In my time working in accountancy I have worked for listed companies, non-governmental organisations, private companies and the largest accounting firms in the world. I have been recruited by and recruited for all of these firms and now, at Theta, I am responsible for growing a full-service accounting advisory and consulting firm, so I have seen the recruitment process from beginning to end, at every angle.
From what I have observed, there is a skills gap in experience rather than core skills which are more crucial to the success and the employability of the individual. There is a gap of experience within many roles where professionals need greater commercial and real-life applicable experience to apply their auditing and accounting knowledge to.
The experience gap
Within each individual, there is a ‘breadth’ of a skills gap. I am not expecting all accountants trained in the profession to have every skill; however, the training environment encourages trainees to work within a specific area of a firm which gives them deep experience and skills in one area, but often not decent exposure to other areas. For example, trainees in auditing will often have little exposure and experience to ‘non-audit’ advisory services. This means they develop deep and valuable expertise in audit but not accounting issues and challenges from a non-audit perspective which is a key requirement and skill outside of the audit profession. In my current role at Theta, I often see qualified accountants from large firms who have very little – if any – experience in accounts preparation. A fundamental understanding of how financial reporting comes together is so key to be an effective advisor in practice and in industry.
As well as impacting their ability to take skills from the profession into life outside of practice, their breadth of experience is fundamental to their ability to add wider insights and support to clients whilst still in the profession. If the current drive to ‘split’ the audit and non-audit functions of firms goes ahead, either voluntarily or by legislation, this is likely to exacerbate further the narrowing of the individual’s breadth of experience across the skills in both audit and non-audit services. This will impact what they can take out of the profession to industry and will be detrimental to the profession as a whole.
Candidates typically fall into either being a ‘technical’ person or someone with a proven record of growing opportunities and developing businesses whilst not being technically strong – it is exceptionally rare that you find one with both skill sets. If you do, grab them.
This issue is inherent in the structure of firms where the business development responsibility is generally at the partner or director level. Staff below that level are encouraged to support and start to develop such a mindset but are not invested in fully by the firms or asked to act as entrepreneurs or owners of the business. Personally, I have seen big firms recruit the business development experience they need from other firms to fill the skills gap as an easier and more cost-effective approach than to develop from within. This is where we, as a sector, we need to realign training in the industry. It is not necessarily just an issue in accounting but is being experienced by other professional service sectors such as law.
This is a fundamental issue in marketplace at the minute – there is a scarcity of resources and the industry has a fundamental issue of finding the right mix of experience. The question is: how, as an industry, are we reacting to the skills deficit?
What is the cost?
There will always be a cost associated with providing trainees with a wide range of experiences and skills which is accepted by the firms. However, regulatory pressures and downward pressure on fees – the required audit rotation and tenders generate a lot of fee reduction pressure – will make firms even more sensitive to costs. I’m interested to see the impact this has on the willingness of firms to incur costs, make investments and accept non-chargeable time etc. inherent in providing a range of experiences more than the individual needs for their current role. What firms must remember is that this investment into skills is an investment into the business as well, so long as the firm can retain the talent that they can develop. This is another development that firms must make in order to make a decent return on investment thrive in the next decade.
Saying this, where firms do provide internal secondments and periods of experience to widen their people’s skills, the resulting inherent additional costs resulting from splitting audit and non-audit disciplines is likely to have a significant impact on the investment available to continue to do this – firms will have to hire more specialists in sit in audit full time rather than utilise specialists from their non-audit discipline when needed – this will potentially limit not just the obvious chance for individuals to get the wider experiences, but the investment available to provide internal secondments, training and those experiences.
What can be done?
Things are changing, but not necessarily in favour of the firms. At Theta, we are interviewing people from the big firms who are getting ‘burnt out’ at a more and more junior level. When I first trained myself, you would hear about an occasional partner who had reached this point, now its Senior Managers and Managers.
With the upcoming IR35 tax rule changes, some large companies are already moving away from the sub-contractor model. It will be interesting to see how the impact of the new rules, and whether the next government readdresses them to see how they affect the industry.
To conclude, the skills gap that we are facing in the industry is one that both employees and employers have the capacity and the responsibility to fill. There is a wealth of talent out there, but we need to harness and grow the crucial, applicable skills in candidates to help grow business at every level and retain the best talent in the marketplace today. At Theta, we have recognised these issues at an early stage, and other firms must adapt soon in order to remain competitive in their particular service offering.
By Chris Biggs – Managing Director of Theta Financial Reporting