Host

Philippa Lamb

Guests

• Kat Hearn, Senior Technical Manager, ICAEW
• Androulla Soteri, Chief People Officer, Dains Accountants
• Lola Abitogun, Founder, Alchemy HR

Producer

Natalie Chisholm

Transcript

Philippa Lamb: Hello and welcome to Behind the Numbers. I’m Philippa Lamb. Today we’re discussing recruitment and retention, because it is clear that accountancy has a talent problem. This is not a pipeline issue. Trainees are plentiful, but holding on to qualified staff? That’s another matter. Now, ICAEW research reveals that 70% of mid-tier firms see talent as their most significant challenge. So why are so many recently qualified professionals quitting? Where are they going? And what needs to happen to make accountancy more appealing and exciting as a long-term career choice?

[Kat Hearn: We need to consider that actually it’s reflective of a more flexible workplace and non-linear career path progression that people are following.]

[Androulla Soteri: People want to feel like the work they are doing has impact on something that is bigger than the spreadsheet they’re looking at or the little bit of the audit process that they’re dealing with.]

[Lola Abitogun: A lot of people are moving to work in industry, because that is seen to be – for want of a better word – easier, especially when it comes to a kind of work-life balance.]

PL: Kat Hearn is with us remotely. She’s Senior Technical Manager at ICAEW. She is going to tell us about that research. Androulla Soteri is also with us remotely. She’s Chief People Officer at Dains Accountants and has deep insight into both the drivers of talent loss and the solutions to it. And Lola Abitogun is here with me. She qualified as a chartered accountant herself, and now she founded and leads Alchemy HR, a consultancy specialising in helping small businesses build high performing commercial teams. Hello, everyone. OK, let’s set the scene a bit. Kat, you’ve dug into this at ICAEW. As I understand it, there is not a problem about recruiting graduates. So at what point is a firm seeing talent problems kick in?

Kat Hearn: When we completed the research, we looked at the range of where the talent challenges were coming from. We started by looking at the macro trends, and certainly more than half of our firms identified talent challenges as one of their top macro trends. When we delved into the talent challenges, the recruitment and retention of qualified staff were cited as the main concern. So 67% of people said that recruitment of qualified staff was a top concern, and 60% said the retention of those qualified staff. Right down at the other end of the spectrum, the least selective challenge was the recruitment of trainees, and only 10% of our respondents selected that. And I do think that’s reflective of the fact we’ve got a really healthy and buoyant market of graduates entering the profession. We’ve also got other pathways into the profession as well, such as apprenticeships. So it is really focused on that middle bit of career, from all the way between qualifying as a new graduate – when you first complete your training contract – all the way through to becoming a partner in a firm.

PL: As you say, a lot of firms worry about this – and about problems recruiting specialists as well, as I understand it; ESG – people like that?

KH: I think the range of tasks that chartered accountants are asked to perform these days is wider, and we see lots more service lines that people need to operate in. So we know that as a chartered accountant, you’re in a really good place in terms of having a variety of skills available to you, but it is just about how firms deploy those skills and make sure that they get good coverage of the service lines that they offer. And of course, meeting those client demands across a bigger service offering means that they do need to have people specialising at a deeper level across the board.

PL: So is future-proofing skills generally seen as quite a challenge right now? Because, as you say, it’s a wider skill set than it’s ever been, isn’t it?

KH: Absolutely, and I think it was our number four selected challenge in that 43% of people said future-proofing was a challenge for them. And I do think that that has been taken into account with the review of the ACA syllabus, but also changes to ICAEW CPD policy: making sure that people do take on the importance of upskilling and keeping their skills up to date. But certainly it’s something that, as an accountant, you ought to have on your radar, making sure that you’re not falling behind and that you are keeping your skills at the forefront of the profession.

PL: And succession planning – that cropped up too?

