UK employers lack sparkle with golden age workers
When it comes to employing people over 55, the UK ranks 21st out of 35 countries. PwC’s Golden Age index has Iceland, New Zealand and Israel at the top of the league. One way of interpreting all this is that nations could be richer if people had longer working lives. Potentially to the tune of $3.5 trillion if everyone across the OECD had similar older-folk job rates as New Zealand.
The number-crunchers at the Big Four accounting firm say: "GDP could be boosted by about £180 billion a year if the UK could match New Zealand’s employment rates for the over-55s."
However, the prospects of that happening don't look that rosy at the moment. PwC reckons: "Up to 23% of UK jobs currently held by 55+ workers could be displaced by automation technology in the next decade."
Improved in the UK
But they do say that employment of older workers has improved in the UK in recent years.
The index is a weighted average of indicators – employment, earnings and training – that reflect the labour market impact of workers aged over 55.
Employment rates of older workers differ across the country, ranging from 75.3 per cent in the south-east, to 63.2 per cent in Northern Ireland.
PwC says there are three key reasons for these differences:
- regions with lower older worker employment rates tend to be the lower performing regions and have lower overall employment rates too.
- regions with a greater proportion of older workers with degrees tend to have higher employment rates.
- lower older worker employment rates are often driven by lower female employment rates, with these low-performing regions tending to have a greater disparity between male and female employment rates. For example, in Northern Ireland, the difference between female and male employment for over 50s is about 12 percentage points.
John Hawksworth, PwC chief economist, says: “The UK needs to pick up the pace in increasing employment for older workers to keep up with the likes of Germany, which has climbed the rankings from 21st to 14th place."
Automation technology
In the UK up to 23 per cent of jobs currently held by 55+ workers could be displaced by automation technology in the next decade. In particular, technology is likely to be used to complete tasks such as clerical support and simple decision making.
This potential risk to older workers is greater than the average for workers of all ages in the UK (20 per cent). Older female workers face a higher risk of job automation compared to their male counterparts within the next 10 years.
Dynamic issues
Looking further into the future, expectations for technological advancements in physical labour and problem solving of dynamic issues could further increase the risk associated with job automation to an average of 32 per cent for older workers by the mid-2030s.
But the report also emphasises that AI and robotics will boost economic growth, leading to new job creation for workers who can adapt to these new technologies.
Hawksworth adds: “The ability to adapt to new technologies and a rapidly evolving working environment is crucial for people looking for employment in later life. AI technology can boost economic growth, generate more labour demand and support longer working lives."
FRC criticises KPMG audit; plus I'm an accountant for art's sake!
Big Four firm KPMG is again on the receiving end of some tough criticism from the UK accounting watchdog. The Financial Reporting Council says there has been an "unacceptable deterioration" in the work KPMG carries out for the UK's biggest companies.
Aside from the question "could there have been an acceptable deterioration?" the criticism is yet another body blow to the reputation of the accounting giant. It will heighten the pressure on KPMG, which has seen itself at the centre of several scandals over the past year, particularly the collapse of Carillion, which KPMG had audited for 19 years.
The FRC, said half of KPMG’s audits of FTSE 350 groups needed “more than limited improvements” and pointed the finger at KPMG's management rather than its front-line auditors as such.
Our key concern
But the FRC added: "Our key concern is the extent of challenge of management and exercise of professional scepticism by audit teams, both being critical attributes of an effective audit, and more generally the inconsistent execution of audits within the firm."
KPMG audit chief Michelle Hinchliffe, said: “We are disappointed that our overall audit quality score for our 2016/17 audits has decreased by four per cent and that the steps taken in previous years have not resulted in the necessary improvements to audit quality. We are taking action to resolve this. We want all of our audits, regardless of size, to meet the highest standards.”
General decline in quality of work
KPMG's audit performance was poorer than its Big Four rivals, EY, Deloitte and PwC. Having said that none has particularly shone of late and there has been a general decline in quality of audit work resulting from failures to challenge management and insufficient scepticism. Many are calling for the Big Four to be broken up and for the consultancy and audit functions to be separated.
