Talent, technology and other massive forces are affecting virtually every public accounting firm. The impact is upending business models and providing just as many opportunities as challenges…and also generating a lot of questions.

So INCPAS commissioned CPA Crossings to conduct a research study: "Transforming Your Firm's Business Model: Workforce Transformation and Talent Management Strategies."

The research surveyed 205 full-time professionals working in public accounting firms. There was representation from every level, from staff accountant to partner, at firms in 31 states.

While the report is filled with data, strategies and advice, there are three key insights that really stood out.

Key Finding #1

Most respondents expect their firms to shrink in headcount by 20% or more in the next five years. Not only that, most reported that they anticipated need fewer entry-level employees in the future.

How will accounting firms continue to see growth and profitability with smaller teams?

This prediction alone seems to be enough to consider restructuring accounting firms now to prepare for the future. No longer can accounting firms expect to succeed with the traditional pyramid-shaped accounting practice structure that has helped firms grow for over 100 years. This structure relies on a large volume of entry-level staff.

With less headcount in the future, firms will have to focus on hiring staff with technology and business skills who can start at the experienced staff level and provide more value faster to clients. Getting to the experienced staff or manager level will take too long with the pyramid structure. It is not designed to retain or accelerate staff. It actually does the opposite.

Key Finding #2

The predicted reduction, driven by technological advances and a talent crunch, will force firms to adopt a different practice structure that retains and rewards the best performers.

These best performers want to be compensated in ways beyond firm partnership. The pyramid structure does not accommodate for that type of retention. New models that accelerate people to high-value work quicker so that accounting firms can provide more specialized skills and expertise are needed. One such model is the inverted pentagon practice structure.

The inverted pentagon structure is purpose-built to accommodate the ongoing technological advances and implications as well as a talent deficit and its impact. It is also designed to retain the best performers.

Key Finding #3

To be successful in the future, accounting firms will need a new practice structure that accommodates and focuses on the “6 Ps” of Business Model Transformation.

The 6 Ps:

• Precision hiring
• Proactive retention
• Practical technology implementation
• Pricing expertise
• Practice area expansion or focus
• People acceleration

To learn more about the 6 Ps or the other insights in this report, download the full report.