Last week, I wrote a way too long piece on the Institute of Chartered Accountants in England and Wales (ICAEW)’s recent report “Evolution of mid-tier accountancy firms.” Through a survey of managing partners at mid-tier firms across the pond, ICAEW took their temperature on five topics most impacting accounting firms of all sizes in current year:
- Firm structure and operational model
- Leadership and culture
- Talent
- Technology
- Financial performance and service lines
See: Here’s How Mid-Tier Accounting Firms Are Feeling About Private Equity and M&A for a breakdown on the PE and merger topic.
For this piece, we’re going to check out the talent portion and how hybrid work relates to it. We’ll get to technology in a later piece because once again this is going to run long. Everyone (by everyone I mean leadership) is waiting around for technology to swoop in and save the day but for the moment, adoption of next-gen tech solutions is slow. And that’s not necessarily a bad thing, the accounting profession is reactive and scared of taking big risks for a reason. See: Accounting Firms Will Not Be Leading the AI Revolution
The Talent Problem at Mid-Tier Accounting Firms
The short summary of the ICAEW’s findings is as follows:
Talent is the top challenge currently facing the mid-tier, with attraction and retention of qualified staff being the largest concern, and recruitment of trainees a secondary issue. The importance of future-proofing the skills of chartered accountants was recognized by firms, largely driven by changes in technology and the increasing breadth of work that they are likely to be required to perform. Firms recognize that they must be an attractive place to work. Nearly one-third of firms described their culture as ‘caring’ and while firms indicate a shift to more time working onsite, the majority still see hybrid working as the norm in the future. Investments in technology, offshoring and outsourcing initiatives can potentially help to address talent shortages and enhance operational efficiency.
Good luck with that.
An important distinction is revealed in the survey findings and it’s this:
“Recruitment of qualified staff was a top talent challenge for 67% of respondents, while recruitment of trainees was considered a challenge by 10%”
Meaning much lip service is paid to pipeline challenges but really, mid-tier firms don’t care so much about entry-level staff. Or at least they aren’t panicking about not being able to find them. A steady supply of fresh blood is how you get qualified staff but I suppose that’s a future problem we’re not too pressed about for now. They do sort of acknowledge this:
A top three talent challenge for 43% of those surveyed was ‘future-proofing skills’, which speaks to the need to ensure the quality of staff in the long term. Meanwhile, 45% of respondents confirmed that ‘succession planning’ was a key talent challenge. This seems to acknowledge the importance of retaining sufficient talent to maintain the partnership and its leadership team, which is corroborated by 14% selecting the ‘attractiveness of partnership’ as a challenge.
Respondents ranked their top talent challenges and, uh, yeah, recruiting trainees barely made the board.
Communication
Along with technological prowess, a good number of respondents listed excellent communication skills as most-desired in their staff.
Effective interpersonal skills With firms predicting that future clients will require more tailored support (31%) and demand a more personalized service (14%), effective communication and interpersonal skills will continue to be very important to build strong client relationships and collaborate effectively. Investing in business and professional skills at all levels within the firm would appear to be money well spent.
This is going to be a big problem in a few years as the group of professionals who experienced pandemic disruption four years ago at critical points in their adult lives like college and their first accounting job start reaching the higher rungs on the ladder. See: Big 4 Firms Are Noticing a Sudden Skills Gap in New Hires
On the topic of Gen Z — even though the mid-tiers clearly don’t care about the younguns — the report offers the usual crap about sustainability and purpose. No, Gen Z just doesn’t want to grind away at a spreadsheet for meager salaries. And millennials have been telling you this same thing for twenty years.
Culture
Gen Z have a different outlook on life to previous generations, prioritizing social responsibility, diversity, work-life balance and sustainability.
Let me interrupt them here. Stop it. Previous generations gave just as much a shit about work-life balance as Gen Z. It’s just that the talent pipeline was so robust no one in leadership cared to do anything about. Now that people at the experienced level are drifting away from the profession altogether the problem is getting worse because there are fewer people to share the load. If only they’d jacked up salaries 10-15 years ago when they had the chance.
Just 2% of firms surveyed described the culture of their firm as ‘environmentally conscious’, despite 38% stating that ESG considerations did impact decision-making at board level.
This disconnect may be contributing to the retention challenge within firms, as Gen Z seek employers that resonate with their beliefs and values. Although, when asked which words best described the culture in their firms, ‘caring’ was the third most popular choice, behind ‘collaborative’ and ‘client centric’. A sizeable proportion of respondents (21%-26%) also described their firms as ‘entrepreneurial’, ‘purpose-led’, ‘inclusive’ and ‘family-like’.
Let’s move on before I get annoyed.
Tied to communication, the report covered ways of working. According to this, the mid-tiers are accepting that some remote work is here to stay but clearly really, really want people in the office more.
Said the report:
Survey respondents indicated that client-facing staff are currently working on average two days in the office (or at client sites) each week. Looking to the next three years, respondents predicted this would change to staff spending the majority of their time in the office and at client sites. The portion of firms offering fully remote work is set to be nominal (2%), while at the other extreme 12% of those surveyed indicated that they anticipate a return to staff working fully on-site.
Changes to working patterns must allow firms to compete in recruiting and developing top talent while meeting the firm and client requirements to be on site. Hybrid working must be balanced with and aligned to individual client expectations. Close to one-third of those surveyed (31%) predicted that clients will want more tailored support in the future. Meanwhile, 14% believe clients will require more personalized relationships and their firm’s ways of working will need to deliver on this.
They really love saying they’re “collaborative,” don’t they? Walking up to someone’s desk to interrupt them when they’re in the zone is not collaboration, you guys.
When asked what word best described their firm’s culture, the most popular choice was ‘collaborative’ – which was selected by 45% of respondents. As hybrid working arrangements can create communication gaps and reduce spontaneous interactions among team members, there is a disconnect between that working model and many firms’ collaborative culture, driving a shift back to working in the office.
So that’s it on talent. If succession planning is really as important to them as they say they maybe should be a bit more worried about headcount than they purport to be. But whatever. Not my circus, not my monkeys spreadsheet jockeys.
Access the full ICAEW report here: Evolution of mid-tier accountancy firms
Garbage article.
Heh. Same ole leadership and same ole problems. HUH. Go figure.
“Nearly one-third of firms described their culture as ‘caring’”.