by Lee Bryant, Post*Shift
There are lots of factors impacting on accounting firms of all sizes, from the rise of cloud-based self-service software, through new business support platforms to peer-to-peer networks where clients share advice among themselves. There are also higher level shifts underway in the nature of the profession and the role of professionals, with theses such as Daniel and Richard Susskind’s ‘End of the Professions’ generating much debate. Will we still need professionals in the future, and will they still perform the same roles in the same ways? Perhaps not entirely, but we will probably continue to need advisers to help navigate the complicated world of finance and accounting for some time yet.
Within the profession, projects such as the ICAEW’s Tomorrow’s Practice have looked at how the work itself might change in the future, and this project picks up on insights such as these to ask what the predicted changes to the practice of accounting will mean for the shape, scope and nature of accounting firms themselves. At all levels, from the small practice right up to the Big Four, changing market dynamics and shifting competitive pressures are posing challenges for the firms and the rather traditional way they are organised today.
Yet, it is rare to find a company of any kind that has the foresight to change in advance of expected future shifts. We tend to be locked into existing operating models, and it often takes a real and present danger to prod us into taking proactive measures to secure the future of the firm. Instead of looking to the distant horizon, however, there are some very practical challenges faced by firm’s today, as well as being challenges for the future.
This is becoming harder and harder in a world where smart graduates have lots of options, and where the lure of the fast-moving startup world can look more attractive than the traditional career paths inside larger firms, and where there are more and more options for freelance, self-employed or other non-traditional forms of work.
We are already seeing major changes in the way firms select and assess candidates to promote greater accessibility and diversity, but that may not be enough. We also need to look more closely at the expectations younger employees carry with them into the firms, and consider whether the firms are doing enough to address them. In particular, if fewer talented people are motivated to build a life-long career aimed at achieving partner status or similar, then how might the hierarchical social structure of the larger firms change?
If the traditional career path is not the only driver for people to join traditional firms, then how else can they meet the wider needs of employees in order to retain the talent they need to succeed? One way is to provide more personalised ways of working, from flexible hours and family-friendly policies through to variable levels of employment, task-based (rather than just time-based) rewards and perhaps also by connecting more directly with employees’ sense of social and professional purpose.
The rise of digital collaboration technology makes this easier to manage, both for the firms and the individual, but it also requires a culture change that values work and value-generation, rather than just presenteeism and visibility.
Professional ethics and identity have underpinned accounting firms from the very beginning, and even if we accept long-term theses such as Richard and Daniel Susskind’s prediction of the end of the professions, for as long as professional practical expertise is needed – however it is delivered – customers need to be able to trust a process they might not fully understand. Even if every professional is replaced by algorithms, we need to trust the process and the code that underpin them.
But in the medium term, in a world where professionals continue to congregate in firms to do business, the issue of how the firm communicates and pursues its purpose is important, and a key driver of the culture it creates. Beyond a sense of professional purpose, perhaps augmented by an element of social purpose and pro-bono work, the firm needs to add something tangible to the work and satisfaction of individual practitioners, whether this is just a sense of being stronger together, or something more connected with their individual goals.
How could changes to the structure, culture and practice of the firms help to address increasing competition in the short-term? Arguably, there are now more firms that the market requires, since various aspects of low-end accounting are moving to software platforms, online peer to peer communities and other non-traditional solutions, in addition to the increasing number of professionals who ply their trade outside the structure of the firms.
The key to this is asking how the firm structure itself adds value to the work of the individual practitioners. Rather than take the current, rather traditional configuration for granted, perhaps there are more imaginative solutions to the practice of accounting that can also help protect against commoditisation? It will be interesting to explore what these might be – from widening the firm’s scope into other ares of professional advice, such as law, to involving more data science and design thinking in helping clients make sense of financial data for their own people. – and what their implications might be for the way the firm is set up.
Throughout this project, we hope to gather ideas from professionals about the drivers that are impacting on firms, and how they expect firms of the future to be structured and managed to meet these challenges. But it will also be instructive to consider the barriers that stand in the way of upgrading the firms to deliver better value both to their customers and the professionals who inhabit them, such as the continued reliance on hourly billing, which disincentivises efficiency, and regulatory constraints that assume the practice of accounting will fundamentally remain the way it is today.
As we get further into the process, we will share what we learn and begin to populate our future firms framework