Interview: Haines Watts in 2018 and beyond

2018 was a fantastic year for Haines Watts, with continual acquisition announcements bringing their total growth to 16%. According to our figures, this makes Haines Watts the fastest growing firm of this year. When considering the uncertainty in the industry at this time, this achievement becomes all the more impressive. But what is next for the top twenty firm?

Michael Davidson, group managing partner at Haines Watts, agreed to share his insights with Accountancy Age. Having been with the firm for 27 years, Davidson worked his way up through the “meritocracy” (as he describes the firm) to his current high-profile role. Experience in various positions within the firm lends to Davidson’s particular foresight when considering the future of Haines Watts.

Key highlights of 2018?

When asked what he would consider to be his key highlights for Haines Watts this year, Davidson replies: “I think, for me, the key highlight was predominantly around the growth we’ve shown. It was interesting to see that – when compared to similar peers – we were punching above our weight.

“It’s not just the fact that fees were up – through a mixture of organic growth and acquisition – but actual profits were also up by similar levels. It shows that the work we’re adding to the business is being done at similar levels of profitability as those we’re currently performing at—which is very reassuring for me.

“Off the back of that, I’m very much one for believing that – given the fact we predominantly provide professional advice to clients – it’s fundamentally important we’re seen to be a well-run and progressive business. If we’re not seen to be enjoying  good financial performance, it makes it very difficult for us to be perceived as credible to clients or future clients in commercially advising them.

“As it is, I think it makes us an attractive proposition because we can grow profitably.”

So, what can we expect from Haines Watts in 2019?

Davidson remains very realistic about what people can expect from the firm come 2019. It will be a year fraught with further tensions and complications for all businesses. He says that he still expects Haines Watts to keep growing, “but not at the same levels as before.”

Even though growth will be slower in the next financial year, Davidson reveals that, as of the half year mark, Haines Watts has been performing at 10% growth, which is still an impressive surge in uncertain times.

Davidson continues on to cite a challenging area that he and others in the firm will be focused on addressing this year and the next: “Haines Watts has around 40 offices spread across the country. It’s been a bit of a struggle, given that structure, to always produce a consistent level of client service across the country. That’s because our structure hasn’t really allowed us to offer the full range of Haines Watts service lines from every individual location. We feel that’s increasingly becoming a problem for us to crack.

“There are probably three of our regions in the UK that have already moved to working collaboratively within the region—which the Greater London region has been doing for a number of years now. Some of the lessons learned there, and the successes, are now being shared around the country.”

Proactively enforcing changes that will counteract this issue, Davidson cites the importance of “encouraging the offices to work together from a regional platform.” It is vital to him that each office continues to see the value a widely spread regional practice can offer their clientele.

“[This will eventually] mean that the clients will get a more consistent level of service,” Davidson explains. “This is very important to us going forward.”

That dreaded ‘B-word’: Brexit

“Brexit is an interesting one. Our philosophy with Brexit has been to not second guess everything that’s going to be decided, and really just keep our client base agile enough to get the basics right; this will help them to tackle change,” Davidson says.

Considering the fact that Theresa May has recently announced a further delay to the Brexit deal vote in parliament, it seems that waiting for definitive decisions to be announced will allow for further stability in the long-term, as opposed to committing cashflow to one contingency plan.

Davidson continues: “There seems to be a decision-making paralysis going on, where most decisions that don’t need to be made urgently are being kicked back into summer next year.

“This does mean that we have been less active on clients; but we are providing support at this rocky stage, so that business owners feel like they’re getting support.”

Working life and people development

“Flexible working is something we encourage. We have many staff on flexible working, and we have always provided a lot of flexibility around how they work. Nearly all our staff have the ability – through the cloud platforms we use – to work from home.

“At Haines Watts, we are pretty focused on a ‘results performance criteria’. This ultimately means that, as long as people can deliver what is needed to clients, we can allow them a lot of flexibility as to how, within this criteria.”

