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When Marie Claire McDonnell noticed that Irish Chartered Accountants in Toronto were left out in the cold, she started the Toronto Chapter. Now, she wants the new group, and her career in recruitment, to gain momentum. Tell us about your current role. I recruit mid-senior level accountants in mining, real estate, energy and technology industries in Toronto, Canada. Describe your typical day.  No two days are the same in recruitment. The focus of my role is relationship building both on the client and candidate side. I have control and influence over people’s career choices, which is very gratifying. How did your involvement with the Toronto Chapter come about? I have had a lot of success placing Irish Chartered Accountants in Toronto. In a city that networks significantly, I noticed there was no formal networking group for all the Irish Chartered Accountants I meet. When Fergal McCormack and Brian Keegan visited Toronto in March, I jumped at the opportunity to work with the Institute to set up a committee here and kick-start the Toronto Chapter. Our first event in July 2019 was a great success. We had four Irish Chartered Accountants in a panel discussion about their experiences living and working in Toronto.  What are the best and worst aspects of living in Canada? Best: the quality of life, diversity and there is always something fun going on in the city.  Worst: the winter. We get a lot of snow. I like to ski so I enjoy that side of it, but when it is still snowing mid-April, the novelty has well and truly worn off! What are your goals/plans for 2020? I would like to host three successful events with the Irish Chartered Accountants in Toronto Chapter in 2020. Career-wise, I am hoping to gain momentum in the technology industry in Toronto, which has become a major hub for talent. I recently visited the Robert Walters office in San Francisco and realised there are cross-border relationships which can be developed through our partnerships in California.  What’s the best piece of advice you’ve ever received? The early bird catches the worm! I wake up every day at 5.30am, start work at 7am. I feel those golden hours pre-9am are crucial in providing clarity and structure around the productivity of my day. It is challenging to stay organised in recruitment, so if I have that quiet time in the morning to set my goals for the day, it allows me to be more focused. Marie Claire McDonnell is Senior Consultant at Robert Walters, Canada.

Dec 06, 2019
Careers

Chartered Accountant, John Morgan, explains his five steps to becoming a trusted finance business partner. On 22 September 2002, I was in Croke Park to witness my home county, Armagh, win its first All-Ireland Senior Football Championship Final. Two years into my Corporate Finance career with EY in London, it got me thinking: it’d be great to get home to witness Armagh’s inevitable decade of domination! Having completed my Chartered Accountancy training with EY in Belfast, I was given the opportunity to join a newl y formed team in London that focused on pre-acquisition due diligence for private equity clients. I spent two years in that team, working with amazing people on fascinating deals. My favourite aspect of the role was getting underneath the forecasts in the information memo and working with operational management to understand and challenge revenue and cost forecast assumptions. Getting beyond the numbers and dealing with operational management was something I relished, but it was frustrating to never see whether forecast assumptions materialised. I wanted to not only review and challenge such assumptions, but also work with the management team on implementing the plan. Lesson 1: understand the business I then returned home to Northern Ireland to join BT as a Finance Business Partner, which gave me the opportunity to work with the Operational Director to manage a budget and drive business performance. I immediately got stuck into the detail and came up with money-saving opportunities. BT in the early noughties perhaps still had low hanging fruit, but I immersed myself in understanding the business – both from an operational and strategic perspective. In 2003, the Ireland CEO stood on stage at the company’s annual management conference and spoke about the difference broadband would make to both BT and the country. He seemed convinced that this was a game changer, so I took time out of my day job to spend some time with engineers understanding the network. This taught me lesson number one – to be an effective business partner, you must understand the business from an operational and strategic perspective. This helps on two fronts: first, you gain credibility with the senior operational managers you are attempting to influence; and second, you can become more than a number-cruncher and begin to add value. Lesson 2: build relationships A key lesson for me in the early stages was how to manage key stakeholders with different priorities. Learning to balance conflicting interests is crucial, and this manifested itself with my Operational Director and Finance Director. My first Financial Director wrote on my annual performance report: “has a healthy