Spotlight

SMEs might struggle to recruit top talent in today’s tight employee market, but size could be their hidden strength. With Ireland on track to reach full employment by 2019 and the Brexit-induced migration of large corporations such as Bank of America and Barclays, the challenge facing Ireland’s small- and medium-sized enterprises (SMEs) in the so-called “war for talent” appears daunting. Stories abound that large multinational companies develop sophisticated people management strategies, are able to offer higher salaries and a myriad of employee perks such as monthly back massages, free onsite food halls and ping pong tables in the boardroom. Despite some of the advantages that larger corporations inevitably have, SMEs are actually well-positioned to compete with them due to the shifting demands and desires of the workforce. While money is important to people and ping-pong tables are fun, SMEs are able to deliver something greater, something that many workers are looking for today – meaning in what they do. The idea that meaningful work is motivational work has been around for a long time, but research is beginning to identify key workplace factors that help employees find greater significance in what they do. Interestingly, many of the workplace factors that enhance meaningfulness are the bread and butter of SMEs. In search of meaning  So how are SMEs positioned to offer candidates avenues to find meaning in what they do? Well, the very nature of work in SMEs requires a different mindset. With less bureaucracy and more autonomy, SME employees have the opportunity to push forward their ideas, programmes and improvements much easier and quicker. With increased autonomy, employees show higher levels of responsibility for work outcomes and this in turn leads to high-quality work performance. SMEs also require their employees to take on a broad range of responsibilities, using and developing a variety of skills across several business functions. This might include meeting with higher-level clients or presenting recommendations to senior management. An SME employee will not only gain well-rounded exposure to a variety of tasks, but will also be positioned as a serious player at the decision-making table. SMEs, given their size, also have a great capacity to create a strong and motivational culture. This is important because a strong culture appeals to many job candidates. According to research conducted by Hays, 61% of finance and accounting professionals said they would take a pay cut for a better cultural fit. SMEs are also better positioned to provide flexibility to employees, as they are less constrained by the need to maintain standard policies for large pools of employees. Given the above, SMEs provide a fertile greenfield site for employee development. Indeed, Hays note that employees rate career progression and development opportunities as more important than benefits or employer brand when considering a move to a new organisation. Many employees are motivated not just by salary, but in finding a depth of experience in their next role. In that context, SME leadership must engage with job candidates and share with them the benefits and advantages of working at their SME. The war for talent When SMEs stop trying to compete with the offers and perks from larger companies and instead engage in communicating the benefits that SMEs inherently have, they will start to attract the talent that is needed. The first step is to actively advertise and communicate the opportunities afforded to employees in job descriptions, LinkedIn posts and recruitment meetings. Tell future candidates about the variety of work, immediate exposure to significant clients, and projects they will be part of when joining your company. Play to the ambition of these individuals. The next opportunity is to promote the cultural fit and work-life balance of a smaller organisation where people know each other’s family and interests, and can accommodate requests. This can be done by including the CEO and senior management in the hiring process and designing mentoring programmes that allow individuals to build relationships with key team members. These actions show that everyone has access to top managers – far from the reality faced by many at larger organisations. A third recommendation for SMEs is to expand access to feedback and develop a culture in which feedback is not just accepted, but asked for. SMEs have the ability to provide feedback that recognises accomplishments and creates areas of improvement for individuals. Employees yearn for recognition and are increasingly looking to employers to offer and provide development opportunities – a feedback culture provides both. When SMEs take the time to be proud of what makes them a successful organisation and actively promote these characteristics, they will be able to recruit top talent. And just as important, activities that aim to attract new talent are also incredibly influential in keeping current talent engaged. The nature of work at SMEs leaves them well-prepared when combined with a rigorous communication strategy to perform well in the ‘war for talent’. Amanda Shantz is Associate Professor and Director of the MBA at Trinity College Dublin. Andrew Clark is an MSc candidate at Trinity College Dublin.

