Recruiting the Millennium Generation: The New CPA

By Tim M. Lindquist

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AUGUST 2008 - The shortage of qualified employees in the accounting industry is a significant problem, fueled by the increased scrutiny of accounting records under the requirements of the Sarbanes-Oxley Act (SOX), as well as the impending retirement of the Baby Boom generation. This shortage has created intense competition to recruit top accounting graduates into the workforce. Because there are not enough graduates to satisfy the demand, new accountants have many options. Big Four and mid-tier firms are engaged in a fierce battle for new recruits and are struggling to find qualified candidates. Attracting these new graduates and meeting their expectations requires an understanding of and appreciation for how they are different from previous generations of applicants. The hiring environment has shifted, and strategies and tactics used just a few years ago to secure top candidates are likely to prove ineffective today.

Four Generations at Work in Accounting

Although it is important for employers to recognize the uniqueness of each individual employee, it is also important to understand generational distinctiveness, which can explain differences among workers that at first seem confusing and sometimes disruptive.

A generational cohort is a society-wide peer group born over a period roughly the same length of time as passage from youth to adulthood (about 20 years), who collectively possesses a common persona. Personas are identified by three attributes:

  • Perceived membership in a common generation,
  • Common beliefs and behaviors, and
  • A common location in history.

A generational cohort is a product of its times and tastes: music that is heard, heroes shared, passions agreed upon, and, especially, defining moments experienced—all of these characterize a generation. A cohort embarks on a generational cycle that causes each new group of rising youths to seek to correct the excesses of its midlife parents and provide leaders to fill the role of the departing elders.

How this affects the accounting workplace is an unfolding story. At no previous time in history have so many different generations worked side by side as they do in the 21st century. This diversity can lead to positive creative energy, but it can also have a negative impact, because each generational cohort has its own unique work ethic, differing perspective on work, and preferred management style.

While definitive dates vary among researchers regarding the boundaries of generational cohorts, there appears to be clear agreement that four generations are sharing the accounting workplace today: Veterans, Baby Boomers, Generation Xers, and Millennials. Veterans (also known as the “Silent Generation,” born between 1922 and 1943) are the World War II generation. They either fought and won the war or grew up in a time when its impact was felt distinctly upon their lives. This group, while likely retired from public accounting, still holds a number of senior accounting management positions in private industry. As a cohort, they like consistency, uniformity, discipline, law, and order. As workers, they are loyal, dependable, and appreciative. They are also used to a clear distinction between manager and employee.

Baby Boomers (born between 1943 and 1960) are passionate about their careers and are the group that created the 60-hour work week. They like participation and spirit in the workplace and have fought to bring humanity and heart into the office, creating a fair and level playing field for all. As a group, they are collegial and consensual, and they like growth, expansion, and teamwork. Members of this group are likely to be partners in public accounting firms today.

Generation X (born between 1960 and 1982) is the cohort which has received much negative press due to their edgy skepticism. Craving feedback, they desire workplace flexibility, hate close supervision, and “work to live, not live to work.” Preferring informality, their approach to authority is casual, and they are, as a group, quite self-reliant. They have, however, learned that hard work is no guarantee of survival; they have seen that corporations can discard employees without warning. Growing up, they had an egalitarian relationship with their parents and never learned to be good soldiers. They also went to school in a system that encouraged diverse viewpoints. Generation X employees are likely to be managers in public accounting today.

Finally, the Millennium Generation (sometimes called Generation Y or Nexters, born between 1982 and 2000), as pointed out by renowned generational researchers Neil Howe and William Strauss, are the 18th New World generation, the 14th to know the American nation and flag, and the 5th (and last) to be born in the 20th century. If Generation X was considered a “lost” generation, Generation Y is a “found” one. Parents of these individuals not only wanted these children, but they often went to amazing lengths to have them. As such, never has a generation felt as special as the Millennials. Members of this group of youths, born into a world that already celebrated the individual, were raised to put themselves first and follow their own dreams. Thinking of themselves as special, individuals in this cohort do not have automatic respect for authority and feel free to make suggestions if they think they can improve a situation. Millennials demand that respect be earned and not just assumed by position.

Feeling special, however, can also lead to feelings of entitlement, which is possibly the biggest challenge with Millennials. When feeling special crosses into entitlement, it can border on narcissism. In the last couple of years, a qualitative shift has occurred among this cohort, and now many college students have a sense of entitlement. Jean Twenge, a psychologist from San Diego State University, notes that some Millennials arrive at the workplace with a sense of privilege, believing they deserve everything immediately, and with shockingly high expectations for salary, job flexibility, and responsibility (see Generation Me: Why Today’s Young Americans Are More Confident, Assertive, Entitled—and More Miserable Than Ever Before, 2006).

