The dynamic market for research talent

THE DYNAMIC MARKET FOR RESEARCH TALENT Lanny M. Soloman, Peter M . Johnson and Philip M. J . Reckers

INTRODUCTION Change is manifest everywhere - in every aspect of our lives . Technology and global competition have fostered a previously unknown rate of change in business . Our educational institutions have been severely challenged to remain current and relevant, and the best way to deploy limited resources has become a matter of intense debate . The recent monograph entitled Accounting Education : Charting the Course through a Perilous Future (Albrecht & Sack, 2000) has added greatly to this discourse by raising questions and providing answers to only a few . Questions cover all aspects of accounting education, including program content, pedagogy and means of delivery across time, space, and institutional structure . Everything seems open to challenge . Will the old ways continue to work? Pertinent questions include :

• What is the value of accreditation? • Should accounting departments combine with finance departments and/or CIS/MIS? • Is the 5th year mandated by the public accounting profession really necessary? • Should the traditional emphasis on auditing and tax (i .e . public accounting) be changed?

Advances in Accounting, Volume 18, pages 251-259 . Copyright © 2001 by Elsevier Science Ltd . All rights of reproduction in any form reserved . ISBN : 0-7623-0719-6 251



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• Do professional advisory boards make a difference? • What skills should schools seek today in new faculty to serve current and future needs, and at what price? Do salary differences exist across areas of subject-matter expertise? • How important is research talent vis-a-vis teaching talent? • Do significant impediments to technological implementation exist at institutions where graduates are expected to have increased hands-on skills? Administrators and other leaders of accounting programs have difficult choices to make. The mission of the Accounting Programs Leadership Group (APLG) has always been to add value to processes fundamental to visioning and change management . To that end, members of the 2001 Annual Meeting Program Planning Committee conducted a survey of administrators of accounting programs in October 2000 . The survey covered a wealth of topics . To provide timely feedback on some of the most urgently requested data, this report addresses a small portion of the larger survey findings . This paper provides comparative data relating to faculty positions available, by sub-areas and category of institution . New-hire salaries, summer support data and data on enrollment trends are also documented in this, the first of several reports on operational aspects of accounting programs . Participants

Questionnaires were sent to all administrators of accounting programs identified in the Prentice Hall Accounting Faculty Directory : 2000-2001 (Hasselback, 2000) . A response rate of about 25% was experienced . Eighty-nine responses were received from members of the APLG, and 62 responses were obtained from non-APLG schools . The 151 responses represented : 34 Ph .D . granting institutions 85 Comprehensive institutions (bachelors and masters programs) 32 Undergraduate (UG)-only accounting programs Demand for Accounting Faculty

The 151 responding schools reported 141 faculty vacancies . It is not possible to project demand of non-responding institutions because of the possibility of a systematic reason for non-response (e .g . a lack of vacancies .) Sixty-two percent of responding Ph .D . Granting Institutions reported one or more searches in progress . Sixty-one percent of Comprehensive Institutions did likewise . Only 41% of UG-Only programs had openings .



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Only (18) positions (or 13%) were for positions advertised as other than assistant or assistant/associate professor . (Note : Survey participants were instructed to use the assistant/associate classification if they were indifferent between the two ranks .) Of the eighteen, three were for associate professor, eight were for professor and seven were for administrative (chair) positions . Thus, the primary demand is for entry level or junior level faculty . Table 1 presents the distribution of assistant and assistant/associate professor positions across sub-areas .' Most authorized recruiting in 2000-01 appears to be targeted recruiting . Only four of one hundred twenty-three positions are not associated with a specific sub-area . The most authorized lines can be found in the FIN (financial accounting) sub-area. The second highest frequency relates to SYS (accounting information systems) .2 The fact that SYS trails FIN may be somewhat surprising, especially when one considers the war stories that are commonly heard with respect to recruiting of SYS faculty . This outcome is consistent with one interpretation of the Albrecht and Sack monograph, that enhanced curriculum content focus on financial analysis and CIS/MIS is desirable. Unfortunately, though, there is no basis within the data to support a (reactive) cause-and-effect relationship to the Albrecht and Sack report . Further, SYS trails demand for MGR (managerial accounting) specialists among Comprehensive Programs . When categories of institutions are considered, some noticeable and potentially relevant patterns emerge . Note the demand across sub-areas is more balanced among Comprehensive Programs than among Ph .D . Granting Programs, where the emphasis lies with FIN and SYS . Among Ph.D . Granting Programs, 19 of 30 positions (63%) are in FIN or SYS whereas among Comprehensive Programs, 33 of 76 positions (43%) are in these areas . Resource Commitments : Nine-Month Salaries To recruit faculty, institutions must commit resources and offer viable competitive compensation packages . One major element of these packages is the

