This is an excerpt from an article that I’m writing for one of our K-Net partners – hope you find it interesting:
Why worry about tomorrow, it never comes? Why worry about future proofing; today is demanding enough? Short-termism can signal the death knell for organisations. Managers ignoring the shifting tide of the external environment run the risk of a loss of quality, customer confidence, competitive advantage, decision-making capability, trust and, in the case of government organisations, public confidence.
The world is changing rapidly and with it the dynamics of the business environment. The risks and rewards brought by these winds of change are both extreme; the questions are, how are you positioned and are you adaptive enough to survive?
Top-level data suggests that the accountancy field is experiencing unprecedented emergent growth; CPA course enrolment, graduates and service demand are all on the increase, with some commentators believing that the accountancy field will be one of the few benefactors from the recent global recession; the AICPA reporting expected growth of 22% between 2008 and 2018.
Don’t break out the champagne just yet; behind this data are other trends that, if ignored, could see US organisations relying on offshore solutions and this growth in demand could just be a red sky in the morning; a sailor’s warning. To understand the challenges, rewards and risks, there is a need to look at the Why that lies beneath the reports and the potential implications; why is this growth happening and what does it mean for the future?
Many organisations have shrugged off the bravado that defined the turn of the century; bitten by the recession, they have returned to old values of risk-adversity and prudence. The last five years have served as a warning that will live long in organisational memory, not only for this generation, but also for the next. However, more than this, it has happened against a backdrop of globalisation, offshoring, an ageing workforce and the power of social media.
Organisations are looking for more than just basic service providers, they need solution providers; consultants and advisors who can provide market intelligence, strategic management guidance and decision-making support. In a world where more and more basic processes will be provided through technology-based solutions, it is the human advantage, a knowledge advantage, that will provide the dynamic platform for future resilience and success. The lower the knowledge-intensity of the process, foregoing more physical, personal service, roles, such as carpenters, the greater the risk to the human resource and the organisation dependent upon their function. There is a clear and present threat that organisations that do not recognise and respond to the need to invest in the development of the dynamic capability of their human resources will face extinction.
Technology challenges organisations supplying simple or complicated knowledge-based services, but it is not the only threat on the horizon. A rise in demand can bring with it the risk of offshoring. If demand outstrips supply, as has been suggested could happen in the accounting and audit field, or if the quality of the supply does not meet the need, then it will either expedite the development of software solutions or it will lead to the use of offshore talent. The indicators for the demand for higher quality can potentially be found in headline figures from the US Bureau of Labour and Statistics; postgraduate hires, in the period 2008-2010, increased from 26% to 40%, while undergraduate hires dropped, from 56% to 43%. The threat of offshoring is also evident; in 2007 Professor Blinder at Princeton University, a former Deputy Chairman of the Federal Reserve, suggested that the US could lose 30-40 million jobs to offshore alternatives in the next generation. Throw into the mix the emergence of the BRIC nations, and the lure of low cost HR solutions, and the alarms bells can be heard to be ringing louder.
As positions in organisations are sent offshore, or replaced by technology solutions, the potential for a new threat arises, one that is rarely risk assessed, but one that could increase the flow of jobs away from the US. People are freethinking, bringing with them variety and variety is the lifeblood of any organisation looking to navigate a complex environment. For example, a recently retired Managing Director of a UK pharmaceutical company said that the biggest cost saving contribution developed by the company during his tenure was brought about by a suggestion from a receptionist in the company. There is a need to recognise that as low knowledge intensity positions migrate offshore there is a consequence to the internal variety available to the organisation. This drives a growing need to engage with open processes that encourage collaboration to compensate for the loss in variety. If this is ignored then organisations run the risk of stagnation, scuttling tomorrow and contributing to the loss of competitive advantage for society as a whole.
More than this, the role of social media has changed the business landscape. Poor service provision, leadership, corporate ethics or corporate social responsibility can harm a brand quicker today than ever before. Every employee and client has a powerful voice that, when amplified through social media, could hasten success or failure at unprecedented speed.
The economy requires organisations to become more dynamic and agile in order to improve their resilience and sustainability. The accounting and auditing field is no different. The future will mould knowledge-intensive roles that need to be occupied by dynamic and agile individuals.
The riches are there to be exploited for those that develop solutions that respond to the complexity and knowledge intensity of the environment in which organisations now operate. In the UK the ACCA reported that the future for accounting and auditing requires a shift beyond the basic procedural knowledge gained in current education practice, to more organisational-centric knowledge. The ACCA signposted key roles for accounting professionals as the field adapts to the needs of the economy: Risk Management; strategic scenario planning; project modelling and consulting; relationship building; intellectual capital accounting and management; and using data and knowledge to improve business intelligence and the decision-making process.
Tomorrow’s challenges are compounded by a sense of dissatisfaction with today’s emerging workforce; perhaps an underlying issue behind the shift towards postgraduate hires. Organisations, both as employers and clients, want problem solvers, good communicators, whether person-to-person or through social media, and people who can collaborate. Many organisations would say that their true advantage lies within the top 20% of their staff; usually their most experienced employees. This begs the question, what is being done to access, retain, share, develop and use that knowledge and expertise across the organisation; not only for today, but as a platform for tomorrow?
Dynamic futures are being built now. Have you risk assessed and scenario planned for these challenges? And what cost to relearn what you already know?