KH: So 45% said succession planning was a concern for them. So that’s really about the pipeline of people going on into the partner role, and even from the partners going into that practice leadership role within the firm itself. We know there are lots of factors impacting that. Certainly we can talk about things like increased regulation, but I think also we need to consider that actually it’s reflective of a more flexible workplace and non-linear career path progression that people are following. There is more choice, there is more availability of knowledge in the market in terms of what other roles are out there. And I think actually the new generation of workers coming through, they don’t do that same form of long-term view and long-term planning that we perhaps saw 15, 20 years ago. Nowadays, people have a shorter kind of plan in place, and there are more points in the career at which they assess those plans.

PL: Yes, I want to get into that in a bit. But I’m interested right now, because these numbers are big – these are not niche problems, are they – were you surprised that the numbers came back so high about these concerns?

KH: I don’t think so. I think, anecdotally, we have known that talent has been a challenge in the profession for some time. The research really validated the depth of those challenges that firms are feeling and gave us a starting point to really explore some of those themes in more detail and work out where those challenges are and where ICAEW can provide support.

PL: Now, we’re going to get into what can be done to combat these problems. But before we do that, I’d like to lay out, really, what you all see as the major drivers of these talent issues. Androulla, I know you think culture is really central.

Androulla Soteri: Yes, it absolutely is. You know, culture within the accountancy profession has been problematic, complicated. We’re very set in the ways that we do things. We like holding on to that legacy of what has built our profession – which is around chargeable hours, and we don’t bring home life to the workplace, and we’re in the office, and there is a linear pathway to progression, and you need to give your life and your soul in order to get there. And actually, what people are saying is that those aren’t the things that bring us joy or are valuable to us any more. And we are seeing a shift in terms of flexibility, for sure. And that, I think, has been triggered by COVID – if you can find a blessing in COVID – but we need to do more. Essentially, we need to completely change the narrative around what you need to be and do and deliver in order to become a partner. People look up the ladder and they see partners working 14-hour days, and they just don’t want that. That isn’t desirable for them. They don’t want that lifestyle. So there’s a lot around what we need to shift within our organisations internally in order to make staying in the profession more attractive.

PL: The hours issue is a big one, isn’t it? Would it be fair to say that is becoming a bigger issue particularly for – well, obviously, particularly for people with care and responsibilities. But is it an issue that particularly impacts women, given that we as women tend to be primary carers? Are you seeing more women leave because they think, “I just can’t hit those hours, and I know I won’t be able to later in my career.”

AS: If you look at the statistics in firms, you’ll often see that the stats are saying there’s a majority of women in firms – more than men. But actually, if you take a deep dive into it, you see that a lot of those females are in support roles rather than client-facing roles. And actually, when you home in on the manager, director, partner differences, it just diminishes so rapidly. And it’s just a fact that the majority of the burden of caring – whether it’s children, whether it’s elderly parents, whatever it is – it does fall on the women, and it does make it difficult for women to commit to the kind of hours that are expected of them, and to do the networking, and to do all of the other things that come with it in order to progress in those positions. I am aware of firms that still have a rule that says no female partner can work part time. We’re still in that world, which is terrifying. I’m glad to say that’s not Dains, but we’re still in that world. It’s so backwards.

PL: So Lola, I’m guessing there’s a perception that, you know, in industry, things are better?

Lola Abitogun: For sure, I completely agree with Androulla that becoming a partner is no longer aspirational. You know, gone are the days where you think, “OK, I’ve started my career as an accountant, and that’s what I’ll do for ever.” It may be the case that that’s what you do for ever, but for a lot of people now, they see that there’s another option. They could go into industry. They could go and do something completely different. We know that the skills of a chartered accountant are highly sought after, but not just in accounting. Even from my own experience, I do something completely different now, but those skills have put me in good stead, and they’re very highly respected skills. We all know the statistics about FTSE directors and how many of those have a qualification, an accounting qualification, and it’s not a coincidence. They’re highly sought-after skills, whether that’s within accounting, finance, strategy, ops or business –we have loads of people in organisations, firms, who are looking for these people.

PL: So accountants have options?