Millennials are often very direct in their interpersonal business relationships. Some business managers suggest young workers are too blunt and constantly want instant feedback that is straightforward and uncomplicated. Managers also tend to dislike that Millennials are ready to give criticism back in return. Millennials are frank and have few qualms about sharing information which might previously have been considered sensitive or private. They are also more confident than previous generations at this early stage of life. With increased confidence comes comfort in meeting and talking with strangers in social and business settings. Millennials are, after all, more likely to have attended day care from an early age than any previous generation. With this confidence comes more familiarity and an orientation toward a team environment with group activity.

As for abilities in the workplace, the Millennium Generation is the best educated in history and, as high achievers, they recognize that hard work and goal setting can lead to fulfillment of their dreams. At the same time, however, Millennials see workaholism as a pervasive condition of the adult world, and while they enjoy the money, they wish their parents were less stressed about work. Whereas Baby Boomers chose careers that represented personal vocations, Millennials would rather strike a balance between what they do and what they want to do, rather than merge the two.

Millennials, unlike the Boomers and Generation Xers in their youth, are more conventional and pragmatic about a number of work-related issues. Furthermore, many Millennials have comprehensive 5-, 10-, 20-, and 40-year plans for the future, including college financing, salaries, and even retirement. Unlike their parents, who as a generation have a near-zero savings rate, this group’s reserve rate is approximately 25%. Young Millennials also have a strong sense of social responsibility, manifested by levels of volunteerism beyond that of previous generations. Finally, the youngest cohort manifests a sense of internationalism unequaled by preceding youth. Millennials think of themselves as global citizens, as evidenced by study abroad programs flourishing in today’s colleges and universities.

Impact on the Accounting Workplace

An understanding of the factors that drive accounting employment decisions and work expectations of new hires is critical to the success of any company. As already discussed, the Millennium Generation comes to the workplace with a unique set of skills and expectations unlike any previous cohort. They also are entering today’s workforce in a buyer’s market. In response to these challenges, the AICPA’s Private Companies Practice Section (PCPS) administered its “Top Talent Study” to highly valued nonpartner employees and partners on employment issues revolving around their hopes for growth opportunities, job benefits, and firm culture, as well as on how those elements affect their decisions to join or stay with the firm. The study, as reported by Anita Dennis in “Understanding the Best and Brightest” (Journal of Accountancy, November 2006), found that management and staff employees (termed “top talent” in the study) and partners generally concur on factors that are important in making an initial employment decision with a firm. Specifically, both groups of workers agree that career growth opportunities, paid personal vacation time, and salary are 3 of the top 5 reasons to join a firm. Partners and top talent also concur that a comfortable office atmosphere and flexible work schedule are central to an employment decision, ranking them within their top 10 reasons to join a firm.

What Does the Millennium Generation Think?

The findings of the PCPS study provide insight into the similarities and differences on the issues deemed to be important employment factors for public accounting employees at different stages of their careers. In generational terms, the PCPS study most likely compared the perceptions of Generation X (top talent) with Baby Boomers (partners). Because Generation X is already in the workplace, the question really becomes, what does the Millennium Generation find important in choosing their first job? As previous generational studies have suggested, the personality traits of the youth coming out of college now and entering the workforce are different from those in years past.

In response to this question, a survey was conducted of accounting students enrolled in Intermediate Accounting at a mid-sized university in the Midwest. The purpose of this study was to find out how members of the Millennium Generation would rate the employment factors determined to be important to top talent and partners from the PCPS study. Students were asked to rate each factor on a scale between 1 (least important) to 10 (most important). Survey results for all three generational cohorts are presented in Exhibit 1.

Not surprisingly, all three cohorts agree that career growth opportunities, salary, and paid personal/vacation time are among the top 5 most important reasons to join a public accounting firm. Spanning generational divides, they have been key factors in making employment decisions. All three cohorts also agree that a flexible working schedule ranks in the top 10 reasons to join a firm; however, it should be noted that Millennials find it much more important (ranked 6th), when compared to top talent (tied for 10th) and partners (9th). This likely is a reflection of younger accountants’ desire to have more balance in their work and personal life.

There are other relative areas of agreement between the two generations. For example, Millennials and partners both rank medical benefits among their top 5 (ranked tied for 3rd, and 2nd, respectively), whereas top talent lists medical benefits at 6th. This reflects a growing conventionality and pragmatism of the younger college students over Generation X. Conversely, Millennials and top talent agree that paid overtime is one of the least important job acceptance criteria (8th and tied for 10th, respectively), whereas partners ranked it 5th. Perhaps the younger generation knows such compensation is no longer that common in public accounting. A number of students in this research wrote comments on their surveys like “What overtime?” and “I wish.”