FRC boss Stephen Haddrill says: “At a time when public trust in business and in audit is in the spotlight, the Big Four must improve the quality of their audits and do so quickly . . . firms must strenuously renew their efforts to improve audit quality to meet the legitimate expectation of investors and other stakeholders.”
On a different note, Frank Dunphy, the accountant who helped artist Damian Hirst amass a fortune, is to sell his £10-million collection at Sotheby’s in September. It includes some of Hirst's work, such as Yellow Ball.
Dunphy was key in reducing the commission paid to art dealers from 50 to 10 per cent when selling Hirst's work. He also launched a £111-million one-man auction at Sotheby’s in 2008, which replaced the dealer’s cut with an auctioneer’s commission. Hirst’s wealth rose to more than £600 million on the back of the move.
Art. Or artful?
IRIS CFO wins top finance professional award
Congratulations to IRIS CFO Elona Mortimer-Zhika, who has won finance professional of the year in the Venus awards for women in business.
Elona was recognised in the working women's Oscars for her dedication and tenacity.
The Thames Valley region award follows IRIS's recent acquisitions of Star Computers and Taxfiler and the buyout by Hg Capital and ICG. Elona was instrumental in the recent sale of the business, which was the UK’s largest ever and Europe’s third largest ever private equity led software buyout, representing an enterprise value of £1.3bn.
Approach to leadership
Elona has a refreshing approach to leadership. “I like to lead by example and earn my stripes," she says. "I believe that great leaders should be humble. There are always ways to improve and I learn from both my peers and my team. My motto is, ‘It’s more important to get it right, than be right’.”
The accounting software group boss grew up in Albania and came to the UK when she was just 16 on a scholarship programme. Elona balances her career and family, raising two boys aged two and six.
As well as a highly demanding job, she finds time to enjoy as much as possible with her children, whether it is attending school activities or spending the weekend bargain hunting with them for Thomas the Tank Engine sets at car boot sales.
Strive to do the right thing
Kevin Dady, CEO of IRIS says, “We all strive to do the right thing, and do it well. The passion across the business to create products and environments that customers and staff love, is at the heart of all we do. Elona’s award is inspiring for us all and testament to her approach throughout her career. We are all very proud of her achievement.”
Having started her career at Arthur Andersen and then Deloitte, Elona’s previous roles include SVP chief of staff for Mavenir and VP of commercial finance for Xura and Acision.
She was nominated by recruitment groups Rapid and Firefly The Venus Awards were set up in in 2009 by Tara Howard in response to the lack of recognition of women in business. Now spanning eight UK regions, the awards recognise the dedication, effort and skill in juggling business and other commitments.
Seven skills that are the hallmark of eager beavers!
I came across this two-part question the other day: "Is there someone on your team who seems unusually productive? Someone who gets a huge amount done — without working longer hours?"
Productivity on a wide scale is a tricky concept. It's got loads of economists scratching their heads. Take Britain's low wage, low productivity economy as an example. Then add artificial intelligence and automation to the mix.
During the industrial revolution in Britain, it was worthwhile investing in machines/automation because of the relatively high cost of labour. That's not so much the case these days. Yet many are fearful of the threat of automation. Probably rightly!
Manage workloads effortlessly
Anyway, I digress. What interests the questioners at the top of my blog is productivity on a micro scale. It's not about the Hotel California colleague (they can check out any time they like, but they can never leave) ... it's about the ones who manage their workloads effortlessly and are still home in time for the early kick-off from Volgograd. This is altogether easier to grasp as a concept.
Productive people are in every sector. According to the Harvard Business Review, the most productive software developers write nine times more usable code per day than the average developer. According to research by Michael Mankins, the best fish butcher at Le Bernardin restaurant in New York can prepare three times as much fish as the average one and the best sales associate at Nordstrom sells eight times more clothes.
Leadership development consultants Jack Zenger and Joseph Folkman collected data on 7,000 people rated by their manager for productivity. Here, I'm going to share the seven top skills/traits/behaviours, as identified by Zenger and Folkman.
- Stretch goals. "A big project encourages you to pick up your pace and eliminate all distractions. There is some great magic that occurs when people become riveted by the thought of achieving a stretch goal. The people in our study who got the most done made setting stretch goals a habit."