Aug 01, 2018
Spotlight

Gerry Gallagher explains how SMEs should approach corporate governance in their organisations. Small and medium enterprises (SMEs) face many challenges while trying to survive in a competitive business environment. The lack of scale and resources available to SMEs often results in those running the organisation having to immerse themselves in a wide variety of the everyday operational functions, often to the neglect of the more strategic issues such as corporate governance. In addition, the directors and the managers are many times one and the same. However, good corporate governance is vital to the long-term success of any organisation, regardless of whether it is a multinational or a small, family-owned firm.  The UK’s Financial Reporting Council (FRC), in its Corporate Governance Code, defines corporate governance as “the system by which companies are directed and controlled”. While the FRC’s Code is developed primarily for listed companies, many of the principles contained therein are relevant to all companies. Governance embraces many disciplines: law, accountancy, economics, political science, sociology and psychology. The main challenge for SMEs is to take those principles and tailor them for their own particular situation. This process can be simplified if we examine governance under three broad headings: accountability, strategy and performance. Accountability All organisations are held accountable, but the level of accountability is more onerous for publicly-quoted companies where their actions are subject to minute scrutiny, not just by shareholders, but by a broad group of stakeholders. However, SMEs are also subject to considerable oversight. Sometimes different sectors have specific legislation governing their area. In recent years, many charities, for example, have found themselves open to a degree of scrutiny for which they were ill-prepared.  There is also a great deal of legislation that applies to all companies, such as the 2014 Companies Act. This legislation consolidated all previous relevant acts, in addition to a number of new provisions. It is very detailed and, for the first time, it codified eight duties of company directors. For example, on taking up the role of director, a person must, under Section 223 of the Act, certify: “I acknowledge that, as a director, I have legal duties and obligations imposed by the Companies Act, other statutes and at common law”. That declaration makes clear to the director that they have an onus to be familiar with the provisions, not only of the Companies Act, but also other legislation such as health and safety, employment law and many others. GDPR is one example of legislation that has placed considerable pressure on all organisations to ensure compliance. In addition to specific legislation, there are many codes developed to ensure good governance, such as the UK Corporate Governance Code and the G20/OECD. These are principles-based codes which inform the development of more specific codes in different sectors such as the Central Bank’s Corporate Governance Code for Credit Institutions and Insurance Undertakings, or the Department of Public Enterprise and Reform’s Code of Practice for the Governance of State Bodies. These codes are based on a “comply or explain” approach which allows for flexibility in their implementation, depending on the specific circumstances.  There are also voluntary codes that impact on all sectors such as those of the independent self-regulatory body for advertising, the Advertising Standards Authority of Ireland, which promotes high standards in marketing communication and advertising. Apart from external accountability, firms must also have the appropriate internal systems in place to ensure accountability. Managers need to make decisions based on accurate data and, in particular, financial information. Here, the role of the Chartered Accountant is vital, not just by providing financial information, but by interpreting it in a manner that spells out the implications for the firm and can provide assurance to outside bodies.  Strategy Accountability is only one part of the equation. The FRC definition also refers to how companies are “directed”. Each SME exists for a specific purpose and managers need to be clear on that purpose. The purpose is not to make a profit – that is the by-product of providing goods or a service that customers are willing to buy at a price greater than the cost of production. Such a purpose must be supported by organisational values, including ethical values. There are many examples where organisations have suffered financially, not because they had broken the law, but because consumers turned away due to unethical behaviour. Good reputations take years to build up, but can be destroyed in an instant, particularly in the age of social media. Such reputations need to be protected by ethical values that are an integral part of what the company does.  A clear purpose and set of values will inform the development of the strategic goals and objectives. For small companies, it can be difficult for managers to set time aside from the day-to-day operational imperatives to focus on what the company should be doing and what is important for its long-term success. You can be busy cutting down trees, but there is not much point if you are in the wrong forest. The balanced scorecard is a useful tool to ensure that strategic goals are balanced between long-term development and short-term opportunities. The company’s strategic goals need to be translated into policies and procedures that guide everyday decisions that provide consistency throughout the organisation. In particular, each company must develop a risk management policy to cover all aspects of its operations, covering financial decisions, health and safety, information technology, GDPR, human resource management and geopolitical risks such as Brexit. Managers must be able to recognise each risk, assess its likely impact on the company, evaluate the probability of that risk, determine what the company’s policy should be and monitor how the risk is rolling out. In addition, the company also needs to develop policies on diverse issues from whistleblowing to corporate social responsibility. Performance Both accountability and strategy are required to work in tandem to ensure the effective performance of the company. Such performance is achieved through people – directors, managers, employees and other stakeholders who are committed, engaged and working together as a team. The company’s directors may also be the managers, and this poses a significant challenge as being a director requires a different skill-set from dealing with the operational issues facing the company on a daily basis. Managers and directors need training specific to their roles so combining the two can be a challenge for the individual and bring on challenges for the SME.  Having the right team on board is essential. This requires careful selection of employees to ensure a good fit with the organisation’s values. Employee training is also important – initial training as part of induction as well as ongoing development. This should cover the technical aspects of their job, but also legal requirements, safety and other areas to ensure the effective performance of the employee and the company. Employees must have a clear understanding of what is expected of them, but they must also be free to make a contribution or to voice any concerns so clear, open communication between employees and management is essential. All of this is underpinned by the organisation’s culture. Louis Gerstner, a former CEO of the computer giant IBM, described culture as what people do when no one is watching. The culture should be one of high performance but predicated on sound ethical principles that guide people in making the right decisions. Culture is the basis for everything that happens in organisations. This requires strong leadership and clarity of purpose. Conclusion In recent years, most aspects of Irish society have been impacted by poor governance, from how we regulated the banks to how charities were run. Across the board, we need to improve on how governance is conducted in all organisations, big and small, and in a manner that reflects the common good. Governance is a holistic approach to running organisations that ensures full accountability to all relevant stakeholders while achieving steady and sustained performance over the long-term. It requires strong leadership, teamwork, and a culture committed to both ethical and operational values. Governance is central to the success of every SME. Dr Gerry Gallagher is a lecturer in governance and corporate strategy at IT Tralee and author of Corporate Strategies for Irish Companies.

Aug 01, 2018
Strategy

Chartered Accountants can help businesses translate abstract Brexit scenarios into strategic planning. Another significant milestone on the road to Brexit came and went at the end of June, leaving businesses none the wiser about the future shape of the UK’s relationship with the EU. Then, in July, at a meeting at Chequers, the British Cabinet agreed on a plan for negotiations with the EU. Briefly, this envisages maintaining “a common rulebook for all goods” but not for services. The UK is proposing a “combined customs territory”, one benefit of which would be to prevent a hard border in Ireland. However, at the time of writing, due to political developments in the UK, the prospects for this plan are unclear. It also remains to be seen how the detail of the plan will be received by the EU. Meanwhile, a survey conducted among local communities in the border region between March 2018 and May 2018 found that most respondents (59%) now think that a ‘hard’ border is more likely than they previously anticipated. Since the last issue of Accountancy Ireland was published, both houses of the UK parliament have agreed on the text of the European Union (Withdrawal) Bill 2017–19. This legislation enables EU law to be transferred into UK law and allows work to begin on preparing the UK statute book for Brexit. The bill now awaits royal assent, when it will become an act of parliament. Readers will recall that when the draft legal text of the withdrawal agreement was published by the EU in March, it included a “backstop” solution to prevent a hard border on the island of Ireland and avoid a “cliff-edge” Brexit by creating a “common regulatory space” where goods could flow back and forth without border checks. Subsequently, on 7 June, the UK Government published a technical note proposing that “in the circumstances in which the backstop is agreed to apply, a temporary customs arrangement should exist between the UK and the EU.” The UK said this temporary arrangement should be “time limited” pending finding a solution to the border question, which it expects to be in place by the end of December 2021 at the latest. However, the EU’s chief Brexit negotiator, Michel Barnier, said the backstop cannot be extended to the whole UK because it is designed for the specific situation of Northern Ireland. More recently, in the run-up to the EU Council meeting at the end of June, UK and EU negotiators issued a joint statement stating that both parties recognise that the backstop requires provisions in relation to customs and regulatory alignment and are committed to accelerating work on the outstanding areas. Negotiations will continue over the coming weeks. Meanwhile, frustrated by the slow pace of the negotiations, various UK businesses and representative organisations have been highlighting the practical problems this creates for businesses. Accountancy Europe, the organisation that represents one million professional accountants, auditors and advisors from 37 countries, has warned that Brexit-related disruption in audit services could threaten the stability of markets. A recently published paper entitled Implications of Brexit on Cooperation within the European Audit Profession stresses the need for a favourable regulatory framework post-Brexit, where the European audit profession can continue to cooperate effectively and efficiently in the provision of statutory audit. This position is supported by Chartered Accountants Ireland. A Moore Stephens study of 653 owner-managed businesses in the UK, published in February 2018, showed that 94% of respondents feel that the UK Government ignores their concerns on Brexit. When asked about their specific Brexit-related worries, 38% of owner-managed businesses said that the introduction of trade tariffs was their biggest concern. 30% fear a loss of EU labour while 23% are concerned about loss of European customers. Only 33% said that they had no concerns around Brexit. In a risk assessment published in June, Airbus said: “While an orderly Brexit with a withdrawal agreement is preferable to a no-deal scenario, the current planned transition (which ends in December 2020) is too short for the EU and UK governments to agree the outstanding issues, and too short for Airbus to implement the required changes with its extensive supply chain. In this scenario, Airbus would carefully monitor any new investments in the UK and refrain from extending the UK suppliers/partners base.” The ongoing uncertainty appears to be slowing the UK’s commercial property market according to business lender, Capitalflow, which has said that some UK developers and investors are now looking to invest in commercial property in Ireland and “unlike their Irish counterparts, who are still having difficulties accessing finance from the Irish pillar banks, UK developers typically have access to multiple sources of finance”. Meanwhile, there is no shortage of Brexit-related reports from official and other sources. One of these, published by the Irish Government in June, looked at the firm-level impact of Brexit on the most exposed sectors of the Irish economy. A list of 20 potential impacts were presented and firms were asked to rate their level of concern for each and to comment on how they understood and evaluated the risks presented. Across all sectors, fear about changes to the free movement of goods was the top concern, followed by fear of reduced freedom to trade in services. Levels of concern varied within sectors. Of the 15 sectors analysed, the chemicals/pharmaceuticals sector expressed the highest level of concern about the impact on their business while firms in the rental/leasing sector expressed the least aggregate concern. In another report, also published in June, the Irish Government’s Expert Group on Future Skills Needs (EGFSN) addressed the skills need arising from the potential trade implications of Brexit. The study deals with skills such as customs clearance, logistics and supply chain management, which will be needed in a potentially more restrictive trading environment with the UK, as well as skills to support diversification of trade to non-UK markets such as international management, sales, marketing, design and development, foreign languages and cultural awareness. The report makes eight recommendations, with 46 associated sub-actions, aimed at enhancing the pool of trade-related skills available to Ireland-based enterprise. At a practical level, skills shortages are a growing problem for businesses across the island of Ireland. EY’s Economic Eye Summer Forecast projects growth of 236,700 net additional jobs in the period 2017–22 across the island of Ireland and reveals that since the day of the Brexit referendum result, 21 financial services organisations have confirmed that they will move all or some of their operations from the UK to Dublin. This positions Dublin as the most popular post-Brexit location ahead of Frankfurt (12), Luxembourg (11) and Paris (8). While the employment rate is currently high, InterTradeIreland cautions that it may be at a plateau and “we are beginning to enter a critical phase of the economic cycle, with businesses across the island taking a collective pause on many key decisions”. Worryingly, InterTradeIreland says that the level of business preparedness around Brexit has improved, but continues to be low with just 8% of cross-border traders having a plan in place. Chartered Accountants have a vital role to play in helping businesses translate what can appear abstract and difficult Brexit scenarios into their strategic planning, focusing in particular on highlighting solutions that could work in specific sectors. Politically, tensions are likely to intensify over the coming weeks and there must be a question mark over whether meaningful progress can be achieved ahead of the next significant milestone, which is the EU Council meeting in October. Michael Farrell FCA is Director at PKF-FPM Accountants Ltd., a service provider for InterTradeIreland’s Brexit Advisory Service.

