Accountancy Firms Say Succession Planning More Important Now Than Before Recession
• Only 8% of accountancy firms NOT carrying out succession planning – below UK average (21 %)
• But 33% of firms are concentrating solely on short-term succession planning (compared to 22% across the UK) – pragmatic response to talent exodus or self-fulfilling prophecy?
Accountancy firms say succession planning is now more important to them than it was in 2006, research from Randstad Financial & Professional, the specialist accountancy recruiter, has found.
In a poll of 100 leading HR directors, 75 per cent of HR directors working in accountancy firms said it was now more important than it had been before the economy crashed.
According to Workpocket 2014/15, Randstad’s guide to HR, published today, succession planning focuses on identifying potential future leaders to fill key positions. In a climate of talent shortage and lack of confidence in leadership potential, there is renewed interest in succession planning – 67 per cent of HR directors working in accountancy firms say it is likely to become a higher priority in the future.
The poll suggested only 8 per cent of accountancy employers are failing to undertake succession planning of any kind compared to 21 per cent of employers across the UK – and 23 per across the US .
The issue is a serious one. KPMG’s 2014 Global Audit Committee Survey found that audit committees are worried by the succession planning for top roles. Their report, which surveyed 1,500 audit committees across 34 countries, found that two thirds of UK respondents said that the issue of talent management was not given sufficient agenda time.
Tara Ricks, MD of Randstad Financial & Professional said: “Sound succession planning is not just about risk-mitigation. It helps to ensure key employees know they’re being groomed for a particular position, which gives them a strong sense of having a clearly defined future within the company. This is a powerful retention tool and keeps people from leaving their company for greener pastures.
The talent management and retention elements of succession planning are becoming more pertinent as the UK’s pool of qualified accountants shrinks in the wake of punitive visa changes, forcing down the number of foreign accountants working in the UK. For instance, The South African Institute of Chartered Accountants says the number of their member working here has fallen more dramatically – from roughly 4,880 in 2013 to just 2,760 today. And membership of NZICA UK, the UK branch of the New Zealand Institute of Chartered Accountants, has shrunk 12% over the last five years – from 2,304 in September 2008 to 2,023 in September 2013.
Tara Ricks said: “With the growing talent shortage at senior and middle manager level, really competent succession planning is more important than it has been for years – especially as it’s no longer possible to rely on pay packets and bonuses to retain the best top 15 per cent of your workforce or on well-qualified foreign accountants to fulfil talent needs.
SCALE OF SUCCESION PLANNING IN FIRMS
Additionally, of those organisations carrying out succession planning, 50 per cent of accountancy employers focus on the top three levels of management and below – compared to the UK average of 37 per cent.
Tara Ricks said: “Traditionally, companies felt succession planning should be limited to a handful of senior management positions. By focusing on only the top one or two levels of management, the process was supposed to remain manageable as only a small percentage of the workforce will be involved in succession planning. But that risks demotivating and alienating a large portion of your workforce. Plus, as recruiters know, a growing number of middle-management positions are becoming as challenging to fill as some of the top spots. From this point of view, accountancy firms are paragons of succession planning virtue.”
BUT SUCCESSION PLANNING IN ACCOUNTANCY IS NOT PERFECT
Almost half (44 per cent) of the UK’s blue-chip employers undertake both short and long-term succession planning. But in accountancy, it’s only a third (33 per cent). And while more than a fifth (22 per cent) of UK wide firms are concentrating solely on short-term succession planning – in accountancy, it’s a third (33 per cent).
Tara Ricks said: “You can raise the bar on your succession planning or watch your top talent – and a host of competitive benefits – fly out the door. If you are going to do succession planning well, you can’t just go through the motions. Effective succession planning can’t be done in a vacuum and needs to be an integrated component of a company’s approach to talent management. It’s a part of the HR process that just isn’t being properly exploited. Large professional services firms are renowned for being an excellent source of talent for inhouse positions and this may be why the sector’s succession planning appears to be so short term. You could call it pragmatism. After all, how many partner roles are there? But it might also go some way to explaining the problem.”
Randstad Financial & Professional suggests that, to ensure firms are recruiting with an eye on the long-term, rather than simply filling a whole in their workforce, the process needs to begin as early as initial interviews during the recruitment process
Tara Ricks said: “This is no longer about deciding who’ll take over if the senior partner decides to retire early. Succession planning needs to become a process whereby a firm ensures employees are recruited and developed to fill key roles within the company. Asking the question “where do you see yourself in five years’ time” is not enough - far better to ask them what skills and abilities they can build on and how they’ll go about adding value to the firm in the future.”
The 2014/15 issue of Workpocket can be ordered here: