CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES (SMPs) 2020 Association of Chartered Certified Accountants and Chartered Accountants ANZ August 2020 About ACCA ACCA is the Association of Chartered Certified Accountants. Were a thriving global community of 227,000 members and 544,000 future members based in 176 countries that upholds the highest professional and ethical values. We believe that accountancy is a cornerstone profession of society that supports both public and private sectors. Thats why were committed to the development of a strong global accountancy profession and the many benefits that this brings to society and individuals. Since 1904 being a force for public good has been embedded in our purpose. And because were a not-for-profit organisation, we build a sustainable global profession by re-investing our surplus to deliver member value and develop the profession for the next generation. Through our world leading ACCA Qualification, we offer everyone everywhere the opportunity to experience a rewarding career in accountancy, finance and management. And using our respected research, we lead the profession by answering todays questions and preparing us for tomorrow. Find out more about us at About Chartered Accountants Australia and New Zealand Chartered Accountants Australia and New Zealand (Chartered Accountants ANZ) is a professional body comprised of over 120,000 diverse, talented and financially astute members who utilise their skills every day to make a difference for businesses the world over. Members are known for their professional integrity, principled judgment, financial discipline and a forward looking approach to business which contributes to the prosperity of our nations. We focus on the education and lifelong learning of our members, and engage in advocacy and thought leadership in areas of public interest that impact the economy and domestic and international markets. We are a member of the International Federation of Accountants, and are connected globally through the 800,000-strong Global Accounting Alliance and Chartered Accountants Worldwide which brings together leading Institutes in Australia, England and Wales, Ireland, New Zealand, Scotland and South Africa to support and promote over 320,000 Chartered Accountants in more than 180 countries. We also have a strategic alliance with the Association of Chartered Certified Accountants. CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES (SMPs) The opportunity for small and medium sized practices to grow in todays business environment is unprecedented. Digital transformation, in particular, is truly enabling smaller accountancy firms to reimagine the services they offer, but successful change is critically dependent on attracting, developing and retaining the right people. This report shares key practical insights on talent transformation in the SMP sector and explores how this sector can offer brilliant careers to accountants in the future. CAREER PROGRESSION IN SMPs IS AS MUCH ABOUT PERSONAL AND PROFESSIONAL DEVELOPMENT AND GROWTH AS IT IS ABOUT JOB TITLES AND PAY SCALES. 4 Contents Executive summary 6 Introduction 9 Case studies 10 1. SMPs: a world of opportunity 12 1.1 The role of digitalisation 13 1.2 Changing business models and client expectations 14 1.3 The culture 14 2. Skills and attitudes fit for the SMP 17 2.1 Ethics and integrity 20 2.2 Critical and analytical thinking 20 2.3 Ready to take the responsibility from early career stages 21 2.4 The entrepreneurial mindset 21 2.5 Comfort with technology 22 2.6 Strong communications skills and empathy 23 2.7 Openness to share and cooperate 24 2.8 The importance of adaptability and readiness for continuous learning 25 3. Attracting talent to SMPs 27 3.1 Diversified talent pools 27 3.2 Building a recruitment brand 28 3.3 Attraction: 10 ways of rethinking the employee proposition 30 3.4 New approaches to recruitment: beyond the traditional CV 35 4. Developing and retaining talent 38 4.1 Learning and development approaches 38 4.2 What matters for talent retention, in addition to development? 46 4.3 Career development paths vary 49 4.4 Succession planning 49 5. Key lessons from COVID-19 for the SMP talent agenda 51 6. Careers in SMPs: top tips for employers and employees 54 6.1 Top tips for employers 54 6.2 Top tips for employees 57 Annex: Chartered Accountants ANZ Capability Model: Skills 59 Acknowledgements 75 References 76 5 CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES | EXECUTIVE SUMMARY Executive summary Accountancy transformed? Ensuring the pipeline of talent to small and medium- sized accountancy practices (SMPs) is vital for the future success of the SMP sector, which could drive the progress and transformation of the accountancy industry as a whole. Adoption of digital accounting tools, changing client expectations and business models are deeply transforming all aspects of SMPs. This impacts on the skills and attitudes required to respond