Laying the foundations for the firm of the future

The accountancy industry has always embraced new technology. Particularly so in recent years as leadership teams continue to grapple with how artificial intelligence, machine learning and robotic process automation can improve their businesses.

While we have yet to see the kind of disruption within accountancy that has characterised other industries, such as retail or even banking, the sector is reaching a tipping point where digital transformation will have a major impact on the culture, structure and working practices of accountancy firms of the future.

Opportunities and threats

Core areas of accountancy are under the microscope like never before with a series of ongoing high-profile reviews. Most notably, the Competition and Markets Authority is shortly set to publish its findings of whether or not the auditing business is “competitive and resilient enough to maintain high-quality standards”. This uncertainty, set against broader political instability, creates opportunities and threats in equal measure.

Two firms looking to take advantage are BDO and Moore Stephens. Their proposed merger is indicative of the potential for further consolidation as ambitious businesses react to the changing market and look to the future.

While challenging the ‘Big Four’ grabs the headlines, one of the factors which will continue to drive consolidation in the market is the economies of scale created for these enlarged businesses when it comes to digital transformation. Moore Stephens, for example, has already begun to reap the benefits from investments in new technology and the deal with BDO is set to turbo-charge the growth achieved.

However, investing in new innovative technologies is more than simply upgrading systems or improving the services offered to clients. For forward-looking firms, it also provides the foundations for attracting and motivating the millennial workforce – specifically ‘knowledge workers’.

Knowledge is power

 These are employees whose main capital is the knowledge and information they use for problem solving based on creative thinking. The term ‘knowledge worker’ is not a new one. It was coined by management consultant Peter Drucker in 1957. Drucker wrote about the success of 20^th century business being driven by the fifty-fold increase in the productivity of the manual worker and predicted that management success in the 21^st century would be driven by a similar productivity boost for knowledge workers.

Drucker was clearly ahead of his time. It’s only in recent years, with the advancement of technology that some of the fundamental barriers to productivity in the accountancy sector have been pushed to one side. The growth of automation has been the catalyst for this by making knowledge workers’ lives easier and freeing up time for them to be more creative and deliver services which add value to clients. In a recent survey of over 250 accountants by The Association of Accounting Technicians (AAT), almost two-thirds of respondents said they believed basic accountancy processes will be fully automated within the next five years. Interestingly, almost nine-out-of-ten went on to say that these advances are positive for the profession and create new opportunities for them.

This runs counter to the popular idea that the growth of automation and AI means ‘robots’ taking over jobs. In fact, arguably, AI’s role in managing mundane administrative work should make accountancy a more attractive profession to the next generation of knowledge workers by creating richer jobs and enabling them to be more productive.

Motivating millennials

 While technology provides the framework and environment for increasing productivity, forward-looking accountancy firms are also considering more fundamental ways of managing the changing needs of their workforce.

Deloitte predicts millennials will make up 75 per cent of the global workforce by 2025. These millennials are embedded in the workforce and are becoming the knowledge workers and business leaders of the future. As a cohort, they have become renowned for being motivated by softer factors, such as sense of purpose and work-life balance, rather than the financial and security factors that have tended to drive previous generations.

As a result, accountancy firms need clear strategies to attract and retain the best and brightest millennial talent. While it’s difficult to generalise for such a varied group, there are some common themes when it comes to motivating millennial knowledge workers. This can range from ensuring your firm has a clearly defined purpose, which staff can relate to at a personal level, to creating a working environment which fosters and rewards passion for achieving the organisation’s goals.

Flexibility and productivity

Whereas previous generations may have hoped for a work-life balance, millennials expect it – and there is a clear link between the kind of flexible working that allows for this with increased productivity. Our own HSBC UK research has shown that 89 per cent of UK employees consider flexible working to be a key motivator to their productivity levels within the workplace – more so than financial incentives.

In practical terms, we are seeing firms create a more dynamic culture for their employees which embraces an agile working environment that is less about the hours worked and more about the results delivered. For some firms this means a structural shift in how work is delivered, with much more emphasis on projects than the traditional hierarchy which has long characterised accountancy firms. It also means flexibility for teams or individuals that can work remotely but collaboratively through technology-enabled platforms.

While increased productivity is part of the reason behind this, it’s also a commercial reaction to market conditions and uncertainty. Firms are having to be more agile to remain competitive as well as to retain and motivate talent. For example, in the legal sector, which has traditionally been slow to embrace technology, automation is changing the make-up of the workforce and we are starting to see a more formalised use of contract workers to supplement a core staff of knowledge workers, so-called ‘contingent work’.

Emerging from all of this is a blueprint for a new type of accountancy business. These firms of the future are not afraid to invest in transformative technology and working practices that will enable them to get the most out of the next generation of knowledge workers who, in turn, will bring new skills to the industry.