Table 1 . Authorized Entry/Junior Level Faculty Recruiting Lines . FIN

MGR

AUD

SYS

TAX

ANY

TOTAL

Ph.D . granting programs Comprehensive programs UG-only programs

11 20 5

5 17 1

2 12 5

8 13 4

1 13 2

3 1 0

30 76 17

Total

36

23

19

25

16

4

123



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L . M. SOLOMON, P. M . JOHNSON AND P . M. J . RECKERS

nine-month (academic-year) salary . Resources committed across sub-areas by institutions may indicate the intensity of their perceived need in respective areas and/or interpretations of relative supply conditions (e .g . a shortage in the market in a particular area) . Different levels of resource commitments across institutions may reflect different aggregate resources or commitment to research vis-A-vis teaching (among other things) . For example, arguably there is a heavy reliance by many schools on non-tenure track adjunct lecturers, visiting faculty, graduate teaching assistants, and larger class sizes, all of which reduce the instructional cost per student. Much work remains, however, before reliable interpretations of the data presented below can be asserted . Table 2 provides authorized nine-month academic-year salaries for positions currently available. In some cells of Table 2, the number of responses are very small (see Table 1) and/or there are missing data . This explains some logically inconsistent results . One must also consider that there are differences among schools, even within categories, that can be significant . The most obvious disclosure in Table 2 is that Ph .D. Granting Programs offer much higher nine-month salaries than other programs, and that figure hovers around $100,000 . A sharp drop-off in salaries occurs when one moves to nonPh.D . Granting Programs, with Comprehensive Programs reporting in the mid 70s on average for assistant professors and reaching the low-to-mid 80s for assistants/associates . Among UG-Only Programs, the figures, while lower, exhibit greater variability . Across sub-areas, compensation is generally uniform . The exception (with a reasonable number of observations) is FIN within Ph .D . Granting Programs . One possible explanation for higher salaries for research faculty with a FIN emphasis may be spill over effects associated with the still higher average

Table 2. Average Authorized Nine-Month Faculty Salaries for Positions Currently Available .

Ph .D. Granting Programs Assistant Assistant/associate Comprehensive Programs Assistant Assistant/associate UG-only Programs Assistant Assistant/associate

FIN

MGR

AUD

SYS

TAX

ANY

$110,000 -

$100,000 95,000

98,750

$93,000 101,250

-

$92,500 -

74,250 83,500

74,500 82,500

74,250 82,500

76,500 85,000

82,750 74,500

82,500

58,750 75,000

-

60,000 89,000

72,500

97,500

-



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Table 3 . Guaranteed Supplemental Summer Support For Junior-Level Recruits. % of Schools Non-Teaching Offering Guaranteed Support Support (Years) Ph .D. granting programs Comprehensive programs UG-only programs