Aug 01, 2018
Strategy

Connectivity exposure is the new IT risk many businesses are ignoring at their peril. Utter dependence on a single telecoms circuit for connectivity is the IT risk that the vast majority of Irish businesses are ignoring. They do so at their peril. With even the most basic systems and processes tied to the internet, a network fault has the power to bring companies shuddering to a standstill within seconds. As professional advisors, accountants and auditors must be cognisant of their clients’ vulnerability to costly disruptions and educate themselves about network resilience, or ‘redundancy’, as a means of mitigating risk, improving controls and guaranteeing business continuity. Why network outages are the new IT risk Accountants and their clients are acutely mindful of the threat posed to their security by viruses, malware and fraudulent phishing scams. Yet, even the most informed business owners persist in ignoring single circuit connectivity as their biggest IT vulnerability.  The move to the cloud has been touted for so long, we would be forgiven for presuming we all work in one centrally located nirvana by now. There are many legitimate business advantages associated with moving to the cloud, but cloud adopters must be aware that the very move that helps their business opens their company up to a new risk. In short, by trusting critical applications to the cloud, Irish businesses render themselves wholly reliant on a fast, secure and dependable connection to the internet. Head in the clouds Happily, most companies have a data connection that works for them – most of the time. And many enterprises feel entitled to shrug off the risk of outages, confident that they work in a relatively low-tech environment. A quick look around their operations typically tells a different story. Accounting software, payroll, invoicing, CRM systems, databases, point of sale systems, even Microsoft 365 applications generally all require a network connection to operate, making connectivity junkies of us all. Counting the cost  Operating in this highly connected cloud-based reality means that a network fault or outage will bring work in any office, retailer, manufacturing or professional services firm grinding to a halt. Once a connection is cut, the clock starts ticking on missed business opportunities and plummeting employee productivity. VoIP phones go down, along with email and web queries, making it impossible for frustrated clients to get in touch or for a business to respond. This means that the impact of an outage on reputation and client goodwill may reverberate long after the connection is restored. Faults, payments and penalties Fault repair time from the country’s largest broadband providers can stretch to over five days as losses continue to mount – not that an outage has to be lengthy to be damaging. Imagine, if you can bear to, a network fault that coincides with a peak ROS deadline, resulting in a 5% surcharge of tax liability for every late filing. Accountants are not alone on this one. A small company that misses a CRO deadline could lose their exemption and find themselves embroiled in an audit with all its associated costs. Meanwhile, the real-time reporting regime coming into effect on 1 January 2019 will impose mandatory online filing deadlines on every PAYE employer nationwide. One suspects that explaining to Revenue that your internet connection failed may go down like a lead balloon – landing somewhere close to “the dog ate my homework”. Network redundancy  Why would an otherwise prudent business ignore a risk of this magnitude? Simply put, the larger national and multinational companies don’t. Enterprise-class businesses have led the way in managing exposure in this field. For years, they have protected themselves against network outages by building wired resilience into their infrastructure. Denis Herlihy, Chief Technical Officer at Ripplecom, feels very strongly about owners, managers and professional advisors who are not countenancing network dependence as a vulnerability. “Any assessment of IT risk that ignores the need for network redundancy in this day and age is quite frankly negligent, in my opinion. One bad experience is more than enough to send companies scrambling for a resilient solution but for a smaller business, one bad experience is more than they can afford.” Management controls to minimise risk  No one believes that accountants should advise their clients to shun the cloud and lose all its advantages. So, what measures can be implemented to manage the risk? Disaster recovery plans are on everyone’s risk management radar but while this will protect files, it is powerless to restore productivity or diminish reputational damage. The custom infrastructure built by large companies is beyond the resources of most companies. However, advances in technology mean that more modest-sized businesses can now incorporate a ‘failover’ solution into their IT set-up. A good failover will deliver the type of network redundancy that larger enterprises have enjoyed for years, but at a fraction of the cost. Failover protection At its simplest, a failover adds a second ‘back-up’ connection that takes over when a network fault occurs or a circuit becomes unavailable. A resilient business with a quality failover will have two diverse network connections – one primary and one secondary. Usually, all internet traffic uses the primary connection but when an outage strikes, all connected systems and devices switch quickly and smoothly to the secondary circuit. Once the main connection is restored, traffic switches back to the primary route. Linked systems and devices continue to operate normally throughout the outage keeping customers, employees and ultimately the business happy. Checklist: how to determine the value of a failover However, not all failover solutions are created equal. When investing in a failover, or advising a client who is, consider that – on top of speed, security and cost-effective pricing – each failover connection should use a distinct access method to reduce the possibility of being impacted by the same outage or physical fault. To add real value, a failover should be automatic (an auto-failover) so that no physical intervention is needed on the part of the client or their IT services company. A market-leading auto-failover, such as Ripplecom’s Orion, will be engineered to continue in the same IP stream to allow for a truly seamless switch from one connection to another. Service disruptions and network faults are outside of a business’ control and are impossible to predict. However, a failover solution that meets these criteria will not just mitigate the threat, it will virtually eliminate it. With a suitable failover in place, owners, managers and advisors can relax knowing that, when an outage does occur, their company will stay securely connected and operational. John McDonnell FCA is a Founding Director of Ripplecom, an Irish telecommunications company specialising in resilient connectivity.