LA: Yes, and we need to make the profession more desirable, so that we don’t have the people leaving, because there are loads of places that are happy to snap them up.

PL: Kat, I think your research underlined this, didn’t it – the attractiveness of the partnership; 14% describe that as a challenge?

KH: I think that is about rising in the ranks and staying within the firm. More widely, I do think we can see from the research that culture has a huge impact on that talent piece. And one thing that I think comes out is perhaps there is a mismatch between some of the perceptions of the culture and how the culture perhaps comes across. We saw that nearly a third of firms described themselves as caring, and I think over half said that they were a collaborative workforce. Those were key cultural descriptors that firms gave. And those probably do resonate well with workers, but we do know as well that the longer you spend in a firm, it’s all very well to just describe your culture, but you’ve got to really live those values. And of course, when you’re recruiting, you can show what you think your culture is, but the longer that someone spends in a firm, the more they actually get to understand and decide for themselves whether the firm stands up to those values.

One of the cultural things for me that has definitely got room for exploring further, from a firm’s point of view, is on the environmental and sustainability piece, because I think culturally and from a values perspective, lots of workers do value that. They want to work somewhere that’s seen as environmentally conscious. They want to work somewhere that values the purposeful and meaningful work that I think perhaps has been related to the new generation, Gen Z workers, as something that they value. But we do see that firms are not quite there on the ESG, from a cultural point of view. Only 2% of firms describe themselves as environmentally conscious as a culture, a descriptor of their culture. That’s really low. It’s one of the bottom, least-selected options. And we can also combine that with the fact that 38% of firms said they were taking ESG considerations into account at board level decision-making, but that means nearly two thirds of firms are not. So actually, that kind of environmental and social aspect perhaps isn’t coming through as strongly in the firms as it could be, and perhaps there is a link with that in terms of recruiting and retaining some of that talent.

PL: I want to talk more about purpose later, because I think there’s a lot there – purpose in all its forms. Before I do that, though, Lola, can we just drill into when people, when candidates, come to you, are they looking to move to a different firm for better terms or career progression? Or are most of them saying, “Actually, I don’t want to move to a different firm? I want to go into industry.”

LA: This ties into what Kat said around the generation of workers that we’re looking at at the moment. I actually wrote my dissertation on the attractiveness of employers to Gen Z when compared to millennials, and it has such a big impact. When we’re looking at that kind of post-qualification, one to three or four years, we’re now looking at, in a lot of cases, employees that sit within Gen Z; and what we know about Gen Z is that they are more interested in portfolio careers. That could be at the same time, so having variety in the work that they do; or it could mean over time they want portfolio careers. So actually, I have seen people who are leaving mid-sized firms, small firms, who are looking to do something completely different. And if they are going to move to another firm, it has to be for a really strong reason. It has to be very compelling. I’m seeing less people move from firm to firm like we used to see before, because they’re like, “What’s the point? I’m going to have to go to another firm, you know, show them how good I am. The money that I’m going to get as a consequence might not be significant.” And we’re also seeing firms counter-offer employees who are trying to leave much more strongly as well, because they don’t want to lose them. We’re just not seeing as much movement. We’re seeing a lot of people leaving, but not as many people coming in at that kind of mid-level.

So yeah, a lot of people are moving to work in industry, because that is seen to be – for want of a better word – easier, especially when it comes to kind of work-life balance. There’s a perception that you can have a really good career and not have to work 14-hour days, even if it’s just for the busy season in the year, and that you might have more support, because you will have external advisers as well. I definitely think industry is considered to be a lot more attractive for a big population of people that are leaving the profession.

PL: Androulla, from everything that’s been said, there does seem to be a significant mismatch between, perhaps, what firms offer or think they’re offering and what early/mid-stage career professionals are actually perceiving. I’m thinking about what needs to happen to change this. Is there something – we’ve talked a bit about partnership – is there something around the structure of the organisations? Is partnership itself an issue? Is it the way the teams are organised? Could there be more flex and interest introduced if firms thought differently about how they do those things?