disrespect for traditional views in BT”. However, my Operational Director did not consider my disrespect “healthy”. He felt that I was not working in partnership with him, so be conscious that your stakeholders may have different priorities and react to your recommendations in different ways. So, lesson number two taught me that unless you can constructively work in partnership with operational management, you won’t succeed. What helps in this respect is objective alignment – you should be on the same side; both striving to drive the business forward. Lesson 3: simplify complex financial data Perhaps one of my first successes was working with my operational Managing Director on driving a material improvement in the cost of installing telegraph poles. The key was being able to distil complex data in a user-friendly manner, which helped drive operational decision-making. My superior felt we were inefficient, so I armed him with some simple unitary analysis that articulated clearly these inefficiencies for both the trade unions and our procurement team. This was critical in negotiating better third-party rates and gaining union agreement to outsource the function. So, lesson number three was the importance of translating complex data into simple, operational language that supported decision-making. I’ve always found unitary analysis really useful in this respect. Lesson 4: be relentless and resilient The bigger the decisions you get involved in, the higher the stakes – and in the early noughties, I learned that you don’t always get it right. Mistakes happen and when they do, the best thing you can do is pick yourself up, brush yourself down and move on. So, lesson four centres around the need to be both relentless and resilient. Lesson 5: do less, coach more As the teens progressed, I started to manage bigger teams, and this leads me to my next key lesson: being an effective leader is the key to success in a senior business partner role. In the noughties, I had more of a solitary role. Now, leading teams of up to 30 people, the balance of time changes significantly as I have evolved from a ‘doer’ into a ‘leader’. It is perhaps my biggest challenge, but unquestionably the most rewarding experience of all. So, lesson number five is that, to excel in senior finance business partnering roles, you need to become an effective leader. Conclusion If you master these five points, you will become a trusted finance business partner. This is what separates a good business partner and a great business partner – moving from merely commentating and recommending, to leading and driving decisions, playing a leading role on some key commercial and strategic decisions, building the business case, and being part of the sign-off on big investment decisions. The line between being a finance business partner and an operational manager can get a bit blurred, which is perhaps when it works best – when you are being asked by the business to step in and do things that you feel is a bit over and above the day job. In the mid-2000s, I led a significant acquisition in Northern Ireland. In the late 2000s, I led the fibre broadband investment business case. And over the last decade, I have signed off on BT’s largest public sector customer bids. When I joined BT in 2003, I never envisaged the fascinating work I would get involved in – from the broadband revolution to leading on some of BT’s largest public sector long-term contracts. But perhaps the most rewarding was building, and being a part of a high-performing team. It all worked out perfectly. Well, almost. What ever happened to that second All-Ireland for Armagh?   John Morgan FCA is Local Government & Health Finance Director at BT Enterprise.

Dec 06, 2019
Tax

While Finance Bill 2019 may have seemed to cater to SMEs, Peter Vale highlights where it includes significant measures for international businesses. The headlines surrounding Budget 2020 and Finance Bill 2019 may have left the impression that most of the legislative changes have been focused on domestic small- and medium-sized enterprises (SME), with less focus on foreign direct investment (FDI) and Irish companies with international operations (which may, of course, include SMEs). The reality is that the Finance Bill was packed with provisions of interest for groups with international operations, either inbound or outbound, albeit many of these were expected and hence didn’t attract the same headlines. Here are some of the key Finance Bill measures for international businesses, some of which were expected, and others which came as a surprise. Mandatory reporting As expected, the Finance Bill saw the introduction of  Council Directive 2011/16/EU (DAC6), which covers the mandatory reporting of certain cross-border transactions to home country tax authorities, to be subsequently exchanged between EU Member States. The DAC6 provisions reflect the ever changing global tax environment and follows on from the Common Reporting Standard (CRS), which was a game-changer in terms of providing for a new level of reporting and transparency. Irish taxpayers might feel relaxed about the new provisions on the basis that Ireland already has domestic mandatory reporting rules, although these haven’t had much bite in practice.  