Aug 01, 2018
Business Law

With the Criminal Justice Act 2018 now coming into force, what is required to protect your organisation’s integrity and reputation? The newly enacted Criminal Justice (Corruption Offences) Act of 2018 is a robust piece of legislation that introduces new corruption-related offences, extra-territorial reach, tougher penalties for those convicted of corruption and the potential for companies to avail of a defence based on taking “reasonable steps” and performing “due diligence” to avoid an offence under the Act. The Act was one of the key measures contained in the Government’s white collar crime package, which was published in November 2017. The Act is also intended to fulfil national commitments under various international anti-corruption instruments including the Organisation for Economic Co-operation and Development (OECD) Convention on Bribery of Foreign Public Officials, the United Nations Convention against Corruption (UNCAC) and the Council of Europe Criminal Law Convention on Corruption. The Act introduces the new offence of “trading in influence”, which criminalises bribery of Irish or foreign officials. It has also introduced “strict criminal liability” for organisations. In effect, this means that the body corporate (“corporates” or “organisations”) will be criminally liable for the actions of its directors, managers, employees or agents should they commit a corruption offence for the corporate’s benefit. Key measures The Act includes the following key measures: Active and passive corruption: a person who corruptly offers, gives or agrees to give a gift, consideration or advantage to any person doing an act in relation to his or her office, employment, position or business shall be guilty of an offence. A similar provision also applies to the acceptance of a gift, consideration or inducement on this basis. The offences address corruption within both the public and private sectors. Furthermore, the reference to office, employment, position or business is intended to cover all public and private sector positions, including those in voluntary bodies such as sporting or charitable organisations; Trading in influence: the Act includes a new offence of “trading in influence”, both active and passive, which criminalises both the offering of a bribe in order to induce a third-party to exert an improper influence over an act of an official, and corruptly accepting the bribe on these grounds; Extra-territorial reach: the Act provides for extraterritorial jurisdiction over acts of corruption outside Ireland committed by Irish persons or companies, or other Irish-registered entities; Presumption of corruption: the Act introduces a presumption of corruption where benefits have been given to an official. It also introduces the concept of a “connected person”, which was one of the key recommendations arising from the Mahon planning tribunal; Strict criminal liability offence: a fundamental element of the Act is the section that will make organisations liable for the corrupt actions committed by its directors, managers, secretaries, employees, agents or subsidiaries. Section 18(2) of the Act affords a possible defence that the corporate took all reasonable steps and exercised all due diligence in order to avoid the commission of the offence; and Penalties: the Act provides for sentences of up to 10 years in prison and unlimited fines for conviction on indictment of serious corruption offences. There are also additional penalties in respect of office holders and public officials. What to do… Organisations must develop and implement robust anti-corruption policies and procedures. It has become increasingly crucial for organisations to develop anti-corruption programmes to help minimise the risk of non-compliance. Given the extraterritorial reach of the Act, it is important for organisations to take account of both local and international activities. As outlined earlier, in order to present a defence against a corruption charge, a body corporate must prove that it took all “reasonable steps” and exercised all “due diligence” to avoid the commission of the corruption offence. In terms of developing an anti-corruption programme, there is a need to perform a comprehensive, risk-based assessment that takes account of: Country risk: dependent on the level of international activities (i.e. beyond national borders); Sectoral risk: a recent fraud-based survey identified corruption as the most common occupational fraud scheme in every global region, including Western Europe. Corruption poses significant risks to several industries and is more prominent in the energy, construction, manufacturing and government and public administration sectors. The survey estimates that the average loss to victim organisations is $250,000; Transaction risk: certain types of transaction give rise to higher risks (e.g. charitable or political contributions, licences and permits, and transactions relating to public procurement); Project-based risk: such risks might arise in high-value projects, with projects involving many contractors or intermediaries, or with projects that are not apparently undertaken at market prices or do not have a clear legitimate objective; and Relationship risk: certain relationships may involve higher risk. For example, the use of intermediaries in transactions with foreign public officials; consortia or joint venture partners; and relationships with politically exposed persons or those with links to prominent public officials. It is important that the risk assessment is tailored specifically to the organisation’s environment and enables the organisation to identify and prioritise the risks it faces. The risk assessment framework should also recognise: Oversight of the risk assessment by top level management; Appropriate resourcing; Identification of the internal and external information sources that will enable risk to be assessed and reviewed; Due diligence enquiries; and Accurate and appropriate documentation of the risk assessment and its conclusions. Lessons from the UK In many ways, the Act reflects the approach of similar legislation operating in the UK, namely the UK Bribery Act (UKBA) 2010. Under the UKBA, the means of defence against prosecution is based on having established “adequate procedures” to prevent corruption acts. UK-based enforcements and prosecutions reveal that bribery and corruption are significant risks where organisations operate internationally. They also highlight the dangers “associated” persons can pose. In the UK, a common denominator in the numerous enforcement actions to date has been the role of third parties in paying bribes or facilitating payments. Consequently, third-party due diligence, contractual protections and compliance audits continue to be critical components of companies’ anti-bribery and corruption policies and procedures. In certain cases, it is not sufficient for an organisation to merely have a policy in order to invoke the “adequate procedures” defence. This policy must be reviewed over time to ensure it remains fit for purpose and must be properly implemented. Beyond the Act, corporate culture plays a significant role in preventing corruption and this ultimately rests on employees’ behaviour. Boards and senior management need to demonstrate and communicate a proactive stance against corruption. The effectiveness of the “tone at the top” cascading throughout the organisation is a key factor in ensuring the commitment of middle managers and staff across all levels of the organisation. Conclusion The process of developing adequate procedures to minimise corruption risk does not have to be onerous. A sound assessment of the risk of exposure to bribery and corruption is the starting point. Organisations must be proportionate in their response; a well-managed and risk-aware organisation should not have any difficulty in developing adequate procedures, which form the defence against prosecution, and in making these work. Detecting any potential corruption offence is a difficult challenge for any organisation. Understanding the methods by which corruption offences are detected is critical for both investigating schemes and implementing effective prevention strategies. Surveys demonstrate that corruption is likely to be detected by tip-offs, which highlights the importance of having secure whistleblowing systems and procedures in place. It is important to note that, while the promotion of arrangements such as the whistle-blower hotline is often aimed primarily towards employees, organisations should also consider promoting their reporting mechanism to outside parties, especially customers and suppliers. The ultimate test for an anti-corruption programme is whether it actually works, and organisations must be prepared to demonstrate this. Ongoing monitoring and auditing, including culture-based audits, also further strengthen organisations’ means of defence. Ultimately, organisations should take a common-sense and risk-based approach to developing and implementing anti-corruption programmes in order to protect their integrity, interests and reputation. Justin Moran is a Director in the Governance, Risk and Internal Controls division at Mazars.