- Consistency. "We all know people who are 100 per cent reliable. If they say, “It will be done,” it will get done. In our study, the most productive people did not see their productivity ebb and flow over time; they didn’t procrastinate only to pull all-nighters later on. Instead, they figured out how to consistently deliver results. There was a cadence and a rhythm to their work that seemed to keep them going.
- Knowledge and technical expertise. "When you know what you’re doing, you don’t have to sacrifice quality for speed. You don’t need to spend time searching online for a good tutorial, or asking a colleague for advice. The most productive professionals didn’t hesitate to ask for help when they needed it…but they didn’t need it that often. They also intentionally acquired new skills and worked to expand their expertise. That helped them be skilful, exacting, and quick in their execution."
- Drive for results. "Most people are willing to accept responsibility for accomplishing goals and to work at a reasonable pace to achieve expected results. But there are a few people who have a great desire to accomplish results sooner and quicker. They are overjoyed to be able to check something off their to-do list. They’re competitive — and they compete not only with their colleagues but also with themselves. They like to set new records for performance and then beat their own best.
- Anticipating and solving problems. "The most productive people come up with innovative solutions and accomplish work more efficiently. They also tend to anticipate roadblocks and begin working on solutions in advance, and so avoid some of the problems that other people run into. Social psychologists call this mental contrasting — thinking about what you want to achieve and what might get in the way of your achieving it — and have found that it helps people achieve their goals."
- Initiative. "For many people, the hardest part of getting a job done is starting. The most productive people start quickly, and they never wait to be told to begin. They ask for forgiveness, not permission. And indeed, their bias for action can get them into trouble sometimes — they might start executing a project before all parties have bought in, say. But their bosses rarely complain, because their results tend to speak for themselves."
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Collaboration. "So far it might sound like we’re describing a person who is a brilliant individual worker but can’t work well with others. But that’s not what our study showed. In today’s complex organisations, very little gets done by someone acting alone. Everything is highly interdependent. The most productive people in our study were highly collaborative and worked well with others. They didn’t have to spend a lot of time soothing ruffled feathers, because they didn’t ruffle many feathers in the first place."
Five ways to improve your clients' experience
Being a professional and building your practice is challenging. There are many things to take care of ... and time can be at a premium.
But, no matter how busy you are, you can’t forget the most important aspect of your business — your clients. Their needs must be understood and be met. And the key is to create an experience that adds value to your clients. It’s all about building real relationships.
Who is doing it in your practice or business? During the past decade, while helping accounting firms grow and expand their practices, we discovered that many business developers focus only on winning the next client or the next project.
A lot give little consideration to winning many more projects with the same client. Building strong client relationships is an integral business development strategy to improve your practice’s bottom line and support its long-term growth.
Happy clients will keep coming back, and they may also recommend your services to others.
Here are five ways to support business development and improve the client experience with your practice:
1. Create a client experience strategy
Most professionals include in their business development plans a strategy that helps them to take the right direction in building their practice.But I rarely find professionals that include in their business development plan a special part dedicated for “the client experience strategy”.
This the process of documenting your client’s journey so you will understand better how to serve their needs. The overall success of the project and your client experience depends very much on the successful implementation of each part of the project.
2. Close the client experience gaps
Research shows that many professionals lose clients and return business from existing clients owing to poor client service. So what’s missing from your practice client experience?
Do you have an onboarding package for every new client who joins your practice? Does every new client joining your practice receive a welcome call or an email from the right person in your practice (or even from yourself)?
What are the first three touch points of your new client with you or your practice? How do you make these interactions different from any other professional practice?
Do you take advantage of the time you have to nurture your relationships? In order to succeed and close these client experience gaps, you need to:
- Understand your clients' business.
- Understand your client target clients.
- Understand new innovative tools to business development and create amazing client experience.
We suggest you identify ways to enhance your communication with your clients, as part of your practice business development. Be proactive and learn how to identify gaps in your clients’ experience to improve your and your team’s performance.
3. Deliver more to your clients
You have been hired by your clients to solve their problems. However, providing solutions is only one piece of the puzzle. In this 'connected age' clients also want you to know them, like them and trust them, before providing your services to them. Clients expect you to earn their loyalty.