successfully to the changes and shape careers paths within SMPs. It also requires reviewing approaches to talent management. Lessons learnt from the leading practitioners, who shared their insights with ACCA and Chartered Accountants ANZ in developing this report, are key to understanding those changes. Skills and attitudes fit for SMPs SMP leaders are reconfirming the importance of attitudes and skills set out in ACCAs seven professional quotients (ACCA 2016a) and Chartered Accountants ANZ Capability model (Chartered Accountants ANZ 2020). The importance of adaptability and readiness to engage in continuous learning, openness to sharing and readiness to take responsibility during early career stages were recurrently underlined as key for a successful career in SMPs. Shared values are becoming increasingly important for both employers and employees working for small practices. Building the recruitment brand The recruitment brand is as important for SMPs as the client brand: key arguments for attracting talent to SMPs need to be clearly communicated. This is important for SMPs that do not have dedicated recruitment resources, where interviewing and screening candidates is a major drain on time. SMPs have a compelling story to attract talent, and practice leaders are actively using social media both to convey their message to potential candidates and to engage them in a dialogue. We suggest 10 clearly formulated key areas for talent attraction that can be used by practice leaders building their recruitment brand. 1. SMPs help businesses and wider society 2. SMPs offer personal growth, development and a long- term career 3. SMPs have a spread of ages from 17 to 70+ and are already learning how to manage the multi-generational workforce 4. SMPs offer variety and are a springboard to career mobility 5. SMPs are creative and work at the cutting edge 10. SMPs are a peoples business 9. SMPs provide the opportunity to see the concrete results of ones work 8. SMPs provide opportunities for participating in the success of the business 6. SMPs offer worklife balance 7. SMPs are ethical FIGURE ES1: 10 ways of rethinking the employee proposition 6 CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES | EXECUTIVE SUMMARY Attraction strategies The recruitment techniques used by SMPs are evolving. Some SMPs use psychometric testing or profiling, particularly when looking at the balance of skills they want to bring into their teams; others ask their candidates to submit videos about themselves instead of writing covering letters and CVs. Those innovative practices have proved their value during the COVID-19 pandemic, when face-to-face interviews were impossible. Talent development and retention Staff retention can be a critical issue for smaller practices. Progression is often said to be key to retention, with the opportunity to learn and develop new skills. It is important to look at development and retention together. The majority of SMPs do not restrict their employees to in-house development programmes, but instead support their initiatives for self-curated training and provide financing for external training opportunities. The use of mentoring, inter-generational cooperation, working in pod systems, networking, and involvement of employees in community work are just some of the approaches used by SMPs to develop staff. Building a continuous learning culture that can engage and support the workforce to adapt and transform in line with business needs is of vital importance for SMPs. The importance of purpose It is more important than ever for SMPs to demonstrate their wider contribution to society, and employees increasingly look for careers that are purposeful and for jobs that have meaning. Since the outbreak of the COVID-19 pandemic, this has become even more important. SMPs provide opportunities for employees to shape the success of businesses and have the satisfying experience of seeing the result of their efforts, in a similar way to those engaged in artisanal work, that often is a missing component in the corporate sector. Purpose, and not just pursuit of profit, is fundamental for all organisations and SMPs are no exception. Transparency is a prominent issue and it works both ways: both SMP employers and employees need to be open about their own plans and ambitions. Careers reimagined Career progression in SMPs is as much about personal and professional development and growth as it is about job titles and pay scales. Larger SMPs have more opportunities to offer a variety of career paths, potentially offering the ability to switch between departments and specialisms. But employees in smaller practices have a natural progression too as the complexity and sophistication of their work grows. Career pathways are less anchored to traditional vertical models and pyramid-shaped organisations. This requires SMP leaders to reconsider how they support careers and design jobs for their employees. Lessons learnt from COVID-19 The