Aug 01, 2018
Strategy

Building a digital-first finance function from scratch is a daunting, but exciting and eminently doable challenge. Joining a start-up can be a daunting experience, and joining as the first accountant responsible for setting up the finance function only adds to the pressure. In this article, I will share my experience of setting up a digital finance function, with the aim of helping future start-up accountants. I joined UrbanVolt at the beginning of 2016 and there was no Dummies’ Guide to Setting Up a Finance Function that I could refer to. However, my training and experience as a Chartered Accountant had prepared me for the mammoth task. What are you aiming for? Living in an age of digital advances, I realised that this presented an opportunity to find new ways of working. To that end, I established UrbanVolt’s finance function on two main principles: Paperless: UrbanVolt’s aim is to reduce businesses energy consumption and reduce the effects of climate change. As such, I wanted to contribute to this environmentally-friendly ethos by having a paperless finance function; and Built for scale: the founders inspired me with their ambitious vision and I realised that this required financial processes built for scale. However, for a truly paperless finance function that is built for scale, I had to embrace cloud technology. G Suite With this in mind, I convinced the UrbanVolt founders that G Suite should be the primary office application for all employees. I had spent the year prior to joining UrbanVolt working at Google and became familiar with the application. I was surprised that G Suite had similar functionality to Microsoft Office, but being on the cloud allowed Google to enhance the functionality by introducing collaborative tools. This enabled several users to work on the same document, at the same time, from anywhere in the world. G Suite significantly increased UrbanVolt’s productivity. The team can work on documents together in real-time, negating the need for multiple document versions and enabling them to meet deadlines for key client deliverables. Cloud accounting The next step to setting up a digital-age finance function was to find a cloud accounting package built for scale. After extensive research and trials, I finally settled on Xero. I liked the user-friendly interface, automation capabilities and the reporting functionality. I was impressed by Xero’s open API, which enabled the development of a third-party add-on marketplace. If the required functionality didn’t exist within Xero, there was an add-on that would provide that functionality. This turned out to be very important for scaling the business. It should also be noted, that all the underlying transactional data is stored within Xero in the cloud. Having all the data in one place in the cloud makes it easier for compliance, reporting and ultimately, remaining paperless. E-signatures As part of my paperless initiative, I introduced e-signature for all UrbanVolt clients. At the outset, the common belief was that clients preferred a wet ink signature on a physical document. This assumption could not have been further from the truth. From a governance perspective, one of the key benefits of an e-signed document is that you receive an audit report providing the following details: Who: records the person(s) who signed the document (including their email address, title etc.); What: the document is given a unique reference; Where: the IP address of the device used to sign the document is logged; and When: the exact date and time the document was signed is also recorded. The addition of the audit report makes it impossible for an e-signature to be forged. Cybersecurity Running your business in the cloud has many benefits. However, cybersecurity was always at the forefront of my mind. I became obsessed with ensuring that UrbanVolt’s data was kept secure. I had learned at Google that an organisation could have the best IT security systems and policies in place, but your organisation is only as strong as your weakest user. I embarked on a mission to educate the team on IT security and data protection. At a minimum, I ensured that the team was aware of: The importance of password complexity and how to use two-step verification Locking PCs and laptops when away from your device(s); and Mobile device security. It is important to get this embedded within an organisation at the outset, especially if you want to avoid a GDPR breach which could carry a significant financial penalty and the loss of your clients’ trust. Cybersecurity continues to be an obsession of mine. Having recently set up Dappr, protecting client data and retaining their trust is of paramount importance. Set the culture Finally, if you’re one of the first employees, you are in a very privileged position to help set the culture of the organisation for future recruits. So try to keep it positive by embracing work flexibility (which is easier when your business is in the cloud) and focus on outputs rather than inputs. Did it work? UrbanVolt now serves over 270 clients across Ireland, the UK and the US. The company has also secured nearly €100 million in various forms of financing over the past two years. All this activity was aided by having a digital finance function – and this is why I set up Dappr, with the mission of helping SMEs achieve similar success with a digital finance function. Michael J. Walls is the Founder of Dappr and Chartered Accountants Ireland’s 2018 Young Chartered Star.