The new DAC6 provisions, however, are much wider in reach, covering not just tax-motivated transactions, but also transactions that may have a “potential tax effect”, but aren’t themselves driven by tax avoidance motives. While the new rules only require reporting from August 2020, they apply retrospectively to transactions from 25 June 2018. Intermediaries and taxpayers need to be aware of the scope of the new rules and have measures in place to track and report such arrangements. Anti-hybrid rules The Finance Bill also saw the expected introduction of anti-hybrid rules, effective for payments made after 1 January 2020, and follow on foot of the binding EU Anti-Tax Avoidance Directive (ATAD1). It is worth noting that the anti-hybrid rules apply to payments made post-1 January 2020 – the actual accounting period of a company is not relevant. So, who needs to be concerned about anti-hybrids? Minority sport? The first thing to note is that there is not a de minimis threshold, therefore all companies irrespective of size are potentially within the scope of the new provisions. The rules target a number of arrangements, in particular where there is a “deduction without inclusion” or a “double deduction” as a result of hybrid mismatches, such as a payment being treated as tax deductible interest by the payor country but as a tax-exempt dividend in the recipient country. It is worth noting that just because a country does not tax a payment does not mean that there is a hybrid mismatch. Thus, the payment of interest by an Irish company to a jurisdiction that does not tax interest income will not be a hybrid mismatch, although interest withholding tax may need to be considered. The anti-hybrid rules are complex. While Revenue guidance (due to be published in 2020) is critical, equally critical is that this guidance is drafted in consultation with relevant industry stakeholders so Ireland’s attractiveness is not adversely impacted vis-a-vis other EU countries. Transfer pricing As expected, the Finance Bill introduced 2017 OECD transfer pricing guidelines into Irish legislation. Other important provisions were also introduced, including the introduction of transfer pricing to non-trading transactions (with limited exceptions), the abolition of pre-2010 grandfathering arrangements and the extension of transfer pricing rules to both capital transactions and to SMEs. The extension to SMEs is significant as it will, at a minimum, add an administrative burden to smaller companies. It is, however, subject to a Ministerial Order. The Minister was reluctant to add to the administrative burden of the SME sector with Brexit looming. Bringing Irish transfer pricing requirements in line with 2017 OECD guidelines will introduce some additional reporting requirements for many companies, with master file and local file requirements now in place.   Of note is that the thresholds for master file and local file introduced in the Bill, €250m and €50m respectively, are much lower than in many other countries. This could trigger additional documentation requirements for some large groups. Many Irish groups will also have intra group financing arrangements in place that may not be arm’s length compliant, and these will now need to be reviewed in light of the Finance Bill changes, which come into effect for accounting periods beginning on or after 1 January 2020. Financial Services/property fund changes There were several changes in the Bill to provisions governing the taxation of Irish real estate funds and section 110 securitisation vehicles. The changes for property funds as initially drafted were unexpected. They were wide-ranging and impacted on funds that only had third party debt. At the time of writing, Committee Stage amendments were expected to correct this anomaly and other provisions that could have inadvertently created a double tax charge for some funds. Additional anti-avoidance provisions have been added for section 110 companies, including the broadening of the control test used in determining whether certain profit participating interest payments are tax deductible, and placing the bona fide commercial purposes test on an objective basis, thereby giving Irish Revenue more scope to challenge aggressive securitisation arrangements.   Interest deductibility limitations Under ATAD1, Ireland is obliged to introduce new rules which broadly restrict interest deductions to 30% of earnings before interest taxes and amortization (EBITA). The Finance Bill did not contain any provisions in respect of these new rules, which are now likely to apply from 1 January 2021 onwards.   In summary, Finance Bill 2019 was one of the most significant in recent years, with new anti-hybrid and transfer pricing provisions, and the introduction of DAC6 reporting requirements. These fulfil Ireland’s commitment to being at the forefront in the adoption of international tax changes and bring our tax regime into compliance with international best practice and relevant EU Tax Directives. Undoubtedly, however, these will add further complexity to the lives of tax professionals and in-house tax teams.  Peter Vale FCA is Tax Partner at Grant Thornton.

