companies in ‘Industry’ reduced their hiring appetite, but ‘Public Accounting’ firms were still scrambling to find accountants at all levels to ramp up for the upcoming Busy Season.  By February 2009 (only 7 months later), many of these same ‘Public Accounting’ firms were forced to lay people off due to lack of demand for their services. 

Over the past several years was there a shortage of experienced Accountants?  From 2004 to early 2008 there were some minor shortages in ‘Industry’ but ‘Public Accounting’ experienced a shortage of experienced candidates for their positions.

What’s the overall landscape of Accounting Employment?  Today, the employment environment for both ‘Industry’ and ‘Public Accounting’ is mixed.  Some companies and some firms are expanding and others are contracting.

How has the recession impacted employment in the Accounting industry?  Unemployment within ‘Public Accounting’ and ‘Industry’ has increased significantly during the last 2 years.  Many of the ‘Public Accounting’ firms have cut staff, and large numbers of accounting professionals from ‘Industry’ are between jobs and looking for work.  The first half of 2010 saw some modest improvement in the government and healthcare sectors, but employment in many sectors continued to decline throughout most of 2010.

How has it impacted education in the Accounting field? Are there fewer students?   The number of students majoring in accounting has been steadily growing.  In fact, according to the last AICPA survey, 2008 saw the largest number of graduates in history.  This trend is expected to continue.  The major problem is replacing the Accounting Ph.D. Professors.  They are retiring in large numbers.  The current economy may help this problem.  Many of the new graduates who did not get hired continued their education.   The AICPA has a fund to help students who wish to continue their education and earn an Accounting Ph.D.

Are fewer people being certified as CPAs? Or is it just more difficult for those new to the profession to get jobs because of layoffs, consolidations, etc.?     Just like their peers, accounting graduates were affected by the bad economy.  According to a survey from the National Association of Colleges and Employers, only 19.7 percent of all 2009 graduates who applied for a job actually had one. 

The AICPA reported a significant drop in students sitting for the C.P.A. Exam when the exam was computerized that made it look like the number of students sitting for the exam had dropped 50%. The truth of the matter is there has been a small decrease. When the exam was given in paper form, if a student took the exam in May and November, they were many times counted twice. 

What’s in store for Accountants in the coming years?  We believe the demand for CPAs will be strong whether the economy improves or not.  New governmental healthcare/insurance regulations and Financial Reform regulations will require companies to put significant resources toward compliance.  International Financial Reporting Standards (IFRS) are scheduled to be implemented over the next few years. Some companies that have been putting off Merger and Acquisition activity or other transactions will get ‘back in the game’ at some point.  All of these activities represent good news for the accounting community because all of these issues create additional demand for CPAs.

Will employment numbers for Accountants (both in Georgia and nationally) increase again? If so, why?  According to the U.S. Department of Labor’s Bureau of Labor Statistics’ Occupational Outlook Handbook, employment for a number of accounting and finance specialties will rise as fast or faster than the average for all occupations in the coming years.  In fact, accounting was listed as one of the top 20 industries that would experience the most growth through 2018.  The MetLife Foundation and Civic Ventures, a think tank that focuses on baby boomers, predicts that a worker shortage could develop within 10 years as this group retires.  This will be particularly true for the Public Accounting Firms.  Many of the current Partners are part of the baby boomer generation.  Public Accounts at all levels will have more opportunities for positive career advancement as the top positions become available.  We have seen a huge pickup in hiring by Public Accounting Firms across the nation.  This trend should continue well into first quarter 2011.

Check out our National Public and Industry Accounting Jobs at http://www.advantagetalentinc.com/Job_Openings.html

Why Do Senior Financial Professionals Change Jobs?

Although issues of business volatility and unemployment continue to garner a large share of the headlines in business journals today, the trend of rapid business change has been accelerating for several years. This tendency toward change impacts companies of all sizes, whether public or private. The combination of a dynamic business environment and the recent economic downturn has caused many Financial Executives and their employers to rethink their stance on employment stability. Financial Executive change in employment every two or three years is no longer unusual, and many employers are beginning to consider a break in employment to be the norm.

Even though tolerance of job change is increasing, there is still a large contingent of employers who believe that executives who have not been working in their current job for at least the last 5 years are somehow ‘tainted.’ The common perception is that job change can only be the result of deficient job performance or poor decision-making skills related to choice of employer. This is an out of date belief that does not correlate with the reality of the business environment during the last 10 years. The volatility in the US economy has created a new host of reasons why senior Financial Executives change jobs. The following are examples of these causes of job change and the impact on Senior Financial Executives and their employers.