Aug 01, 2018
Management

Coaching entire organisations could bring the popular concept of self-directedness to life. There’s a bit of a shift going on in how some organisations want to work. We’re hearing the term ‘self-directed teams’ being bandied about frequently now. We’ve even heard about the existence of self-directed organisations. ‘Self-directedness’ has become a bit of a buzzword in leadership seminars and at organisational development CPD events. Guru-type books such as Frederic Laloux’s Reinventing Organisations tend not to use the phrase, but they’re talking about it all the time. According to IGI Global, “key characteristics of self-directedness include motivation, self-responsibility, ability to self-assess, ability to transfer knowledge/skills, and comfort with autonomy”. Meanwhile, over at Wikipedia, they’re calling it “a personality trait of self-determination, that is, the ability to regulate and adapt behaviour to the demands of a situation in order to achieve personally chosen goals and values”. You can see the potential for a dark side but, fundamentally, it feels like a positive thing. Organisations evolving in a people-affirming direction; people owning situations and taking responsibility for outcomes. Its main proponents seem unified in their belief that the most effective way to bring about self-directedness is through coaching. Not just any old coaching, however, but organisational coaching – coaching the whole organisation. Positive deviance So at a recent coaching and mentoring research conference, we duly trotted along to the workshop on organisational coaching in an attempt to get with the programme, eyeball the cutting edge, ride the next wave, move out ahead of the curve and generally find out more about this growing idea – this organisational coaching-inspired voyage towards self-directedness. And we have to report that the workshop was really good. Kaj Hellbom of Helsinki’s Centre for Positive Leadership certainly knows his stuff. The journey towards self-directedness in an organisation begins, says Kaj, with a root and branch search for positive deviance within the workforce. “There is always a positive deviance,” he tells us. “Always.” Richard Pascale-Jerry and Monique Sternin, in their book The Power of Positive Deviance, are a bit more forthcoming. “In every community, there are certain individuals whose uncommon practices and behaviours enable them to find better solutions to problems than their neighbours who have access to the same resources and environment.” Thus, rather than focusing on fixing failures by instituting more control from the outside, positive deviance focuses on success achieved from inside. It leverages the good stuff – the unique; the unexpected brilliance that can be discovered going on in the organisation every day. There is always a positive deviance.  Internal consultants Kaj’s next point builds on this. It’s a fundamental milestone on the road towards creating self-directedness to realise that every organisation already has all the resources it needs to achieve – well, anything really. “All the consultants you need are already working for you,” he suggests, before adding slyly, “If you can find them.” And that is the point at which organisational coaching can make a major impact. First, by working with individuals, duos, teams and large departmental or service groupings to help them unearth the positive deviance in specific individuals and groups. By creating a non-judgmental and encouraging space to facilitate the surfacing of the organisation’s stories; to gauge internal reaction to those stories and interrogate the uncommon practices and behaviours that “enable these individuals to find better solutions to problems than their neighbours who have access to the same resources and environment”; to help colleagues discover a pathway towards having confidence in the thinking of those who have hitherto perhaps been seen as living out their work-life somewhere on the ‘maverick-genius’ scale; and to help them join up the dots between these “better solutions” and hard-numbered organisational results. And then by working some more with those individuals, duos, teams, and larger groups to help them shift their own thinking. To follow the positive deviance for themselves and scale up the thinking in a way that moves an organisation from okay to exceptional. So that was the gist of the workshop – now it’s about doing it ourselves at home.  Begin in the boardroom What might it look like to coach an entire organisation? Where should one start? How long would it take? What would it cost? Who should represent the stakeholders? How should the learnings be collated and curated in a meaningful and helpful manner? Who would own the project? How might they obtain enough organisational buy-in? These are big questions. Finding the answers begins, it seems, in the boardroom. “The development of organisational coaching has been slowed down,” writes Michael Moral, “by the existence of several compliance-based methodologies like, for instance, business process re-engineering and performance management.” Moral argues that these consultant-heavy, top-down approaches give only token attention to “inclusive action-learning approaches, which position organisational players at all levels and locations with shared responsibilities for change”. And this, he tells us, is where organisational coaching is starting to have an impact. Good organisational coaches, he argues, bring a deep understanding of systems theory and corporate structures married with an ability to coach individuals, duos, teams and large groups in four key areas: Behaviours: which can have real impact on the organisational decision system; Emotions: which deeply affect, and to some degree drive, organisational culture; Situation: which is, of course, the area of applying systems thinking to organisational structures; and Cognition: increasingly important as technology becomes a bigger and bigger part of organisational life and thinking. It is, argues Moral, “necessary to traverse all four subsystems to facilitate sustainable change”. And these are the areas on which systemic coaches have been focusing in a deep way for the last five to 10 years. Writers like Peter Hawkins, Simon Western and David Clutterbuck have pioneered thinking in these areas, but many others are taking up the baton. Research is proliferating and coaching practice is beginning to impact whole organisations. Standing in the way at times like these is what is known as ‘immunity to change’, described by Robert Kagen and Lisa Lajey as being “a strongly held belief that not only keeps us in our groove, but also fights any change that threatens the status quo”. This is facilitated in organisations, according to Michael Moral, by the lack of a process or ending that permits organisational members to let go of the past. And in the times of volatility, uncertainty, complexity and ambiguity (VUCA) in which we now live and work, the past can be a very attractive place to inhabit. And here, says Moral, “executive (organisational) coaches who are savvy use resistance as information and energy to accelerate transformation. Coaches expect resistance and know how to use it”. Or as Kaj would put it, “You will meet people who will not move, but this is an everyday coaching issue”. And perhaps it is by dealing with these “everyday coaching issues” on a wider systemic whole-organisation basis that coaching will eventually fulfil its full potential as a positive force for organisational change and development; development that, in this sense, is clearly connected to organisational results and the empowerment of organisational people to produce results in a manner that demonstrated the ability to regulate and adapt behaviour to the demands of a situation. Ian Mitchell and Sîan Lumsden are co-founders of Eighty20 Focus, a real-time executive coaching organisation.