Dec 06, 2019
Tax

Kimberley Rowan highlights the key elements of Finance Bill 2019.  Most of the measures contained in Finance Bill 2019 (the Bill) were expected. It consisted mainly of legislative provisions for the tax changes announced by the Minister for Finance as part of Budget 2020. But some measures were not expected. The change to the general rule on tax deduction for any taxes on income, for example, was not expected by most tax practitioners. A handful of other measures contained in the Bill were also surprising. In this article, I will explore the unexpected measures and provide an overview of the key anticipated measures, focusing on those that affect the domestic taxpayer. Peter Vales write about the key Finance Bill measures for international businesses in his article on page 68. Tax-deductible expenditure The Finance Bill includes two changes to the general rules applying to tax-deductible expenditure. First, a tax deduction is not available for “any taxes on income”. This matter has been before the Tax Appeals Commission in a number of cases and now puts Revenue’s view on a legislative footing. This will be relevant in the context of Irish companies that suffer foreign withholding tax on their business profits. The second amendment aligns the tax deduction for doubtful debts with impairment losses under the relevant accounting standards. KEEP The Bill confirms the welcome enhancements to the Key Employee Engagement Programme, as announced on Budget Day. However, new complex conditions seem likely to limit the practical application of the enhancements. For example, the definition of a qualifying group includes only a qualifying holding company, its qualifying subsidiary/subsidiaries and its relevant subsidiary/subsidiaries. The qualifying group (excluding the holding company) must be wholly or mainly carrying on a qualifying trade, must have at least one qualifying subsidiary and all the companies in the group must be unquoted. It seems that the definition does not extend to scenarios where the parent company in a group is a trading company with multiple subsidiaries or where a holding company holds cash or undertakes certain activities. Income tax payments The Bill introduces exemptions for certain income tax payments. The exemptions introduced cover: The reimbursement of expenses by the HSE to an individual for the donation of a kidney for transplantation (under conditions defined by the Minister for Health); Certain foster care-related payments made by TUSLA; Certain training allowances paid by, or on behalf of, the Minister for Education and Skills; and Certain student support payments awarded by SUSI, education and training boards, or local authorities. The Bill also introduces an amendment to clarify the availability of the income tax exemption on a range of payments made by the Minister for Employment and Social Protection, including payments made under the Magdalen Laundry ex-gratia scheme. The amendment is to clarify that a qualifying person for the relief must, in all circumstances, have received a payment under the Magdalen Restorative Justice Ex-Gratia Scheme. Food supplements  The change in the VAT treatment of food supplements was widely expected. The Bill introduces a provision that, with effect from 1 January 2020, food supplements will be subject to VAT at 13.5%. A concessionary zero rating had applied to these products. The change from zero to 13.5% VAT rate follows a comprehensive review by Revenue of the VAT treatment of food supplements, engagement with the Department of Finance in 2018 concerning policy options, the publication of Revenue guidance in December 2018 and a public consultation in May of this year. Revenue will not, as previously announced, apply a 23% VAT rate to these products. There was no change to the rate in last year’s Finance Bill, but Revenue did issue guidance in December 2018 which removed the concessionary zero-rating of various food supplement products with effect from 1 March 2019. However, the withdrawal of Revenue’s concessionary zero-rating of food supplement products was delayed until 1 November 2019 to allow time for the Department of Finance’s public consultation on the taxation of food supplement products in summer 2019. The zero rate continues until 31 December 2019. From 1 January 2020, the 13.5% rate will apply. The change introduced in Finance Bill 2019 will not impact certain products. These are: Well-established and defined categories of food that are essential for vulnerable groups of the population such as infant formula, baby food, food for special medical purposes and total diet replacement for weight control; Human oral medicines that are licensed or authorised by the HPRA are zero-rated for VAT purposes under a different provision. This includes certain folic acid and other vitamin and mineral products for oral use. Once such products are licensed/authorised by the HPRA as medicines, they are zero-rated for VAT purposes; and Fortified foods (i.e. foods enriched with vitamins and/or minerals). Dwelling house exemption  An exemption from Capital Acquisitions Tax may be available in respect of inheritances of certain dwelling houses. One of the conditions to avail of the dwelling house exemption is that the person receiving the inheritance doesn’t have a beneficial interest in any other residential property at the date of the inheritance. Any dwelling house that is subject to a discretionary trust where the taxpayer is the settlor and a potential beneficiary must also be considered. The Bill amends the exemption following the High Court decision in the Deane case in 2018. The conditions of the relief are amended such that all properties inherited from the same estate are to be considered. A clawback is provided for where a beneficiary subsequently inherits an interest in any other dwelling house from the same disponer. R&D tax credit The Bill details the measures announced as part of Budget 2020 while also introducing several new measures. A summary of the key legislative amendments is as follows: Grants funded by any state and/or by the European Union must be deducted when calculating the amount of qualifying research and development (R&D) expenditure; A company that outsources to third parties must now notify in advance of, or on the day of, payment if that company intends to claim the R&D tax credit. Revenue has said that the purpose of this amendment is to ensure that the sub-contractors do not receive such notifications after their R&D claims have been filed. How this notification by the company will work in practice needs further consideration and guidance from Revenue; The application of a penalty for an over-claim of the R&D tax credit has been aligned with the procedure for over-claims of other credits; Where a payable amount or amount surrendered to a key employee is later withdrawn, any offset of losses or credits cannot be used to shelter the clawback on this amount; and Amendment to capital expenditure on scientific research to ensure that relief for capital expenditure on buildings or structures cannot be claimed in respect of the same expenditure. Pension deduction The Bill provides for tax relief for pension contributions made by a company to occupational pension schemes set up for employees of another company in certain defined circumstances. This amendment is to accommodate cases of a merger, division, joint venture, reconstruction or amalgamation where an issue could arise as to whether contributions are being made in respect of an employer’s employees. Specific conditions apply. A few words on the expected The Bill confirms the Minister’s announcement as part of Budget 2020 that there will be no significant income tax cuts for 2020. The Bill provides the legislation for the tax measures announced in Budget 2020 and the ones worth noting are: Extension of both the Special Assignee Relief Programme and Foreign Earnings Deduction to 31 December 2022; Enhancement of the operation of the Employment and Investment Incentive (EII), although a few technical points were not expected; Minor increases in the Home Carers Credit and the Earned Income Credit (up €100 and €150 respectively); The reduced Universal Social Charge (USC) rate for medical cardholders is extended; Extension of the 0% benefit-in-kind (BIK) rate on electric vehicles; Changes to the overall BIK treatment of employer-provided cars (not vans) from 2023; Capital Acquisitions Tax threshold increase from €320,000 to €335,000. The Bill confirms that the increase applies to gifts or inheritances taken from 9 October 2019; Increase in the rate of Dividend Withholding Tax from 20% to 25% with effect from 1 January 2020. Additional information gathering requirements are proposed at Committee Stage on the ultimate payer of a dividend before the payment of a dividend; Increase in the rate of stamp duty on non-residential property from 6% to 7.5% with effect from 9 October 2019; The ‘Help to Buy’ scheme and the living city centre initiative are extended for a further two years; and The R&D tax credit rate for small and micro companies has been increased from 25% to 30%. What’s next? The Bill is scheduled to move to Report Stage at the end of November and after that, as is the customary legislative process, to the Seanad. Under the requirements of the European Union’s two-pack budgetary schedule, a common budgetary timeline applies to all EU member states. As a result, the Bill will complete passage through the Oireachtas and be enacted as Finance Act 2019 by 31 December. More unexpected measures are unlikely at this stage of the Finance Act process. As this is likely to be the last Finance Act before Brexit, and the last before a general election in the Republic of Ireland, any legislative changes to the tax legislation will have to wait until the new government is formed and the next Finance Act.   Kimberley Rowan ACA AITI Chartered Tax Advisor, is a Tax Manager at Chartered Accountants Ireland.