To do so, you need to push beyond the primary business development goals of your practice. Think of other ways you can satisfy your clients. How can you help them reach their secondary objectives? A simple example could be introducing your client to another valuable client of yours. In my practice, I used to do it at least once every week.
Other ideas could be sending a simple “thank you” card for being your client and for their continued support, organizing a special event for your clients. Surprise your client with something extra. They will appreciate the genuine attention you give them.
(Remember: If you are busy, we can help. We implement these ideas and more on a regular basis for many professionals and the results are astonishing!)
4. Conduct an external client assessment
Do you know how many clients of yours are not fully satisfied with your services? What did you do in the past three months to learn more about the things that your clients want you to improve?
You need to learn the art of “asking” to ask your client the right questions, in the right order, in the right timing to get the information you need to improve your practice services and business development.
If you want a real assessment of client satisfaction, you need to conduct an external audit. When it comes to business development and building clients experience, do not rely too much on opinions and intuition. You need to get actual insights by conducting a proper project to ask and assess your clients’ satisfaction.
5. Focus on your commitment to help
You need to be able to understand the client’s business and to be able to recognize what they’re actually seeking.
Once you find it, focus on it, and demonstrate a commitment to help your clients to achieve it. How do you demonstrate this? One of the most common ways is by using a simple question for every client of your practice. I do that every 4-6 months.
I ask my clients: “What’s your current greatest concern?”. This single question encourages them to be clear on their needs. It also allows me to reassure my clients that I can help.
Are you interested to learn how I can help you maximise your results from business development? Feel free to schedule a FREE call with me HERE
Pimlico 'gig' plumber was in fact a worker
As a rock music fan who has attended many amazing concerts over the years, I have always felt the term "gig" when attached to "economy" glamorised something that was, in essence, uncertain, precarious and had the potential to be not particularly lucrative.
So I was glad when I read that a court had ruled against Pimlico Plumbers. Gary Smith had worked as a 'gig' or self-employed plumber with Pimlico for just over five years. After suffering a heart attack he asked for his gigs, or days, to be cut from five a week to three.
Pimlico said no because they didn't think he was an employee. They also took back his company van.
Reality was a shift swap
In addition, the tribunal found Pimlico had a control over Smith’s “appearance and the cleanliness of his uniform,” and over his ability to compete with Pimlico when he stopped carryingr out jobs for it.
The case went to the employment appeal tribunal and the court of appeal, but the decision remained – he was a worker. This is important when one considers the growing self-employed or gig sector in the UK.
Gig economy employment
Many are now calling for clear regulation to alleviate confusion over worker status.
From the point of view of companies, David Harmer, tax consultancy manager at Abbey Tax division, Accountax, companies need to understand when someone can be considered self-employed for employment law, as well as for HMRC’s purposes, which may be different!
"Remember, although your contracts may be watertight the courts always look at the reality of the relationship - not just the words."
Paving the way for radical reform
The Pimlico decision may well pave the way for radical reform.
Harmer says Pimlico Plumbers’ appeal was hindered by the written contracts it had in place with Smith; the courts highlighted the issues around wording of the contracts, the lack of express written confirmation in respect of substitution and control and the style of language used in the contract itself.
The written contract did not establish the self-employed relationship desired.
Properly drafted contract essential
Harmer adds: “In our opinion, this judgment should not be seen as the end of the gig economy.
"The facts of this case are vastly different to other high profile cases regarding drivers and they do not automatically set a precedent by which these other cases must be judged.
“This case does, however, highlight the fundamental importance of having a properly drafted contract which provides clear and express rights and intentions.
“We have been strongly advocating this message, which is why we always thoroughly review contracts and working practices to ensure our clients have a robust written contract they can rely upon.”
Women feature in top five accountants aged under 35
Three women feature in 2018's top five accounting and finance professionals aged under 35. The Accountancy Age list highlights talented accountants who have made big career contributions so far.
A No. 5 is Sophie Falcon, case manager, at ICAEW Professional Standards. Sophie had nine years at PwC, before joining ICAEW nearly four years ago. She reviews accountants' tax work and assesses conduct.
She has worked with other professional bodies responding to the government’s challenge to the accounting profession in 2015. The result was revisions to the Professional Conduct in Relation to Taxation (PCRT) that was introduced last year.