  • Change in control, the new guard wants a new CFO. Often a CFO will find that he or she is in a position where the senior management team and / or members of the board are replaced (partially or completely) by new leadership team members. New teams often bring with them new perceptions of the skills required by the senior financial executive, or they have a person in mind who they have worked with in the past and trust to execute their new agenda. When this happens, the sitting CFO often loses out to the goals of the new team. The company suffers the loss of institutional knowledge in exchange for their perception of a brighter future.
  • Change in strategy, new skills needed. Because of the velocity of change in the economy, often the only reason that an employee is hired by a company is that a problem exists in the company, and the hiring authorities believe that the candidate for the position can solve the problem. These problems can be very specific and tactical, or more general and strategic. A person who is hired to ‘clean up’ finance and accounting departments may find themselves with a clean and fully functioning department, but the CFO’s boss may have acquired a new vision, i.e. an Initial Public Offering, or a strategy of Merger and Acquisition that the CFO is not experienced in. If the CFO is not able to sell the remaining members of the leadership team that he or she can handle the new strategy, the CFO will be looking for new employment.
  • Major problem is solved, overhead mentality of CEO. If a CFO is hired to solve a specific major problem and handles that problem, there is an inherent risk that there may not be another major problem to solve. Once everything is running smoothly, the CFO is at risk of being considered ‘overhead’ by the remaining members of the leadership team. Some management teams do not recognize a distinction between a controller and a CFO. They feel that once the problem is solved, only the controller’s services are required. Because management is under continuous pressure to eliminate components of overhead, a CFO who is perceived as being overhead is usually terminated quickly.
  • Company is acquired, replication of CFO. Successful companies are often acquired. After the acquisition, there is often a period of post-acquisition integration of the acquirer and the target company. Depending on the complexity of the combined entities and the philosophy of the surviving board of directors and the CEO, that period may fall within a range of as little as a few days or as much as several years. Unless the CFO of the company being acquired has a significantly stronger skill set than the CFO of the company doing the acquiring, the CFO of the target company will often be eliminated by the end of the post-acquisition integration period.
  • Company fails. CFO’s occasionally join companies that ultimately go out of business. Obviously the lack of a paycheck from a company will cause this CFO to search for another opportunity.
  • Politics. Although most company executives claim that politics are not a factor in their organization, many companies continue to be subject to the political agenda of members of the executive leadership team. If a CFO does not see eye to eye with the initiatives of other executive team members, the company may search for a new CFO.
  • Fraud is identified by the CFO, and CFO leaves. In cases where fraud of others is identified by the CFO, the results are mixed. In some situations, the executive team will do the ‘right thing’ and terminate the offending party and fix the problem. At other times, executives will try to sweep the issue ‘under the rug’ in an attempt to put some time and distance between them and the perpetrator, with the hope that the issue will not be exposed again later. If the CFO fights to clean up the fraud in this situation, the reaction of the remaining members of the leadership team often leads to dismissal of the CFO. In other situations, the CFO leaves the company in frustration.
  • Not truly a CFO position. Often a CFO will work for a company that does not differentiate between a CFO and a ‘Head Accountant’. This CFO often comes to the conclusion that they would rather hold CFO responsibilities. If an opportunity comes to them to work at a company that provides acceptable challenge in a true CFO role and enhanced compensation, the CFO may leave to take the better opportunity.

Experience shows that in many cases, the only difference between employed and unemployed people looking for a new opportunity for employment is the timing and impact of forces outside of the Financial Executive’s control. Some Financial Executives are able to identify opportunities to move to a new employer before they find themselves in a state of transition, and others are unable to avoid unemployment. No matter how much importance a Financial Executive places on continuous employment, there are in fact some environments where the risk of being employed is much higher than any reward that may come from working there. When an Executive joins a company, he or she receives 3 proverbial keys; the key to their office, the key to the bathroom, and the key to the closet where the skeletons are kept. Sometimes the skeletons in the closet are scarier than being in job transition.

Some companies are weak and/or on the edge of insolvency, and others create a CFO position that is not worthy of a credible CFO. A CFO may take a calculated risk to take on one of these new positions with the knowledge that they will grow professionally if they take the ‘special’ role. Jobs in this category may have limited duration. Also, transparency of public companies is questionable at best, and is often close to nonexistent for private companies. As a result, even the best due diligence by a CFO candidate will often not uncover some of the risks identified above. Most people with an understanding of the reasons why CFOs frequently change jobs will also understand that finding stability in a job is often more a matter of luck than skill.