97 51 28

2.74 years 2.35 years 1 .89 years

Compensation Fixed Fee Base (%) $7,800 7,000 6,643

20 14 10

starting salaries of new faculty in the Finance discipline . A similar but opposite drag may be felt by SYS faculty in accounting because new research faculty with a CIS/MIS emphasis trail accounting salaries . Other non-supply/demand factors may also influence these figures . Resource Commitments: Summer Support Faculty compensation, of course, is not limited to a nine-month salary . Included are guaranteed summer support and summer teaching opportunities for junior faculty and continuing/executive education and distance education opportunities for more senior faculty . 3 These latter data are not presented in this report . Table 3 provides summer support information related to junior-level recruits . As shown in Table 3, only 28% UG-Only Programs offer guaranteed summer support. Of those offering support, it averages 1 .89 years and $6,643 per summer. Nearly all UG-Only Programs (80%) set a specific dollar amount in their offers to recruits . Only a minority (20%) ties summer support to a percentage of base salary, with that percentage averaging 10% per summer . Fifty-one percent of Comprehensive programs offer guaranteed summer support . Of those schools that do provide support, it averages 2 .35 year . Programs are evenly split on how the compensation is determined . For half of the programs, the figure is explicitly set and averages $7,000 . For the other half, compensation is linked to base pay and the mean is 14% of the base salary . Finally, 97% of Ph .D . Granting Programs offer guaranteed summer support, on average for 2.74 years . Nearly all Ph .D . Granting Programs (81%) express summer support as a percentage of base pay, with that percentage being 20% . It is apparent that the availability and level of summer support varies markedly across the three categories of programs . Compensation for and frequency of participation in summer school teaching for accounting faculties in total also varies markedly, as Table 4 reports . Participation is in no doubt influenced by



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Table 4. Average Stipend for Summer School Courses and Percentage of Faculty Participation .

Ph .D. granting programs Comprehensive programs UG-only programs

Stipend

Faculty Participation

$7,625 6,307 3,731

13% 50% 25%

factors such as compensation per course, course offerings/availability, and alternative revenue sources of the faculty member . Enrollment Trends One obvious change over the last five years that has many educators and practitioners concerned is the decline in undergraduate accounting enrollments . It has been suggested by some that this decline is a market response to programs that have exhibited diminishing value over time . Other commentators point to the need for students to amass 150 credit hours to sit for the CPA exam, low starting salaries relative to other business disciplines, and the added classroom rigor associated with accounting courses . There is likely more than one explanation . The authors examined differences between the 33 programs self-reporting stable or increasing undergraduate enrollments and the 118 programs that reported declining undergraduate enrollments . The increased enrollment programs reported a 10% increase of accounting majors over the past five years while the declining programs reported a 23% decrease over the past five years . The 23% decrease is consistent with the results reported by Albrecht and Sack . Specific reasons for these changes were not explored in this study .' Albrecht and Sack reported that the decline in accounting students is a result of (1) decreased starting salaries, (2) attractive alternative careers, (3) misconceptions about what accountants do, and (4) the 150-hour rule, which increased the opportunity costs to become a CPA . See Albrecht and Sack, 2000 . Factors that could have an impact on enrollment over time but did not appear to do so include AACSB business and accounting accreditation, APLG engagement/ membership, and the presence of a professional advisory board . These results are shown in Table 5 . Interpretation of these findings is difficult . Enrollment changes (i .e . significant declines) have been relatively recent, with remedies perhaps taking longer



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Table 5 . Undergraduate Accounting Enrollments and Possible Factors of

Influence .

Accounting Program Characteristic

AACSB business school accreditation AACSB accounting program accreditation APLG membership school Active professional advisory board

