Accounting Skills Gap No Longer an Unlikely Possibility
Pre-employment accounting tests are becoming a standard part of the accounting hiring process because of the rising issue of talent scarcity and a global skills gap.
While it’s impractical to expect every candidate to be proficient in all topics to perform well in the job, an increasing number of people are overly specialized in one part of the job while being underqualified in another. As a result, CFOs are having difficulty finding accounting candidates with a wide range of abilities, from leadership and planning to reporting and management.
This is why testing for skills and ability has become fundamental to every business looking for top talent in the accounting department. Pre-employment tests for accountants can cover just the basic administrative and software skills tests, but some hiring managers also employ management aptitude tests to see if the candidate would be a good fit for leadership roles in the future. In this article, we’ll take a look at the issues surrounding the rise of pre-employment accounting tests, as well as the reasons for adding the tests to your hiring process.
Read on to learn more about:
- Identifying Top Talent in the Workplace
- The Cost of a Bad Accounting Hire
- What Skills Accountants Need Today
- The Value of Pre-Employment Tests
- Which Tests to Give Your Accounting Candidates
Identifying Top Talent in the Workplace
Issues caused by inefficiency or poor performance in the accounting department have a negative impact on financial management and the company’s health. This is why business executives must create strategies to attract and retain the top talent in the field.
Unfortunately, candidates applying for accounting jobs frequently fail to properly draft their resumes, making it difficult for hiring managers to identify the top candidates. As hiring managers seek specific skills listed on resumes, this information is often omitted. This can put recruiters and hiring managers in the position of having the right applicant in front of them, but not knowing it.
In our previous article, “Accounting Applicant Screening Today: What You Need to Know,” we discussed that making decisions entirely on resumes is not advisable, as resumes aren’t always reliable for identifying top talent. Not only are they prone to being inflated, but a significant amount of candidates admit to actively faking their resume in order to get an interview. Even though candidates believe they are doing themselves a favor, it ultimately ends up backfiring and hurting their chances of being hired.
When a company is hiring accounting professionals and rightfully wants each applicant to have an equal opportunity, pre-employment testing may be the best option to help achieve that goal. Pre-employment accounting tests, including pre-employment math tests, and screening procedures can be more important than a solid resume.
The Cost of a Bad Hire in the Accounting Department
The key to any company’s success is finding the right people for the job. At the same time, this is also one of the most difficult parts of managing a team.
Because every company benefits from having a strong workforce, a great team can offer energy, synergy, and originality to any organization. However, when a single unsuitable individual is added to the mix, a bad hire, things can start taking a wrong turn.
While it may seem exaggerated, the ultimate outcome of a bad hire will be felt by the company’s performance. The challenges created by bad hires will directly impact any business’ bottom line. One study found that making a bad hire can cost a company up to 15 times that employee’s annual salary. While hiring the “right” person leads to a positive ROI of at least three times the annual salary, hiring the “wrong” person damages an organization by creating a negative ROI.
Those staggering numbers emphasize hiring the “right” person from the very start, as it has a direct impact on the org’s financial health. As we introduced the issue in “Overcoming the Accounting Skills Gap with Applicants,” putting together a competent accounting team is critical to any company’s success. To help toward that goal, businesses should consider using a pre-employment accounting test, a pre-employment math test, or other pre-employment tests to assess a candidate’s accounting and bookkeeping skills, as well as their management and professional success aptitude, to make the best possible hire right now.
What Skills Do Accountants Need Today?
“In the modern environment we operate in, it’s no longer all about those old, green ledgers,” says Ginger White of Cummins, an Indiana-based equipment manufacturer. These days, accountants are expected to know more than just the basics of tax forms, balance sheets, and other records.
Even entry-level accountants must have a broader set of abilities because they are responsible for a wide range of tasks, including data entry, document management and financial analysis. In short, they must be capable of dealing with any situation successfully and efficiently, while having a firm grasp on ever-changing accounting terminology.
In addition, accountants often need to explain their data to clients, who may not have a solid comprehension of complex financial concepts. They may also spend a significant amount of time evaluating and optimizing financial records. As a result, accountants are essentially acting as ‘data interpreters’, for which strong communication skills are necessary.
