In previous posts we wrote about changes facing accountants and CPAs with regard to technology and its ramifications for the industry. But today’s focus is a bit different: How firms will be affected by the future changes not just in technology but also the outlook and expectations of the workforce. Firms will be the big driver of any changes in the field which makes it critical that the normally slow-moving and risk averse profession develops a new culture to handle the upcoming changes.
Firms are facing technological change because, of course, they’re made up of the aforementioned accountants. But firms also face organizational effects. Tech advancements can permanently affect whole industries (Just ask the record companies) and accounting is no different. Look at Turbo Tax. How many 1040 filers and their accompanying revenue have been lost to it? This is a significant amount of a significant segment that isn’t coming back and firms have had to figure out how to replace those dollars.
But it can go further than this. The internet and search engines make information easier than ever to access. But creating a website – a professional-looking website – by one’s self is also much, much easier to do now. The combination of these two has given rise to competition from unqualified “accountants”. These are people who, even though they don’t have as many credentials, experience and/or as much education as the pros, can now present themselves as legitimate service providers. They charge lower fees and try to undercut established firms. Of course, as we’ve discussed previously, there’s also the tech advancements that have and are making the historical grunt work of accounting a commodity. These things are – or should be – forcing firms to reimagine themselves and the services they provide.
The Worker and Workplace of the Future
One of the big things that the industry needs to examine and evolve is how and where they work. Accounting firms are rather staid. They want you at the office between certain hours every day, completing tasks, and billing hours. But there are a few issues with this.
First, with so much of the grunt work disappearing due to technology and outsourcing Accounting will be forced to focus more on not-easily quantifiable work such as financial strategy and management accounting. These things – lucrative value-added, project-based work – lend themselves a lot more to fees or set costs for different types of projects as opposed to the billable hour. This disconnect will be felt more acutely in the coming years.
Second, the employee of the future will want more flexibility with regard to working. Working remotely, for example, has become common enough that in the coming years people will expect it as an option available to them. The most talented prospects will go to companies that offer this sort of flexibility. Wouldn’t you rather work for a place that was willing to work around/with your life? This is particularly true of Millennials which are the largest generation ever.
Technology has and will continue to facilitate such working arrangements. Everything is moving into the cloud which is becoming more and more widely accessible. Software, such as Google Docs and Google Sheets, allow real-time simultaneous editing by more than one party. Forget about using a laptop – you can do this stuff from your phone nowadays. There won’t be a reason to have to show up at a particular place for a particular amount of time to do your job and do it well.
Lastly, the flexibility that technology provides will help firms that are going to need to go global to expand and/or remain profitable. Really, this would include most firms. The world is coming closer and closer together so firms will need to be able to transcend borders to keep and acquire clients. Additionally, the cloud also helps cost efficiency because it reduces the amount that needs to be spent on leasing office space,
The billable hour. This has been the key metric for accounting firms forever. The more hours you worked the more money the firm got. Easy. Cut and dried. But, given everything discussed above, is it still relevant for today’s world? No, not really.
Appreciating value and the contributions of people as opposed to simply how much time they spend on an assignment is a foundational shift that must happen as it crucial to the evolution of the field. We don’t need to focus on time spent on an assignment because the client won’t care – they just want good direction and results and will be happy to reward that. And what incentive does Accounting have to improve, innovate and move faster to get those solutions if logging hours is the objective?
Finally, the talent of the future is not going to want to work for a firm that is timesheet-obsessed. They care more about creativity and fulfillment than racking up the hours.
Finally, another much-needed change is making talent development an important part of the culture. Like a lot of other fields, Accounting has never really had any strong or consistent leadership training. Good performers got promoted and those who figured it out on their own rose while other, perhaps more talented and valuable employees, didn’t.
The problem is that the industry is shooting itself in the foot by leaving the next generation of leaders – and leadership ethos – up to chance and this can have disastrous industry-wide effects.
But this problem will become acute in the coming years because of the anticipated people drought. Consider the combination of factors that make this a concern.
- 40% to 70% of today’s CPAs – by and large Baby Boomers – will be retiring or eligible for retirement in the next 10 years.
- There is a projected growth rate of accounting positions of 15 – 20% in the coming years.
- There are only about 55 million Gen X’ers vs. 75 million Boomers
So there will be more openings and less people to fill them. But this also means that there will be a much smaller pool from which to draw future leadership which makes makes having a program to identify and groom them even more important. Another issue is that Millennials will have to have their development fast tracked to help pick up the slack. This can only happen with well thought out methods.