Programs with Stable or Increasing Enrollments

Programs with Decreasing Enrollments

82% 44% 48% 61%

83% 54% 62% 73%

to identify, implement, and take effect. An insufficient lag may have occurred to-date, and the value added by AACSB accreditation, APLG participation and advisory board outreach efforts may have yet to be demonstrated . Also, notably, the difference across the groups in accreditation, APLG association and advisory board use is not large, and it is not obvious that one would find differences in enrollment success based on these factors . Factors extraneous to internal processes may account primarily for enrollment outcomes . Other differences between groups that may warrant further inquiry are differences in department structure and emphasis on graduate education . Thirty-three percent of increasing-enrollment programs report combined accounting and finance or accounting and CIS/MIS departments, with most of the combinations having occurred in the last five years . Twenty-eight percent of decreasing-enrollment schools have similar departmental structures, but most of these operations have been in existence for a much longer duration . The emphasis of increasing-enrollment schools appears to be with undergraduate programs . More specifically, these institutions have focused their efforts on undergraduate education and have not become as heavily involved in graduate programming efforts as their decreasing-enrollment counterpartsboth at the departmental and college level, see Table 6 . One potential contributor to declining undergraduate accounting enrollment may be a shifting focus, one that results from the 150-hour professional accountancy mandate . Undergraduate enrollment declines arguably are a result of not only declining student credit-hour generation but perhaps a declining undergraduate capacity, as faculty resources are re-allocated to graduate programs . 5 There may be a "chicken-and-egg" effect here . That is, as undergraduate enrollments decline, faculty members shift their efforts to graduate programs . The shift, in turn, decreases a school's capacity to serve sophomores, juniors and seniors .



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L . M. SOLOMON, P. M . JOHNSON AND P . M. J . RECKERS Table 6 . Graduate Programs Offered by Departments with Increasing/Decreasing Undergraduate Accounting Enrollments . IncreasingEnrollment Programs

Masters of accounting Masters of taxation Masters in AIS, CIS or MIS MBA-accounting concentration MBA-MIS concentration Ph .D .-accounting concentration

52% 12% 3% 49% 3% 9%

DecreasingEnrollment Programs 57% 20% 15% 14% 26% 25%

To expand, the AICPA recently reported (The Supply of Accounting Graduates and the Demand for Public Accounting recruits, 2000) that in 1992-93, 16,650 accounting bachelors degrees, 160 MBAs in accounting and 850 masters in accounting were conferred by accredited accounting programs, for a total of 17,660. In 1999, the figures respectively were 14,075, 220 and 3,100, for a total of 17,395 . Total degrees declined by less than 2% ; however, the mix changed. Undergraduate degrees in 1992-93 comprised 94% of the total whereas in 1999, that figure had fallen to 81 % . Given the shift in the mix, it is very possible that the enhanced demand for graduate education has contributed to declining undergraduate enrollments . The authors urge careful consideration of this idea in prospective studies and analyses as well as in interpretations of current data . Future Reports

This report summarizes only a portion of the data gathered in the October 2000 survey . Other data collected, to be disclosed in future reports, include the following :

• Chair statistics (appointment terms, teaching loads, publishing responsibilities, compensation and workload) • Faculty workload (use of release time and/or overload pay in major activities such as service responsibilities and continuing/executive education) • Promotion standards • Technology in the undergraduate curriculum • Coursework in the graduate curriculum • Impediments to technology • Miscellaneous departmental operating statistics



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NOTES 1 . Table 1 reports 123 positions available for the assistant/professor across subareas.The remainaing 18 positions avaialble are for associate, full and chair positions for which Table 1 does not report. 2. The fact that SYS trails FIN may be somewhat surprising, especialy when one considers the war stories that are commonly heard with respect to recruiting of SYS faculty . 3 . These latter data are not preent in this report . 4 . Albrecht and Sack reported that the decline in accounting students is a result of (1) decreased starting salries, (2) attrative alternative careers, (3) misconceptions about what accountants do, and (4) the 150-hour rule which increased the opportunity costs to becomea CPA . See Albrecht and Sack, 2000. 5 . There may be a `chicken and egg' effect here . That is, as undergraduate enrollements decline, faculty members shift their efforts to graduate programs . This shift, in turn decreases a school's capacity to serve sophomores, juniors and seniors .

REFERENCES Albrecht, S . W ., & Sack, R. J . (2000). Accounting Education : Charting the Course through a Perilous Future . A Joint Project of the AAA, AICPA, IMA and the Big Five Accounting Firms. Accounting Education Series, Volume No .16. American Institute of Certified Public Accountants (2000) . The Supply of Accounting Graduates and the Demand for Public Accounting Recruits . New York, NY : AICPA . Hasselback, J R. (2000) . Accounting Faculty Directory . New Jersey : Prentice Hall.