Why talent retention tops the agenda for UK accountancy firms
The biggest challenge facing UK accountancy firms isn’t macroeconomic uncertainty or regulatory compliance—it’s people.
A striking 67% of firms rank talent acquisition and retention as their top priority, according to the newly released 2024 UK Accountancy Sector Outlook Report, a collaboration between Accountancy Age and HSBC UK.
It is not secret the accountancy sector faces an intense battle for talent. As firms expand into new service lines like digital transformation and ESG advisory, the need for a dynamic workforce capable of adapting to changing client demands has never been greater. Yet, many firms are struggling to meet this challenge.
Small firms, for example, are leaning heavily on flexible working arrangements and remote options, with 77.8% and 73% respectively offering these benefits to attract top-tier candidates. Medium firms, on the other hand, prioritize career development programs, with 91.7% investing in initiatives to foster long-term employee loyalty. Large firms, equipped with greater financial resources, are deploying performance-based incentives such as bonuses and salary sacrifice schemes to maintain their competitive edge.
“The profession is at an inflection point,” notes Subarna Banerjee, UK Managing Partner at UHY. “To thrive, firms must align their values with those of their employees, fostering an environment where people feel valued and supported.”
The Costs of Attrition
Losing talent is both a reputational risk and a financial one. High employee turnover can lead to operational disruptions, decreased morale, and rising recruitment costs. According to the report, medium firms are particularly vulnerable, with 82.4% citing talent acquisition as a pressing issue. Their dual focus on scaling operations and maintaining workforce stability highlights the delicate balancing act many firms face.
Large firms, while seemingly better positioned, are not immune. Even with robust financial packages, 58.3% of large firms still identify talent retention as a challenge, compounded by increasing client pressures on pricing and expectations for innovative solutions.
Creative Solutions for a Competitive Market
To address these challenges, many firms are rethinking their approach to employee engagement and workforce development. Strategies include:
- Flexible Working Models: Small firms are leveraging flexibility as a differentiator, offering hybrid and remote options to attract younger, tech-savvy talent.
- Investment in Learning and Development: Medium firms are leading the charge in career development, recognizing that opportunities for growth are pivotal for employee satisfaction.
- Competitive Compensation Packages: Large firms are doubling down on financial incentives, aligning rewards with performance metrics to drive loyalty.
Moreover, firms across the spectrum are experimenting with initiatives like mentorship programs, wellness offerings, and diversity and inclusion efforts to create more holistic workplace environments.
Broader Challenges Facing the Sector
While talent retention is a top concern, the report highlights several other pressing issues shaping the industry:
- Technology Adoption: Over 75% of firms report year-on-year increases in technology spending, with many focusing on AI and automation to enhance efficiency and client services. However, 15% admit to struggling with adapting to technological advancements.
- ESG Objectives: Firms are increasingly prioritizing sustainability, with large firms leading the way in integrating environmental, social, and governance practices into their strategies.
- Macroeconomic Uncertainty: Rising inflation and interest rates continue to influence client pricing pressures and demand for advisory services, particularly in restructuring and insolvency.
- Regulatory Compliance: Small and medium firms cite regulatory changes as a significant challenge, with many needing to allocate more resources to meet evolving compliance standards.
These interconnected challenges underscore the complexity of the current landscape and the need for firms to adopt multifaceted strategies to remain competitive.
The report’s findings highlight that the firms that invest in their people today will be the ones that succeed tomorrow. As the sector grapples with technological advancements, evolving client needs, and economic pressures, a resilient and motivated workforce will remain the cornerstone of success.