Dec 05, 2019
Ethics and Governance

Boards increasingly need to show how they measure their organisation’s culture, but the key information is likely already available within the business, writes Ros O’Shea. The South Sea Islanders have a word, “mokita”, which translates as “the truth that everyone knows, but nobody speaks”. Other notable definitions of culture include “a system of beliefs, shared values and behavioural norms”, “the way to do things around here” or even the “mood music” or “resting heart-rate” of an organisation. Whatever the definition, stakeholders, still shaken by a litany of corporate scandals including endemic ethical failures in financial markets, now recognise that, as Peter Drucker said, culture does indeed eat strategy for breakfast – and arguably for lunch and dinner too. Their demands have led to concerted efforts in recent years to rebuild trust and restore integrity to the heart of the enterprise. Figure 1 highlights some of these welcome developments, which go way beyond extending the rule book or adopting a tick-the-box approach to compliance. It seems everyone has seemingly landed on the same page, which says: you can have all the rules in the world but there is no substitute for character. Much has been written already about how to cultivate character and foster a values-based culture. Indeed, Chartered Accountants Ireland published my book on the topic, Leading with Integrity, in 2016 and has issued several related guides and research papers since. As organisations seek to embed cultural change, the question everyone is now grappling with is: how do you measure it? How can those charged with governance determine if the tone from the top is being cascaded through the ‘muddle in the middle’ and reflected via the ‘echo from the bottom’? Is it possible, with any degree of accuracy, to properly calibrate an organisation’s mood music or gauge its steady-state operating rhythm?  The answer is yes. My ‘5 Organisational Culture Caps’ (5OCC) approach aims to do just that. Loosely based on Edward de Bono’s ‘Six Thinking Hats’ system (where coloured hats represent different modes of thinking), with 5OCC, each cap is assigned to one of five different stakeholders. By donning each cap in turn and thinking about culture from each of these perspectives, a holistic view is developed of how your espoused values align with how your organisation behaves towards these key constituencies in practice. Four caps are pre-assigned – your customers, staff, shareholders and community all deserve their own headgear. You get to pick who wears the last cap, and your choice is likely to be heavily influenced by the sector in which you operate. For example, financial services firms may well pick the regulator; key vendors may be a valid choice for those downstream in the supply chain; whereas for other organisations, agents or brokers, or other business partners on whom they rely to deliver products or services, may get to wear a cap. Once you determine the full suite of stakeholders, the next step is to select key metrics that best capture their unique expectations of your organisation’s culture. Let’s don each cap in turn. The customer Arguably the single best way to actively test the consistency of stated values with the customer experience to attempt to buy the product or the service. Or you could try to make a complaint and follow what happens. Other key cultural indicators from the customer perspective include: Customer surveys; Net promoter scores; Complaints statistics; Feedback from customer focus groups; Social media and press coverage; Litigation and claims; and Awards and ratings. The staff Here, staff is defined in its broadest sense (i.e. from the boardroom to front-line employees). Again, boards should recognise that only so much governing can be done within the confines of the boardroom, and one of the most effective means of assessing the organisation’s tempo and temperament is to get out and about and engage with staff at all levels. Ideally, this should be done in informal ways and settings (such as townhalls or listening lunches, for example) so that site visits don’t become ‘state visits’. The HR department will be a deep reservoir of information to help you understand and monitor the extent to which values are truly lived across the organisation. There are many possible metrics under this heading, some of which are set out below: Staff surveys, engagement indices and culture audits; 360 reviews of senior management and board evaluation surveys; Remuneration and incentive policies; Ethics training and communication strategies, and their effectiveness; Statistics on staff turnover, absenteeism, safety and disciplinary actions; Whistleblowing and grievance reports, and relationships with unions; Diversity and inclusion data; Recruitment processes, succession plans and promotion decisions; Integrity awards or similar; and Online employee feedback (e.g. via Glassdoor and exit interview notes). The shareholder The nature and extent of shareholder engagement will very much depend on the type of organisation, and metrics will need to be calibrated accordingly. For private, charitable or state-owned firms, it may be a relatively straightforward process to monitor the strength and success of the relationship with the organisation’s owners, trustees or relevant government department – most likely by being party to regular discussions. Some of the following metrics may also be relevant and will certainly be pertinent for companies with a larger and more dispersed share register: Governance structures and board performance; Correspondence and engagement with key shareholders; The AGM experience; Internal and external audit reports; Independence and competence of risk, compliance, audit and legal personnel; Investor or analyst reports; Industry benchmarks; and Transparency and disclosures of financial and other reports. The community Here again the relevant community may be local or global, or somewhere in between, and metrics will need to be commensurate with the organisation’s scale and footprint. Particulars will differ but overall, they will aim to measure the extent to which the business is contributing to – and valued by – the communities in which it does business. Specific metrics are more elusive under this heading, but assessment of culture wearing a community cap will include discussions around: CSR activity in the community; In-house ‘green’ initiatives; CSR ratings and ESG credentials; Sustainability reporting; Progress towards committed UN Sustainable Development goals; Carbon footprint, water use and waste; and Local press coverage. A.N. Other As outlined earlier, you get to pick who wears the fifth cap. If, for example, suppliers are an important stakeholder group for you, measures such as promptness of payment, supplier audits and feedback from key vendors would be important to consider. If the regulator is to wear the cap, relevant areas of focus could include the number of fines, regulatory breaches, risk appetite exceptions, inspection reports and the general tone of correspondence. Metrics can also be devised for any other stakeholders by considering what aspects of your culture are likely to matter most to them. Such metrics may best be ascertained by directly canvassing their opinions. The most helpful aspect of the 5OCC approach is its practicality. Most, if not all, of the information required for the various measures will already exist in your organisation. It is simply a matter of collating and synthesising these valuable, but currently disparate, sources of data to provide a five-way mirror back to the organisation showing how the espoused values are truly living and breathing. There is no doubt that what gets measured gets done. Metrics matter. Boards and directors will increasingly need to prove and publish how they measure and monitor their organisation’s culture and I hope this model is a helpful aide in that endeavour. But again, we must remember that there is no substitute for character. All the KPIs in the world won’t displace the board’s most important role, which is to ensure they have the right leadership team who will do the right things for the right reasons. You can’t cap that.   Ros O’Shea FCA is an independent director and governance consultant.