AS: I’m going to go back to the culture piece just for a moment before I answer that question, because I think the two things are linked. I feel really strongly that leaders of firms don’t actually understand what culture is – how it’s defined – and there’s such a deep lack of understanding of the components that make up culture; and it’s actually things like responsiveness, and it’s leadership style. Human leadership is what people want, and they want to feel a sense of belonging, and they want to be able to see that there is strategic alignment within the organisation and be part of that. These are the things that really make up culture. And so much of when we talk about culture is, you know, that we need to show we’ve got purpose, and we need to be able to demonstrate the purpose that individuals and the roles individuals have within an organisation. And that’s all linked to the strategic alignment that I spoke about before. But actually, it’s not so much about, you know, here’s our values, and if you do these values, everyone will feel a sense of purpose within our organisation, and that’s what defines our culture. No, when you get down to it, culture is really how you treat people on a day-to-day basis.

PL: So it’s mindset, organisational mindset?

AS: It really is. It really is. And then it comes to – let’s go into the question, the structures question; this is a really interesting one. I read an article in Harvard Business Review that talks about the way that we lead people now has to change and that, therefore, the way that we structure our organisations needs to change. And what it describes is that, if you think about the typical structure you have in an accountancy partnership, you have a partner, and you have a director that sits under them, and you have a manager, or maybe two managers, and a set of trainees under that. And you know that if you want to make partner, you have to be jack of all trades, so you’ve got to be really good technically, and you’ve got to be able to network, and you’ve got to be able to sell work as well. And this is a set of skills that is really difficult to find in one person. And so what you end up finding is people just find it too difficult to get to the top, and then they just give up. And that’s where industry becomes more attractive, especially when you start throwing in the work-life balance side of things and things like that.

And actually, we need to get a lot more sophisticated about how we structure our portfolios. It’s quite unrealistic to say we’re going to find all these skills in one person. And that’s before we even start going into the fact that we’re not doing enough to nurture the skills as accountants in terms of training and development. Our learning and development programmes need a lot of work. You know, the ideal portfolio is each portfolio has two partners on it, and one is the technical person, and the other person is the people-management, relationships person. And you just get specialists that are really good at those things, and those partners work together on one portfolio, with one bringing the technical knowledge and the other one bringing the good leadership skills and then maybe the sales skills as well.

PL: Do you know any firms where that’s happening?

AS: In the mid-tier, which is where I know most, I haven’t seen a firm where that’s happening. That doesn’t mean to say It doesn’t exist. But no, I haven’t seen that happen.

PL: Lola, that is surprising, because we see this in other industries, don’t we? This is not a new idea.

LA: It’s not a new idea, but it is a great idea, and I guess it would be new within accountancy. You do see it in professional service firms that are much larger, sometimes, but in that mid-level, I agree, I haven’t.

PL: It came out of tech, didn’t it?

LA: Yes, it’s really big in engineering. So what used to happen in engineering is you’d get really great engineers who are super technical, and then they would reach a certain level and they would be kind of forced or, you know, pushed in the direction of people management. Or if they were in consultancies, in the direction of sales.

PL: However inappropriate they were for it?

LA: Yes, and it’s like you have promoted this person because they’re a great technical leader – a great technical person, and they could be a technical leader. So actually, what was happening within engineering and technology more generally, is that they were getting to that level where they were kind of being pushed in a direction they didn’t want to go to, and they were leaving or just deciding that they’re going to stay where they are and they weren’t able to progress, which impacted how fulfilled they could be in their careers. But that problem was identified because of the talent challenges it was causing, and then they started to say, “Hey, you’re great at being technical. Why don’t we create a career path for you to stay being technical, you can become a deeper technical expert,” in the way that Androulla is describing, “and we can partner you with somebody who is great at sales. They might not be as you know, technically adept as you but together, you could be a power team.” And that is just a great solution. And I think within accountancy, it would be awesome too.

PL: Kat, how open do you think firms might be – I mean, as we heard, at top tier this is happening to a degree already – how open do you feel the profession generally would be to that sort of change? Because it’s pretty fundamental, isn’t it?