Millennials differed in their perception of importance for a comfortable office atmosphere (ranked 4th) from top talent (7th) and partners (tied for 10th). Although it is possible this represents a feeling of entitlement, it is equally likely this reflects the uneasiness of entering the workforce after the comfort and familiarity of college. Finally, Millennials undervalue the importance of interesting and challenging work projects (7th), in comparison to top talent (5th) and partners (6th), although the differences are minimal and probably reflect a lack of work experience on behalf of the youngest cohort.

Perhaps more interesting are the factors ranked by Millennials and top talent as top 10 hiring criteria which were not even rated by partners. A retirement savings plan was ranked as the 3rd (tie) most important reason among the college Millennials to choose a firm, while top talent ranks it at 9th. Even more interesting, partners do not even consider it to be a factor worth consideration in recruitment. Like medical benefits, this high ranking would seem to be another reflection of the growing conventional and pragmatic behavior of the youngest cohort. Millennials and top talent also list the need for an open-door management style among their top 10 hiring criteria (9th and 8th, respectively). Partners, again, do not consider this to be an important factor. This can probably be attributed to the younger generation’s desire to have a voice in the workplace and be seen as a team player from their earliest days, not just when they reach the management ranks.

Two more issues worth discussing are the factors only partners found to be important and the issues only Millennials found to be noteworthy. Partners list the firm’s reputation or prestige as the 7th most important reason to consider a firm for employment, yet college students and top talent don’t consider that an issue. Possibly the “keeping up with the Joneses’” mentality with which the Baby Boomers were raised is being replaced in younger generations with a more internal focus on happiness and satisfaction. Partners also seem to think that access to the latest cutting-edge technology in their firm is an important hiring criterion (tied for 10th), while again, the younger generations do not even list it. This is likely a reflection that the youngest cohort feels entitled to the latest technology and assumes it will be available at the workplace, as such availability is all they have ever known.

Finally, this research asked accounting students to list up to three additional important factors when making a decision to join a public accounting firm (Exhibit 2). Of the students who listed such factors, 58% responded that location was very important. As noted above, Millennials traditionally have close relationships with their parents, and this may reflect a wish to remain within reach of family. An extension of these familial feelings may also be present in the Millennials’ desire to have good relationships with their co-workers (22%), as well as a group/family atmosphere at the job (7%). Respondents also preferred that partners interact extensively with recruits in the hiring process (5%). Firm size mattered to 9% of respondents; however, it was not stressed whether a large or small firm was desirable. College students also look to their first place of employment to provide socialization opportunities and extracurricular activities sponsored by the firm (7%). Travel opportunities were very important to 11% of the students when making their first employment decisions. (This probably reflects the global self-perception of the Millennium Generation.) A number of students also noted they preferred to work for firms that sponsored community service events, in line with elevated social responsibility of the Millennials. As a final note, an analysis of rankings for the Millennium Generation broken out by gender did not produce any significantly discernible differences.

Implications for Public Accounting

Attracting and retaining quality candidates is more challenging today than ever before. Members of the Millennium Generation have unique characteristics, as well as similarities with older generations. Making a firm appealing to today’s college students is something of a conundrum. It appears that promotion of career growth possibilities, salary, and paid personal/vacation time are still solid recruiting factors that rate high in importance among college students. Additionally, promotion of flexible working schedules is more important now than ever. Firms should strongly promote maternity and paternity leave, flextime, and opportunities to work from home. Today’s college students are more pragmatic and conventional than graduates from the prior generation, and they are very interested in hearing the specifics of medical benefit plans and retirement savings plan opportunities.

Young accountants, raised in a very nurturing environment by Boomer and Generation X parents, have a strong desire for a comfortable, relaxed work environment, including an open-door policy with management, friendly relationships with co-workers, and a family atmosphere. Promotion of casual Fridays, firm intramural sports competitions, and possibly first-name-basis employee/management relations are all issues that will attract current college students. Firm involvement in community service events should be promoted to Millennials, who grew up with an attention to service and community. Firm-sponsored food drives, blood drives, ecological preservation events, or work in soup kitchens on holidays will paint a firm in a more positive light for today’s accounting students.

This new generation of accountants will grow, mature, blend, and adjust to the accounting workplace, but they are also ready and able to offer something very different and exciting to the profession. Firms that are attuned to these differences and embrace them are in for an exciting ride.


Tim M. Lindquist, PhD, is an associate professor of accounting at the University of Northern Iowa, Cedar Falls, Iowa.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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