Dec 03, 2019
Careers

Dr Annette Clancy explains why the granting or withholding of control over employees’ working conditions has a knock-on effect on their physical and mental wellbeing. Do you go to work in an office? Or, perhaps you sit behind a desk in a large space divided up into cubicles. Do you have a large desk or a small one? Is there a window in your office? Or, perhaps an air conditioning unit? Do you display photographs of your family or does management supply posters with pithy quotes such as “the only way to guarantee failure is to never try”? You might wonder why these questions matter, but in recent years psychologists have become interested in why some office  designs make workers happy and others do not. Organisational psychologists are increasingly interested in how work environments affect performance. Research suggests that the size of our desks, how we decorate our workspace and the amount of privacy we have or, if we have a desk at all, contribute to contentment, comfort and productivity. Office optimisation Office design is not a new concept. In the early 20th century, an American engineer named Frederick Taylor conducted a study of efficiency at the Bethlehem Iron and Steel Company. His published study, The Principles of Scientific Management, has become so influential in management studies that it is still widely practised and cited today. He invented the concepts of piece rates, assembly lines and time and motion studies. He was also a proponent of optimising workplaces for efficiency – extraneous equipment, people and furniture had to be moved out of the manufacturing or work area in order to achieve maximum productivity. These principles have been adopted for today’s work environment, in which large spaces can be quickly reorganised by partitions into cubicles or dispensed with completely through hot-desk systems. In 2010, two researchers at the University of Exeter – Alex Haslam and Craig Knight – became interested in office design. They focused specifically on cubicles, investigating how much freedom workers had to design their own spaces and whether the look of the cubicle influenced the work that got done. To conduct the research, they designed four different layouts and asked people to do an hour’s worth of work in each. The layouts were as follows: The first was the ‘lean’ office – a spartan space with a bare desk, swivel chair, pencil and paper; The second was ‘enriched’, which had all of the basics and was decorated with plants and art; The third was ‘empowered’, in which people could rearrange the plants and art any way they wished; and The fourth was ‘disempowered’, in which the respondents were allowed to decorate, and then researchers undid all the personal touches. Office customisation The findings from the research are interesting. A pleasant work environment is important, but on its own it is not enough. People in the ‘enriched’ office worked about 15% faster than those in the ‘lean’ office. Productivity and wellbeing increased by about 30% in the workspaces that people customised themselves. When people’s choices were overridden (in the disempowered office), their performance and wellbeing dropped to the same levels as those in the lean office. The findings from the study show that autonomy to customise the work environment is even more important than the physical environment itself. The bigger issue highlighted in the study is one of control. Granting or withholding control over employees’ working conditions has a knock-on effect on the physical and mental wellbeing of employees. Whether it is shared offices, cubicles or hot-desking, what appears to be a simple exercise in space-saving or cost reduction may also result in productivity issues if not considered collaboratively with employees. Dr Annette Clancy is Assistant Professor at UCD School of Art, History and Cultural Policy. Annette’s research focuses on emotions in organisations.

Dec 03, 2019