COVID-19 crisis has shown that the majority of SMPs, particularly those with a strong digital core, are ready to adapt rapidly to the changing world and could drive the transformation of the sector as a whole, thanks to their agility. Their pre-existing remote working culture and adaptability have facilitated the transition of SMPs to the 100% virtual environment that has been essential for most during the lockdown. A number of SMPs have decided to keep working 100% remotely. This will require a review of their approach to talent management, including remote on-boarding and mentoring. Top tips for SMP employers, employees and candidates To assist the SMPs talent management activities, this report offers a practical checklist for talent attraction, development and retention designed for SMP employers. This is followed by top tips for SMP employees and prospective candidates wanting to succeed in their careers in SMPs. PURPOSE, AND NOT JUST PURSUIT OF PROFIT, IS FUNDAMENTAL FOR ALL ORGANISATIONS AND SMPs ARE NO EXCEPTION. 7 CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES | EXECUTIVE SUMMARY TRANSPARENCY IS A PROMINENT ISSUE AND IT WORKS BOTH WAYS: BOTH SMP EMPLOYERS AND EMPLOYEES NEED TO BE OPEN ABOUT THEIR OWN PLANS AND AMBITIONS. 8 CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES | INTRODUCTION The small and medium-sized practice (SMP) sector is rapidly embracing digitalisation. This clearly has an impact on skills and career paths among the SMP community. Introduction Careers in Small and Medium Sized Accountancy Practices brings together the thoughts of SMP practice leaders from around the world on how global trends in the accountancy and finance profession are shaping the skill sets most demanded of accountants and the approaches to talent attraction, development and retention within SMPs. This report continues the series of publications that was initiated by The Passionate Practitioner (ACCA 2019a), which explores different aspects of the digital transformation of SMPs. It is also an adjunct to a broader ACCA report on the future careers trends in accountancy: Future Ready: Accountancy Careers in the 2020s (ACCA 2020a). The opportunity for small and medium sized practices to grow in todays business environment is unprecedented. Digital transformation, in particular, is truly enabling smaller accountancy firms to reimagine the services they offer, but successful change is critically dependent on attracting, developing and retaining the right people. This practical report is designed, firstly, for the leaders of SMP practices, to assist them in talent management and development. Secondly, it is for accountancy professionals or those with other profiles looking at SMPs as potentially their next professional destination. The report is based on the findings of more than 60 interviews conducted with SMP experts from around the world and provides a breadth of practical insights on talent attraction, development and retention within SMPs. Concrete examples of these important aspects are integrated throughout all chapters of the report, illustrated by interview quotes and case studies. WHY IS THIS REPORT DIFFERENT? 1. It focuses on practical aspects of careers specifically in SMPs underlining both challenges and opportunities relevant for this field. 2. It is entirely based on real-life case studies and the testimonials of leading SMP experts. 3. It has global reach and covers case studies from 20 countries around the world. 4. It formulates a set of strong messages about how SMPs can attract talent and position themselves in the broader accountancy field. 5. It suggests top tips for both SMP employers and employees. 9 CAREERS IN SMALL AND MEDIUM SIZED ACCOUNTANCY PRACTICES | INTRODUCTION Case studies We conducted more than 60 interviews with SMP practice leaders and employees from 20 countries. SMPs whose teams we interviewed are diverse in their business models, of which some prominent ones are shown in Figure I1 below. n The ambitious sole practitioner: highly networked and visible, serving clients and winning business proactively. n The digital start-up: usually centred on one or two entrepreneurial pioneers, starting from scratch and mainly focusing on servicing high-growth small businesses with a strong digital core. n The transformed partnership: traditional firms taking a variety of approaches to transitioning their firms to digitalisation, from big bang switchover to building a new practice alongside the old one. n Micro practice with a strong expert network: a newly emerging model in which a highly networked sole practitioner is backed by a strong network of experts in diverse areas, often with international clients and a network base of experts. Despite the diverse business models, we see more commonalities than variations in talent management traits across different practice types and regions. FIGURE I1: Some of the business models adopted by SMPs The ambitious sole practitioner The d