It is obviously much less expensive for an employer to maintain a stable work force. Employers may have valid reasons for demanding stable employees, but if these employers maintain their absolute requirement for longevity, they will miss out on a huge pool of candidates who are capable of doing an effective job for them.

Just because a Financial Executive has worked for the same employer for the last twelve years, doesn’t guarantee that they will be successful in maintaining longevity in a new work environment. Proven flexibility can be very valuable to a Financial Executive as they enter a new employment assignment. People who have a variety of employer experiences have proven that they have most likely exercised their ’employment flexibility muscle’ and can most likely adapt to new environments easily.

CFOs Driving Corporate Growth

CFOs Driving Corporate Growth

By:  Michael Levine, Principal, Advantage Talent, Inc.

 

Many CFO’s ask me how to increase their job longevity.  There is only one answer to this question.  Expand job responsibilities beyond assuring the financial statements are presented on time.  The senior financial executive has to be actively involved in the growth of his or her company.

 

Through my CFO and Controller Roundtables and direct communication with many senior financial executives, I’ve learned about ways financial executives are driving the growth of their companies.  Examples that fuel the internal corporate growth engine include:

 

1      Utilizing a variety of financing vehicles to obtain additional liquidity.

2      Working with the executive team to develop sales professional compensation, which rewards salesmen for focusing on sales with greater profitability. 

3      Working with sales reps in the field when they encounter perceived internal corporate “red tape”.  In many cases, there are opportunities to streamline processes by easing overly restrictive controls or eliminating previously unidentified bureaucratic bottlenecks.

4      Initiating meetings with industry specific business strategists to provide guidance for growth.

5      Evaluating and improving health and other corporate insurance policies to attract and retain employees.

6      Developing tax strategies, which produce significant savings to free up cash for other productive uses.

7      Finding value in liabilities by taking aggressive stance on discounts by vendors, and getting rebates on credit cards, all of which provide cash for growth.

8      Relocating plant controllers to the factory floor vs.‘ivory tower’ offices.  This allows them to better see what is going on in real-time.  They are part of the floor team and therefore are more accessible to concerns which otherwise would not be communicated to the proper parties for action.

9      Negotiating with banks to reduce account and credit card fees.

10   Doing homework on competitive vendors and using information to achieve best pricing without necessity of changing vendors.

11   Securing State tax credits for software installation (training credit) and Federal Income payroll tax credits for certain geographic areas.

12   Developing strategies on timing of inventory purchases to balance tax reduction, holding costs, and pricing trends.

13   Working with the purchasing department to develop policies and procedures for inventory, supplies, and even capital expenditures to eliminate waste and maximize rebates.

14   Analyzing sales profitability by vendor, and subsequent vendor selection.

15   Analyzing sales profitability by customer, and subsequent ‘firing’ of certain customers.

16   Implementing travel and entertainment policy to maximize cash flow and eliminate waste.

 

Several CFOs are taking an outward focus and evaluating business opportunities that create competitive advantages.  Examples include:

1      Expanding current business territory to increase profitability with limited investment.

2      Creating a strategy and business plan to enter a new business sector.

3      Going on sales calls to better understand challenges being faced by sales reps in the field.  One such sales call resulted in development of a customer financing plan with an independent financing company which allows the customer to make payments over time, and also mitigates corporate A/R exposure, helps collect past due accounts and allows company to increase the size of customer orders.  As a result, finance is viewed as an asset to the sales team rather than an adversary. 

4      Investing strategically in IT (Information Technology) to improve customer experience when interacting with the company website, providing easy product catalog access, allowing customers to efficiently perform their own inquiries on product features, appearance, availability and secure order status updates. 

5      Creating online E-Commerce solution allowing customers to purchase directly online which provides for cost savings in customer service areas and improvement of customer satisfaction at the same time.

6      Selecting facility sites for maximum strategic advantage.

 

By taking on responsibilities that improve profitability and growth of the company, the senior financial executive should be able to better position his or herself for a long-term relationship with their current employer.  Come to one of the roundtable meetings and learn about what your peers are doing to drive growth in their companies.   Also, contact me with other questions or ideas at mlevine@advantagetalentinc.com.

Originally published in the CFO Advocate-The Newsletter for the CFO Roundtables.