KH: It is. But I do think accountancy as a profession is very adaptable. We talk about tradition and things that have been in place for a very long time, but even the structure of firms is changing. So you know, historically, and even the current state of play, is that most firms are structured as partnerships and LLPs, but those only came into existence around 2000 – so actually, their history in the long scheme of accountancy, which has been around for much longer than that, is quite new. At the moment, we’ve got other disruptors coming into the profession. Certainly, private equity is seen as a huge disruptor; we’ve got about 12% of firms in the survey who’ve already taken on that private equity investment. That certainly is going to have an impact on the culture of those firms.

Putting the kind of actual how the firms restructure aside, the fact that firms are open to changing the way that their firms are owned and run, I think certainly means that they can make way for changes within their operating model as well. And I think that one thing that the profession will benefit from is that innovative thinking, and thinking about ways of doing things slightly differently. I do think accountancy is steeped in tradition, but I think new generations coming through are open to changing things. And I think we’ve got people in leadership roles in firms at the moment who really are willing to try and change things and do things differently. So I’d be really keen to monitor and see if that kind of tag-team system might come into play in the next few years. I think it’s a good idea, and I’d love to see a pilot and see how it works out.

PL: Lola, do you have a thought about that?

LA: Yes, I just wanted to say that I have seen there are areas where that kind of mid-tier firm has been adaptable. One of the things that used to happen a lot was that you would have rotational schemes, right? You would have new people – and I know we’re not really talking about grads, but it’s a great example – where they would come in and they would do a bit of audit, a bit of tax, a bit of advisory; and then somewhere down the line we sort of got rid of a lot of that, and then you are bringing people in who were kind of like, you’re going to be doing audit, you’re going to be doing tax, you’ll be doing advisory. And all of this stuff around Gen Z and portfolio careers, they really wanted the variety. And I have definitely seen, anecdotally, firms bringing that kind of rotational kind of element back, or allowing mid-level people to do a little bit more than just one thing. And I think that’s been really great as a retention tool.

PL: That brings us back to purpose, which I said I wanted to talk more about, and I do, actually, because I think the days when people thought that was nice to have are gone and everyone is starting to understand this is a really fundamental shift that the new generation wants to see in their work. Androulla, Kat mentioned environmental – macro issues around purpose. When you and I talked about this in the briefing for this podcast, you mentioned it in a narrower sense, that I thought was really interesting – the sense of “What is my purpose within this organisation?” Do you want to talk a little bit about that and how that should work?

AS: People want to feel like the work they are doing has impact on something that is bigger than the spreadsheet they’re looking at or the little bit of the audit process that they’re dealing with. And, you know, I think one of the things we’re a little bit remiss on in the profession is we’re so great at keeping our clients informed. If you think about it, you’ve done an audit, you get to the closing meeting with the client, and you present the findings, the results of the audit. This is what’s going well, this is what’s not going so well, here’s what we recommend you do to make improvements. But at which point do we go back to our trainees and say, “Hey, this is how your little bit of work ended up as part of a discussion point in this final meeting with the client,” and say why it’s really significant. We’re not very good at closing the loop on that internal communication, but obviously very good at dealing with our clients, which we should be. But I think we forget that there are people that sit behind us that really want to know whether what they’re doing has an impact on their clients’ lives.

PL: We touched lightly on learning and development, but it strikes me that the sort of conversations you’re talking about there, they feed very neatly into really authentic conversations, coaching conversations, about what went well, what didn’t go so well, what could we do better next, how could you perform better next time. All that stuff is kind of disappearing, partly because of remote working, but just generally because people are too busy to have them.

AS: I think it’s more than that. I think we just don’t have the skills, is the honest answer. You know, the skill to be a coach is such a powerful one. I think the first problem is there is a real misconception about what coaching means, because a lot of people think that coaching means hearing someone saying, “Oh, when I was in your position, this is what I did.” That isn’t coaching, that’s mentoring. Coaching is something that is entirely different, and the reason that people maybe don’t coach in an authentic way is because it does involve a skill set. And again, we’re very good at providing technical training in our firms, but we are not great at providing skills training.