Tax planning case studies
Sophie led discussions with HMRC on for all seven PCRT members once the new 'Standards for Tax Planning' had been drafted. She looked at tax planning case studies, explored what kinds of tax planning would be acceptable under the new standards and what would be deemed as unacceptable conduct. The result was HMRC agreeing that only highly contrived or highly artificial planning is prohibited under the new PCRT.
At No. 3 is Kirsty Mitchell, markets director, at KPMG UK. Kirsty joined the firm as a school leaver in 2008 and reached director in October 2017. She now leads programmes for entrepreneurs and growing SMEs.
Kirsty is KPMG's rep on the "35 under 35” committee of the Confederation of British Business. And she also fronts KPMG UK's integrated growth strategy and leads initiatives involving the Mayor’s International Business Program, Entrepreneurial Spark, the Oil and Gas Technology Centre, and Enterprise Nation.
Varied client portfolio
At No.1 it's Alicia Crisp, partner at MHA MacIntyre Hudson. Alicia quickly rose to manager and then director before being promoted to partner. She runs a varied client portfolio of owner-managed businesses, specialising in helping entrepreneurs navigate the life cycle of their businesses.
Alicia focuses on staff development, encouraging young people into the profession and showcasing accountancy as a “people” job. Alicia developed and led the firm's employee forum. And she has worked with HR to create a careers advice course for the last six months of their training contract and to arrange career meetings with third-year trainees in her office.
Alicia also works with academy schools, as well as supporting clients with financial and regularity compliance.
FRC fines KPMG for misconduct ... but it's not all bad news
Welcome to Daily Insight. I'm choosing two stories about 'big four' accounting firm KPMG to kick off the week. One good. One not so much.
First the bad news: The UK's accounting watchdog has fined KPMG about £3.2million for misconduct in audit work for an insurance tech group called Quindell.
KPMG partner William Smith was personally fined £84,000. And there were stern Financial Reporting Council words for both he and the company.
Criminal investigation
The Serious Fraud Office has also launched a criminal investigation into Quindell following several share-related scandals and a probe into its accounts by the Financial Conduct Authority in 2015.
The FRC said in a statement on Monday morning: "KPMG and Mr Smith, members of the Institute of Chartered Accountants in England and Wales (ICAEW), have admitted that their conduct fell significantly short of the standards reasonably to be expected of a Member and a Member Firm and that they failed to act in accordance with the ICAEW’s Fundamental Principle of Professional Competence and Due Care.
"The Misconduct related to two audit areas, and included failure to obtain reasonable assurance that the financial statements as a whole were free from material misstatement, failure to obtain sufficient appropriate audit evidence and failure to exercise sufficient professional scepticism."
Required standards
KPMG said in a statement: “We regret that some aspects of our audit for the year ended 31 December 2013 did not meet the required standards.”
It added that “certain information given to KPMG [by Quindell] contradicted representations previously made by former members of management. Nonetheless, we accept the FRC’s findings that in two specific areas of the audit, our challenge for the year ended 31 December 2013 should have gone further.”
I came across KPMG story number two in Accountancy Age ... It's all about KPMG's reverse mentoring scheme that was widened out earlier this year following a successful pilot in 2017.
Focus of the KPMG diversity scheme
The focus of the scheme is pairing partners with black heritage colleagues, so that those working at senior levels can better understand the workplace challenges of those from diverse backgrounds. The aim is to improve diversity and inclusion across the firm.
KPMG’s I&D senior lead, Edleen John says about the scheme: "It involves us enabling more senior employees to gain insights and understanding from some of our more junior employees, about their experiences, learnings and day to day life at KPMG.
"However, it’s atypical, it’s not like the usual mentoring where someone more senior imparts their wisdom and knowledge to somebody more junior.
"It focuses on the more junior employees imparting their knowledge to the more senior individuals; sharing information about their background, who they are and what it’s like working here at KPMG.
Sense of community
She adds: "I think it’s [the programme] enabled junior employees to feel a more of a sense of belonging to the organisation and feel like their voices are being heard, and to also build up a sense of community.
"As it’s a group of people who are all on the program at the same time, they are able to build up a broader network of like-minded employees than maybe they would have had exposure to before.
