Preparing your employees for a digital future
There has been a lot of press coverage about the effect of developments such as Making Tax Digital, new software applications and other innovations on the delivery of accounting, tax and business services.
Many of these articles portray a future that is radically different from the way most practices now operate, with some commentators predicting a doomsday scenario. But while such predictions may be exaggerated, practices do need to plan for change. This includes looking at your skills base and planning how to train staff and reposition their roles for a digitalised world.
There seems to be very little independent advice available as an alternative to going to software providers, which just want to promote their own systems – an approach that does not necessarily address the overall strategy of the practice and its portfolio of clients or staff.
A key element that will need to be considered in this change process is resourcing. The traditional employment path, where trainees are encouraged to stay with a business and pursue their careers with one employer – or at least progress through a period of training and then take on senior managerial and partner-level responsibilities – now seems an inappropriate model for a digitalised future. Digitalisation will bring about fundamental changes to workflows and to the skill sets that existing and future employees will need.
A prime example that I came across recently was a management accounting practice that specialises in providing monthly accounts alongside some financial director-style commentary, and focuses on one industry sector.
Five years ago this business was dominated by data-entry work – bookkeeping and accounts preparation were key pinch points in its workflow. But over the last five years, 70 per cent of the practice’s data input has been digitalised. Data-entry bookkeeping work has been reduced to 30 per cent
of the activity and is declining year on year. In turn, IT client software has been upgraded and a customised report standardised. For the practice, this means: * a much-reduced requirement for bookkeeping and data entry
* an enhanced requirement for administrative roles, chasing clients and suppliers to ensure data is delivered to a fixed timetable
* a greater need for IT resources, whether outsourced or internal, to onboard new clients digitally and work on converting clients who have not yet migrated onto the portal
* the need for a resource to analyse workflows and automate every step as new software is developed.
The investment made in new client onboarding means high-quality data feeds and the preliminary review stage for accounts preparation has been eliminated. So client account managers have more time to review the reports, then either hand these on to partner level or interpret and advise clients on potential actions to be taken.
NEW RANGE OF SKILLS
Because of these changes, recruitment and training within this organisation has evolved, and some of the skill sets of the past are now defunct. Administrators, analysts and IT specialists are now in increasing demand.
External recruitment of these skills will be necessary, challenging the old pyramid structure. The client-facing side of the business is now clearly at the administration, manager and partner level. The need to evaluate new processes is ongoing, such as finding new ways of bringing data on board and new ways of delivering financial director advice, or highlighting critical situations upon interpretation of the data.
This is wholesale change and is ongoing, dynamic and in need of investment. Current recruitment needs to take into account the new model. For example, a large firm we’ve worked with recently, which fills over 200 training positions every year, now plans for the retention of only 25 per cent of those trainees; previously they had targeted a retention rate of 50 per cent. They are looking at the recruitment of more varied external skill sets to fulfil management and technical positions for their three-year horizon, rather than relying on internally trained individuals.
You therefore need a human resources talent plan, but to do this you first have to understand and agree the level of digitalisation to be achieved for the practice and at what speed to drive change.
The management accounting firm mentioned earlier was an early adopter of digitalised data input, but it has taken nearly five years to bring about a fairly smooth change in the workflow and a definitive step-change in recruitment and training.
It is more difficult to significantly change a traditional practice with existing, loyal staff and a fairly rigid workflow – but not impossible. The change should be tackled with an open mind and solutions should be keenly sought.
Keith Underwood is managing director of Foulger Underwood Associates Ltd, a business consultancy and M&A lead advisory service. he specialises in strategic planning and financial/business development, both in the UK and in Asia.