Haines Watts and technology

The technology sector is one of the fastest developing industries in the world, and accountancy firms are beginning to incorporate the likes of automation into their everyday working lives.

Davidson says that Haines Watts is “conscious of AI and all the other technological challenges” that face the industry. However, so far, any explorations into this area for the firm have been conducted through internal reviews and working with the international network in which they are a member of.

Davidson concludes that “the general consensus is, at the moment, that it’s slightly too early to jump in any particular direction. We’re still monitoring that space to see how things pan out, so we can react as and when some real traction and momentum arrives in any particular direction.”

A brief look at audit practice

Davidson pointed out that Haines Watts currently do not “do any regulated auditing. And, therefore, some of the harsher issues that are falling out of the review of the Big Four concentration (CMA), BEIS or the Kingman review, aren’t something that we are going to be challenged by.”

With the CMA report due out at some point this month, audit practice is set to be improved to avoid scandals that have dominated the media in recent years.

On the topic, Davidson says: “We are very supportive of our peers in the regulated space, the fact is that audit quality is something that should always be encouraged and developed. From our perspective, there will be opportunities that will open up to Haines Watts in the non-audit space from the fallout of the CMA review and the Kingman review. Clearly, any quality issues that are proposed for improvement that impact on the private sector – which is our core space – we will look to embrace and implement.”

Aspiring accountants should consider options outside of London

“One of the reasons I previously said that the firm’s growth is something we’re particularly proud of is because this is an area that really helps in people development,” says Davidson.

“We have a number of initiatives that are currently going on in the firm around senior management development and leadership development—these are open to our workforce across the country. I think we’re actually just about to start our fifth cohort, in which we’ll have 50 of the young people we see as being future leaders in the business joining a programme that helps them to be more self-aware, to help them understand how they can apply and align their own personal aspirations with those of the firm.”

The financial heart of the UK is undoubtedly based in London. It is unsurprising, then, that many (if not all) of the larger accountancy firms have offices there. However, this does tend to breed a London-centric narrative in the accounting world.

“Haines Watts history has not made it a London-centric kind of firm. One of the benefits as to how Haines Watts has developed is that we have taken our successes outside of London. We’ve grown and developed our London presence according to our regional experience. It’s become more of a provincial practice, rather than a very corporate practice, which is what a lot of our peers have in the London market.

“We’re bringing the provinces to London, rather than being a London firm that has grown outwards around the country. I think that makes us quite unique.”

Opportunities for young aspiring accountants outside of London are bountiful, through graduate schemes, trainee programmes, and apprenticeships.

Haines Watts has a high retention rate with those who start at the firm young; Michael Davidson himself is an example of this. He mentions how “four of the six board members have come up from quite junior levels in the firm.”

This is definitely a factor that is appealing to young people looking to move into accountancy, for it “sends a message to everybody in the organisation that, if you apply yourselves, take opportunities as they come, and graft, then anything is possible.

“We are encouraging apprenticeships, looking at diverse ways of fishing for talent in areas we haven’t considered before. For example, the military is an area where we think accountancy firms might benefit from the skill-sets around discipline and leadership. Historically, the military isn’t an area in which you would go looking for accountants. However, we’re very much looking to embrace places we can find the talent that can meet the requirements of clients in the future.”

How the future “paralysis of decision-making” will have an effect

“I think there will be a paralysis of decision-making for the next six months,” Davidson concludes. “It will cause major issues within some of the supply chain—which will go beyond March, and probably into the summer.

“I can see that causing major working capital disruption, and the cycle of cash within organisations will, again, bring another layer of stress.”

When asked how he thinks clients and businesses can prepare for a potential worsening of uncertainty next year, he responds: “I think businesses need to be looking after the basics—being agile, not chasing work. They need to make sure they are doing the work at the right profit levels and getting paid, as well as being diligent and not over-trading. They need to make sure that they are holding on to as much cash as they feel they need, or plan to need, to get through what could be quite a disturbing and disruptive spring and summer.”