"Similarly through the various networking events taking place, even though they all have a direct mentor or mentee, they also have additional exposure to other partners so that’s been hugely positive."
How to turn the dull into the delightful
I went to the ICPA's London Practice Evolution Seminar yesterday. On the train up to the capital, I was mulling over how boring one of the titles of the speaker sessions appeared to be. "Taxation of Rental Income: From repairs to interest deductions."
Reading it made me worry slightly about what sort of day I was going to be in for. As it turned out, I need not have been concerned. It was a lively and well-attended event with over 100 delegates... mostly accountants in practice.
There were some excellent sessions: from money laundering compliance expert Richard Simms; effervescent ICPA chairman Tony Margaritelli; engaging chartered accountant Elaine Clark; a classy keynote from Steve Pipe; a VAT pitfall avoidance strategy from Melanie Lord; and the latest on MTD from TaxCalc's Steve Checkley.
That suspect title
Daily Insight will be returning to what some of these good folk had to say next week. But, first, let's check out that suspect title. For someone who is new to the accounting world, I was amazed at how brilliantly Croner-i tax expert Colin Walker breathed life into tax aspects of property rental income business.
He reminded me of a law lecturer I had in the 1970s, who kicked off the course by saying: "You're going to enjoy the law... for one thing, it's got a bar!"
Colin started by focusing on repairs/renewals legislation, which has chopped and changed in definition over the years as a result of case law. As regards the HMRC Property Income Manual, he said dryly: "A word of caution. It might not be right and it might be out of date."
Taxable capital expenditure
His talk tapped into the growth in buy-to-let. And the attendees lapped up the knowledge, with lots of enthusiastic note taking. The area of whether expenses are deemed capital or repair is far from straight forward. Whether something is being used in the business.
Take the case of the renovated ship in Law Shipping Company v CIR in 1930. Or the post-war cinema refurbishment Odeon Cinemas v Jones in 1971. Or Burnley Football Club rebuilding a grandstand.
But this was my favourite quote on the subject of whether something is deemed taxable capital expenditure. "Say you had a house, took the roof off, and then turned it upside down and shook it. If it falls out, it's capital."
Excellent and informative stuff. See you next week!
Millennial power and the top young accountants
Today's Daily Insight focus is on millennials. According to a terrific report in yesterday's Financial Times those aged between 22-37 are the world's most powerful consumers.
They are reaching an age now where, according to the big banks, their economic activity is "important". And there lots of them ... 2 billion worldwide. India's 410 million millennials are expected to spend about $330 billion annually by 2020.
But millennials don't want mass-market products made by massive corporations.
They like things to be niche. Think craft beer, tattoos and gourmet ketchup. Artisan coffee and baked goods. Camping experiences captured on video. Lots of technology. Going local. It's probably a reaction to globalisation.
Chilling out in check shirts
But it's not all chilling out in check shirts, though. There is a pervading feeling of powerlessness among many younger people, particularly in Europe and the US. Plus money, especially for housing, is a major worry for lots of millennials.
Which brings us reasonably neatly to Accountancy Age's latest series on the 35 leading accounting professionals aged under 35. The annual ranking "spotlights rising talent in the accountancy industry, featuring those who have made outstanding contributions to their field in their career to date".
Management development programme
The rankings so far posted can be found here. Among those listed up to press, at 34, is Jo Nockels, senior training and communications manager, at TaxAssist Accountants started in practice at Larking Gowen and, in 2010, joined TaxAssist. She became a senior manager in 2014 and in 2016 was selected for the firm’s management development programme.
At 27, is Laura Adkins, director at Whitley Stimpson. Adkins is responsible for the audit of the some of the firm’s largest corporate clients. "She has taken a lead role in growing the business and developing, recognising and rewarding its people. She is a strong advocate for staff welfare and training and is responsible for training across Whitley Stimpson’s four offices," says Accountancy Age.
And at 21 is Philip George, partner at Forrester Boyd. George joined Forrester Boyd on after university, and received successive promotions before being made partner after nine years at the firm. "George is responsible for external business growth and in collaboration with the business development manager actively seeks new business opportunities by informing clients of the potential benefits of cloud accounting," says Accountancy Age.