Communications aside, critical thinking is an invaluable skill in the accounting field as well. Accountants are regularly confronted with errors, discrepancies, and inaccuracies, which, if not identified and corrected, can have major consequences for companies and clients. Therefore, these must be approached carefully, taking into account all variables and potential risks, in order to handle complex challenges.
Finally, to fulfill various tasks and responsibilities, today’s accountants use a number of software solutions and tools. Spreadsheets are most commonly used and it’s considered necessary for aspiring accountants to learn Microsoft Excel and other spreadsheet systems.
The Forefront of Accounting
To ensure that they remain relevant in the workforce, accountants need to have a high level of computer literacy and software skills as more companies move to a fully digital environment. The two areas that hiring managers should pay close attention to during the testing phase of accounting candidates are automation and big data.
In “Are Your Accounting Hires Ready for Today’s Challenges?” we outlined a few factors that affect accounting applicants. While automation can be regarded as a danger to the workforce, AccountingWEB recently argued that it has great value, but is best employed as a supplement, rather than a replacement for accounting staff. Automation solutions can drastically reduce manual entry jobs and increase accounting department efficiency by eliminating daunting work and mistakes, but only when it is administered by people with the necessary expertise.
Advanced analytics and big data skills are in great demand in the typical accounting department today, according to Robert Half, along with data mining, operational analysis, and trend detection. Knowing what expectations lie in the future of accountancy, makes it all the more important to have assembled a highly skilled team today.
What is the Value of Pre-Employment Tests?
Pre-employment tests have become the next logical step when companies aim to spot top talent while eliminating bias, by measuring actual capabilities to find the best candidate for a position.
Pre-employment tests, when used at the beginning of the hiring process, can save a lot of time for both hiring managers and applicants. Companies are able to filter out candidates, before starting the time-consuming interview process. Applicants who pass pre-employment tests will have shown enough interest to invest the time required to complete them.
After the best candidate has been chosen, pre-employment tests continue to add value because they can reveal what training is required for the soon-to-be new employee. This can reduce the time spent on training and onboarding new employees.
What Types of Tests Can Be Administered to Accountant Candidates?
One definition of the accounting functions includes examining and compiling financial documents for businesses and individuals. However, in-demand accounting abilities will vary by job title. Not all accountant applicants will have the same skills. A person working at an entry-level job at a small firm won’t need the skills needed for a CFO. This is why there are a myriad of pre-employment tests which can be used, depending on the needs of the position.
For example, junior accountant candidates might only need data-entry skills, which can be tested through the help of data entry and typing tests. Senior accountant candidates may also need math skills, attention to detail skills, and more. Accounting managers and CFOs may need accounting terminology tests, QuickBooks tests or other technology tests, as well as financial analysis, management, and knowledge tests.
If you’re looking to get a little more information on which tests to use depending on the position you’re looking to fill, we’ve explored this issue in more depth in our previous article, “Accounting Assessments: Which Tests to Use for Each Job Role“. And, if there isn’t an out-of-the-box pre-employment test that meets the demands of the position you’re hiring for, there’s always the option of creating a custom test, which can be adjusted on the fly.
Given the growing war for talent due to qualified candidate scarcity and a global skill gap, employers should take a proactive approach for screening and hiring top talent. This is especially true for accounting applicants, who will become such a key part of the organization’s success.
Accountants will determine budgets, perform financial analyses and project forecasts that set the stage for the entire company to follow. Inadequately screening and hiring the wrong people will negatively impact the bottom line and can cost up to 15 times that employee’s annual salary.
Unfortunately, work experience can often prove to be an insufficient measure of an employee’s overall value. Accounting knowledge is a starting point, but new employees will also need the soft skills necessary to be the right fit for the company. Flexibility, responsibility, and great communication skills are all extremely beneficial for accountants to have, so testing for those skills can be beneficial.
To ensure that the best possible candidate is selected, businesses should consider screening accounting applicants with the help of pre-employment accounting tests.
EmployTest specializes in developing pre-employment tests for the public sector (government), companies, and nonprofits. Contact us for a free sample of our accounting skills test – and learn more about what we offer on our Explore page.