Impact of Millennials on CPA Firms

Co-Editors: Steven F. Holub, CPA, MBA, Kenneth M. Parker, CPA

Over the past few decades, generational differences have clearly affected the cultures and workplace environments of accounting firms. Flexible schedules, greater percentages of female hires, telecommuting, and paternity leave represent a few of the changes that are now fairly commonplace. As members of the Millennial generation continue to enter the workforce, CPA firms will increasingly need to focus on how to successfully attract, motivate, develop, and retain these individuals.

In a comprehensive 2010 survey report, “Millennials: A Portrait of Generation Next,” the Pew Research Center focuses on the values, attitudes, behaviors, and demographic characteristics of the Millennial generation, which they defined to include individuals 18 to 29 years of age in 2010. The report describes Millennials as confident, connected, and open to change. In addition to exploring pertinent findings in the report, this column discusses the impact these findings could have on the recruitment, professional development, and retention practices of CPA firms.

Confident

Though many Millennials have not yet attained the educational level of Gen Xers, they will likely evolve into the most educated generation in American history. Unfortunately, in the midst of the recent recession, this high graduation rate has failed to translate into a high employment rate. Yet, in the face of the harshest economic challenges in years, this generation’s confidence remains undiminished. Although two-thirds of Millennials report earning less money than they need to live as they would like, 88% of them still “expect to earn enough in the future to live the good life.” This optimism far exceeds that of Gen Xers (ages 30 to 45 in 2010) and Baby Boomers (46 to 64) with respect to their financial futures and earning power (Pew Report, Ch. 5, p. 40).

While self-confident, Millennials do not feel they have an edge over older generations with respect to their work ethic, moral values, or respect for others. Millennials agree that older adults excel in these areas. Of the four generations profiled in the report, Millennials are the only ones who do not cite “work ethic” as one of their principal defining characteristics (Pew Report, Ch. 1, p. 6).

Connected

Immersed in technology and social media platforms, Millennials identify technology use as their generation’s most defining characteristic—and for good reason (Pew Report, Ch. 1, p. 5). Surpassing older Americans in internet and cell phone use, Millennials are much more likely to have social networking profiles, connect to the internet wirelessly when away from home or work, and post videos of themselves online. Many Millennials rely solely on cell phones for communication and use their cell phones extensively for texting (Pew Report, Ch. 4, pp. 25–37).

Of the 75% of Millennials who have their own social networking profiles, 29% check their favorite site several times a day (Pew Report, Ch. 4, p. 29). While they are the generation least likely to have watched at least an hour of television in the past 24 hours, Millennials are the most likely to have watched an online video or posted a message to someone’s online profile within the same time frame (Pew Report, Ch. 4, p. 36). Finally, 20% of Millennials have posted video of themselves online (Pew Report, Ch. 4, p. 30).

Open to Change

Often the ones hired last and fired first during the recent recession, Millennials have in some ways had no choice but to be open to change (Pew Report, Ch. 5, p. 39). Consistent with this mindset, they are more accepting than older generations of new patterns of social behavior, including gay marriage, interracial relationships, and single parenting (Pew Report, Ch. 6, p. 51). Relocating may potentially be more attractive to Millennials since only 22% of them own a home, versus 71% of those 30 and older (Pew Report, Ch. 5, p. 40).

With respect to work, two-thirds of employed Millennials find it somewhat or very likely they will change careers in the future. In addition, nearly 60% of employed Millennials have already switched careers at least once (Pew Report, Ch. 5, p. 46). Further pointing to a greater appetite for change, 57% of Millennials do not expect to stay with their current employer, versus the 62% of Gen Xers who have no plans to ever leave their current employer (Pew Report, Ch. 5, p. 47).

Recruitment

With racial and ethnic minorities making up 39% of Millennials, this generation is apt to be more comfortable in diverse workplaces (Pew Report, Ch. 2, p. 9). Thus, fostering and emphasizing employee diversity in CPA firm offices could go a long way toward recruiting these individuals. Because Millennials are less likely to be employed than members of older generations were at the same age (Pew Report, Ch. 2, p. 10), older recruits with limited to no on-the-job accounting experience may become more common. When evaluating Millennial recruits, age may need to be less heavily weighted than in the past.

In alignment with older generations, family, rather than fame or fortune, represents the top priority for Millennials (Pew Report, Ch. 3, p. 17). Firm initiatives and office environments supporting work/life balance will continue to be of strong interest to recruits (e.g., part-time employment and technology-enabled flexible work arrangements). Since Millennials are most likely to live in suburban-metropolitan areas, regional and national firms may have a lot more success expanding offices located in or near the largest metropolitan areas. Currently, 54% of Millennials live in the suburbs, while only 14% live in rural areas (Pew Report, Ch. 2, p. 12).

Because Millennials pride themselves on and immerse themselves in technology, firms should evaluate how best to use technology to attract this generation. Based on the communication patterns of Millennials, effective recruiting may increasingly hinge on the active use of social networking sites such as Twitter and Facebook, business networking sites such as LinkedIn, catchy online videos, and one-on-one texting. In addition, accenting any investments in or development of leading-edge technology among on-campus recruiters, experienced-hire recruiters, and practice professionals could go a long way toward recruiting Millennials.

Professional Development and Retention

Because they grew up in fast-paced environments and are ever-confident of their abilities, Millennials may seek new roles and challenges with greater frequency. Rotational programs through other practice areas and investments in specialized training could provide professionals with a desired change of pace. Inextricably linked to the efficient and effective delivery of CPA firm services, technology will only grow in importance over the next decade. Millennials would likely welcome the opportunity to contribute to the development and rollout of new technology platforms. A firm’s ability to leverage the Millennial generation’s skills and ideas with respect to technology could eventually translate into a competitive advantage.

As a result of habitual access to external blogs (e.g., GoingConcern.com) and social and business networking sites, Millennials exhibit an acute, real-time awareness of open positions, raises, bonuses, and layoffs at other firms. With this information often reported on the internet within hours, firms should carefully assess the potential, unintended media impact of compensation and termination decisions. While good relationships with firm alumni have always been important, it is now even more important that alumni remain friends with the firm. One negative story posted on the internet could have a huge ripple effect on hiring and retention.

Conclusion

CPA firms continuously vie for the best talent, and Millennials represent the most recent wave of talent to enter the workforce. By being sensitive to the defining characteristics of this generation when designing recruiting, professional development, and termination policies and making associated decisions, CPA firms will maximize the positive contributions of the Millennial generation to their practices.