Aug 01, 2018
Ethics and Governance

Would you, as a person in a position of responsibility, know what to do if you received a protected disclosure?   As a senior financial officer, an external auditor, internal auditor, chair of an audit committee or in the myriad of roles that Chartered Accountants fill, it is possible that you will be asked to act as a screener,  investigator or advisor in a case of protected disclosure. Your training and experience are likely to have given you many of the competencies necessary to act in an independent and skilled manner, which should make you a trusted professional in this area. Before you undertake such a task, however, there are several things you should ask yourself. Do I understand the fundamental principles of protected disclosure? The three principles of effective protected disclosure are as follows: Disclosures of wrongdoing in the workplace should be screened and/or investigated; The identity of the person disclosing should be adequately protected; and The discloser, if disclosing based on a reasonable belief, should not be penalised for disclosing. If all these elements were in place, there would not be a need for detailed procedures and policies. Sadly, experience has shown that there have been failings on all three essentials, so you should be familiar with the law, policy and procedures which have proved necessary. Am I familiar with the 2014 Act and the organisation’s policy? Most organisations now have a policy, among its suite of governance policies, dealing with protected disclosures. This policy should derive from the board’s commitment to its culture, which should drive its strategic plan, which in turn gives rise to a business plan that is supported by its policies and procedures. Many organisations have had precursor policies such as, a whistleblowing or speaking-up policy. The 2014 Act refers to “protected disclosures” and so that is now the common nomenclature. The Department of Public Expenditure and Reform and the Workplace Relations Commission have issued guidelines as to what should be included in protected disclosure policies for public and private entities respectively. So, the first thing you need to do is to read the Protected Disclosures Act 2014 and the organisation’s policy. What major provisions do I need to understand? As you read the documentation, it should become clear that the main requirements you need to appreciate are as follows: An entity cannot prohibit or restrict the making of protected disclosures; The 2014 Act applies to all workers – employees, contractors, agency workers and people on work experience schemes. It includes workers in the public and private sectors (including members of An Garda Siochána). Although volunteers are not specifically mentioned, it is recommended that they be included; A worker, having a reasonable belief of wrongdoing in the workplace, can make a protected disclosure to the employer. A designated recipient will normally be mentioned in the policy and there will usually be provision for reporting further up the line if the belief of wrongdoing extends to the designated recipient; Wrongdoing in this context means information that comes to a complainant during his or her employment about a criminal act, failure to comply with a legal obligation, miscarriage of justice, endangerment of any individual’s health and safety, the endangerment of the environment, improper use of public funds, an act of a public body that is oppressive, discriminatory or gross negligence or mismanagement, and destruction of information regarding the above; It is not a protected disclosure if the disclosure concerns personal complaints such as personal employment complaints or allegations of bullying or normal day-to-day operational reporting; The worker must provide information tending to show wrongdoing. The complaint must not be based on a suspicion without tangible foundation. However, the complainant is not expected or entitled to investigate and find proof. The complainant should frame the complaint in terms of information giving rise to reasonable belief of wrongdoing and should not seek to draw conclusions about particular individuals or specific offences; The principles of natural justice and fair procedure must apply to a person against whom a disclosure is made. Any disclosure made in the absence of a reasonable belief will not attract the protection of the 2014 Act and may involve a disciplinary action against the discloser. However, if there is reasonable belief, a discloser cannot normally be sued for defamation; The motivation of the discloser is not relevant. So, even if the discloser will benefit in some way from the disclosure of the information, it does not matter. All that matters is that there is prima facie information about wrongdoing; Anonymous disclosures should be investigated as far as possible, but it can be difficult in the absence of the ability to seek out further details; The wrongdoing does not have to have happened in the State; There is an obligation to protect the complainant’s identity except in circumstances where the recipient shows that all reasonable steps were taken to protect identity, the investigator believes the discloser does not object, disclosure is necessary to effect a complete investigation, or to prevent a serious risk to the State, public health, public safety and so forth; and The complainant must not suffer any penalty for disclosing, such as any suspension, lay-off, demotion, loss of promotion opportunity, transfer of duties, unfair treatment, harassment, etc. What might I be asked to do? You might be asked to do any one of four tasks. First, you might be asked to receive a protected disclosure and conduct an initial screening. This would involve receiving the protected disclosure from the complainant, either in writing or orally. You should take careful notes where the complaint is oral only and ensure that the complainant agrees with your record. You will need to listen carefully and satisfy yourself that the complainant has a reasonable belief of wrongdoing, as defined. You may need to separate out elements of what is being said between personal complaints and protected disclosure. This screening process simply determines whether the matter is a protected disclosure or, in the case of a combination, which issues need to be investigated as a protected disclosure and which issues should be referred back to the complainant to pursue under the dignity at work or other HR policies. You should recommend the form an investigation should take – an informal approach if reasonably straightforward; a detailed and extensive investigation if the wrongdoing is of a serious nature; an external investigation if the matters are so grave; or a report to An Garda Siochána if the matters indicate a contravention of the law. You should set out the terms of reference for the investigation based on your findings of the matters to be investigated. Second, you might be asked to conduct an investigation – for example, as a member of senior management, of the board, chair of the audit committee or an independent external professional. This will necessitate setting up a framework appropriate to the screener’s recommendations and terms of reference. It may involve an informal establishment of facts, or a more formal process to take evidence from the complainant and such other persons as can provide information concerning the matters under investigation. During the course of your investigation, you should give appropriate feedback to the complainant and you should advise him or her when you have completed your consideration, although there is no need to give a complete account or to inform the discloser of any disciplinary action to be taken. Third, you may be asked to undertake a hearing into an allegation of penalisation by the complainant arising from, and attributable to, the protected disclosure. Since such a penalisation is specifically provided for in the 2014 Act, it is possible that the complainant may seek recourse to the courts. And fourth, following the screening and the investigation, the complainant may seek a review of the decision to disclose his or her identity, or of the outcome of the investigation of the complaint, or of the outcome of the investigation into any penalisation complaint. This review must be conducted by a person not involved in the initial screening, investigation or decision and would entail an independent, unbiased review of the policies, procedures followed and outcomes. You may be asked to conduct this review. There is no entitlement to two reviews of the same issues. What skills do I need to deal with a protected disclosure? To handle a case of protected disclosure, the skills and competencies that you should have, in addition to your professional competence, include: Technical skills such as knowledge of procurement policy, payroll legislation, accounting principles, taxation law and so on, depending on the nature of the disclosure; Good emotional intelligence; Listening skills. Often, people who make protected disclosures have been trying for some time to be heard and feel frustrated by the way they perceive they have been treated. They are often very independent and persistent people, but may be disengaged from the organisation and feeling stressed. They need to be heard actively and respectfully; Clear analytical skills. This involves an ability to extract the key details from what can be a lengthy and complex narrative; Good personal ethical values including independence, confidentiality and trustworthiness; An ability to read law and regulation, and apply it to different situations; A deep understanding of the organisation’s essence – its culture and ‘how things are really done around here’; and Patience. Who carries out the work of screening, investigation and review? This work is currently carried out by a range of internal disclosure recipients, supported by legal and accounting professionals. Entities may be nervous of internalising the process and some favour outsourcing it, seeking to protect themselves by putting the investigations into independent, outside hands. For example, the Office of Government Procurement has a list of firms approved for such work. However, although experience is building in the area of protected disclosure professional consultancy, it is still relatively new and many professionals are being very careful and fastidious in their work in this area as they build expertise. It can therefore be expensive, and organisations sometimes find that the amount budgeted and approved for this cost is inadequate to cover the final cost of screening, investigation and possible reviews. Time to review? The 2014 Act made provision for a review of the working of the legislation. The outcome of that review is due in August 2018 and it will prove interesting to see the outcome of the evaluation. In my own humble opinion, I feel that there is a risk that we have taken a very legal and/or compliance-focused approach to protected disclosures, focusing on defined events without really coming to grips with the communication, emotional and nuanced aspects that often underpin protected disclosures. It would probably be better if entities could take as much of this protected disclosure work as possible in-house, building trust in a process that is founded on a clear culture of real openness and respect. This would require shifting the lens from protecting from harm people who speak up to rewarding people who speak up if they unearth toxic behaviour that is contrary to the organisation’s culture. The Financial Reporting Council has urged us to spend time reflecting on our culture and examining how it should be embedded into our organisations. This area of protected disclosure is one festering vesicle that provides evidence of a culture which, while it may look great on paper, is not systemically flushing through the body corporate. An open environment with a strong and deeply embedded culture of doing the right thing should lead to fewer protected disclosures if people are listened to. Where someone spots a need to speak up, the culture should be one of naming and rewarding the early identification of potential wrongdoing. This approach is profoundly to be preferred to one of engaging an overly adversarial, legalistic and compliance-focused approach after the event, hiding the complainant and cushioning him or her from an expected backlash. It would be healthy for us, as a profession that has had some exposure to these protected disclosure cases, to share our experiences (on a no-name basis) with each other and engage with Government in reviewing the whole area. I commend such a debate and a contribution to the statutory review. Prof. Patricia Barker FCA is Adjunct Professor of Accounting at DCU and a former member of Council at Chartered Accountants Ireland.