And so, you know, the skills needed to be a good coach are great listening skills and helping the individual assimilate information and holding a mirror up to them, helping them uncover blind spots and then supporting them to find solutions to their own problems, rather than being the firefighter that comes in and tells them how to solve a problem. Because the person that does that steals the other person’s learning, and the moment you steal someone else’s learning, you steal their dignity as they try to progress through a role.

People want to learn. They want to accumulate the skills that are needed to go up the ladder, but we’re not very good at allowing them to do that. Just think of a time like anyone listening. Think of a time where you said to yourself, “Oh, it’s quicker if I just do it, I’m going to do it.” Everyone does that. And the moment you’ve done that, you’ve inhibited someone’s capability to progress because you haven’t given them a chance to learn or to make the mistakes for themselves and work out for themselves what the better way of doing things is.

PL: And Lola, those conversations, the learning, can go both ways, can’t it? Because they are opportunities for organisations to learn from their people?

LA: They’re really great opportunities. And just as Androulla was saying it, I was saying it – yes, I’ve definitely done that before. I’ve definitely been like, “I’ll do it. I’ll do it myself.” I think we’ve all been there. But yes, I think there’s lots of stuff for organisations to learn from the listening – the organisational listening – when you’re actually getting feedback; obviously, hopefully you have a mechanism to get feedback from your team and listen to what they’re saying. It’s some of the best data that you can get, because, as Androulla said, people want to come to work and do a great job. They want to progress. They want all these wonderful things. And sometimes all it takes is for the organisation to listen to the individuals. And sometimes the solutions are much closer to home.

PL: Listening to everything you’ve all said, I’m interested to know what you think will happen in terms of recruitment and retention across the profession, if the firms don’t listen to the sort of things you’ve been saying. Where will it go, Kat?

KH: That’s a million-dollar question. I’m not sure where it will go. I don’t think that the talent challenge is so bad that it’s on a knife edge. I still think that accountancy is a really revered position. I still think there are lots of people who take pride in becoming a chartered accountant. We know that there are lots of ways that you can find meaning in the work, in terms of supporting businesses and building those relationships with clients. And I do think perhaps we need to be better at selling those things. But as a profession, we have a lot to offer. I think in the short term, while there is a little bit of a squeeze on talent recruitment, there will be shorter, perhaps interim solutions that firms pursue. I think there are lots of ways that you can look at building capacity. And certainly we could talk about technology as being a solution, we could talk about looking at changing your operating model to increase the amount of work that you either offshore or outsource. Teams are evolving to include people who aren’t necessarily present in the office itself.

So there are ways in which the actual day-to-day running of the businesses are changing, but I think overall that firms will find a way to meet the worker requirements, and that it still will remain an attractive position and an attractive profession. It is just potentially acknowledging that the way in which people progress from the beginning to the end of their career won’t be so linear and that they might go in a more of a zigzag route, but we will still end up with people meeting those end positions and filling those roles because they’re really desirable.

PL: And Androulla, what’s the first thing you’d like to see firms doing to address this?

AS: I think it closely relates to human-centred leadership that is linked with learning and development, really getting to know your people, having performance development plans that you put in place, and when you make a promise to your people, you actually deliver on that promise, because that’s something we’re not very good at in this profession.

PL: Thank you very much. I wish we could talk about this longer, because I know there is a lot we haven’t got into, but I hope we’ll come back to – thank you very much indeed.

Behind the Numbers will be back in late September. Before then, join us for a new episode of Accountancy Insights, covering the top stories for accountancy professionals from right across ICAEW and the sector. Finally, another reminder that listening to these podcasts counts towards your CPD, so tell your colleagues; and the easiest way to log your listening is to listen on the ICAEW site rather than your phone app, because then you can just click the Add CPD tool for every episode as you listen to it. Thanks for being with us.