Aug 01, 2018
Feature Interview

Minister Paschal Donohoe T.D. talks to Accountancy Ireland about tax policy, geopolitical risks and life in politics. Since his election to Dáil Éireann in 2011, when he topped the poll in the constituency of Dublin Central, Paschal Donohoe’s political ascension has been both steady and steep. The affable father of two moved quickly from the back benches to the ministry of both finance and public expenditure and reform with notable milestones along the way, not least his deft handling of the sale of the State’s 30% stake in Aer Lingus to IAG in 2015 as Minister for Transport. Donohoe’s path to Government Buildings wasn’t so smooth, however. Having returned from the UK, where he worked as sales and marketing director for Proctor & Gamble, he engaged in public service, first as a member of Dublin City Council and later as a member of Seanad Éireann. Donohoe then contested the 2007 general election, but was unsuccessful, and again suffered defeat in 2009 when he put himself forward in the Dublin Central bye-election following the death of Tony Gregory. 2011 would prove to be very different. Donohoe was elected on the second count in a predominantly working-class constituency and within three years, secured a seat at the Cabinet table as Minister for Transport, Tourism and Sport. Today, he heads arguably the State’s most important portfolios and is gearing up to deliver his third Budget in October. Donohoe has been consistent in his prudent approach to the country’s finances and believes in the concept of a ‘just society’, as espoused by the late Fine Gael T.D. and Attorney General, Declan Costello, which promotes trade, an open economy and an open society. Economic landscape While the recently-published Summer Economic Statement points to a stabilised financial position, falling unemployment and economic growth on the tenth anniversary of the financial crisis, Donohoe’s sight is set on pursuing policies that improve living standards and ensure that Ireland doesn’t find itself at the epicentre of another such crisis. “The Irish economy has made extraordinary progress versus where we were a decade ago,” he said. To illustrate the point, Donohoe notes the nearly 2.2 million people employed, the improved national finances which, for the second year in a row, are broadly balanced and the country’s steady “and, at times, remarkable” economic progress. “However, a recovering economy is not the same thing as a society that’s healed,” he added. “And we are all aware now of the pressures and needs we have to respond back to, such as housing supply and supporting improvements in public services. So, while I can always point to the progress that has been made, we always have more that we need to achieve. That is the essence of public life.” While politicians are often accused of becoming alienated from the electorate, Donohoe is acutely aware of the impact of austerity in Dublin Central in particular. From constituents whose mortgages are now owned by so-called vulture funds to those who are in arrears, the Minister continues to engage with the often-harsh consequences of economic policy. “All of this has informed my understanding of what we need to do to make sure we have a way of treating people that is fair, that is understood, and that is in line with the needs of our regulators,” he said. “To date, we have managed to avoid the kind of repossessions that many feared at the depth of our crisis, but we need to keep our framework,” Donohoe continued. “We always need to challenge ourselves to make sure that it is as fair and effective as possible.” Geopolitical risks While Donohoe can control the State’s approach to fiscal policy and has established a ‘rainy day fund’ to “build up our budgetary resilience in the future”, Ireland remains susceptible to external geopolitical shocks as a small, open economy. The Government’s Draft National Risk Assessment 2018, which identifies the strategic risks facing Ireland over the short-, medium- and long-term, highlights a number of potential challenges. These include Brexit, instability in Northern Ireland, the future direction of the EU, and the changing distribution of global influence and move away from a rules-based system. Irrespective of what happens in the international sphere, Donohoe’s buoyant optimism leads him to believe that Ireland’s economy will weather the fallout of any challenges it might face. In the context of Brexit, he agrees that the magnitude of the challenge will depend on the severity of the exit. “Clearly, the softer the Brexit the more manageable it will be for our economy but if it is to be a very hard Brexit, it will pose an exceptional challenge for the Irish economy,” he said. “But even if it will be an exceptional challenge, I am confident that – because of how our companies have diversified their trading performance and the improvement that our economy has delivered in our national finances – we will have it within ourselves to respond back.” Beyond Brexit, the one big-ticket item Donohoe is keeping an eye on is the global trade consensus – an issue that has become increasingly topical in recent months. “We are deeply integrated into the global trading architecture. If that architecture changes and the terms of trade shift, that has the potential to have a very significant effect on the Irish trading performance,” he said. “That is therefore a matter I would constantly monitor, but I believe that the kind of changes we have made to date in having a more diversified export model and what we have done to rebuild our domestic sector are the kind of things that we need to do to ensure that we have an open economy that is capable of withstanding the kind of shifts that could occur.” Tax policy Another shift that certainly would occur if France and Germany had their way is a move to a common corporation tax regime across the eurozone. According to a statement from the German finance ministry following the recent announcement of a Franco-German joint proposal for corporate tax harmonisation among EU member states, “Europe needs a common framework in tax policy. This is the only way to prevent unfair tax practices and a harmful tax race to the bottom, and to create transparent and fair conditions of competition for European companies.” Despite criticism from several quarters including Dutch MEP, Paul Tang, who described Ireland and Luxembourg as “tax pirates” and Oxfam, which labelled Ireland a “conduit tax haven”, Donohoe and the Department of Finance have been steadfast in the view that Ireland is not a tax haven, it does not meet any international standards for being so considered, and the 12.5% corporate tax rate is sacrosanct. But is Donohoe’s thinking influenced in any way by the accusations levelled at Ireland? “What is important for me is that we have a tax code and tax policy that is both competitive and that also deals with concerns regarding global taxation and the fairness of global taxation,” he said. “I don’t believe that Ireland gets the credit it deserves for the changes we have made with the elimination of stateless companies, the phased elimination of the so-called Double Irish, the introduction of mandatory disclosure of information and tax planning. These are all big changes that we have made but don’t get credit for. “We need to continue to deliver a balanced approach with a tax code that is competitive while, over time, dealing with issues that are subject to international focus,” he added. “And that’s why the BEPS process for the OECD is so important, because it allows all countries to gradually move together in dealing with issues that are of international concern.” Life in politics With talk of a general election swirling, responsibility for two departments and an endless list of issues to consider, Donohoe has much to balance in his professional life – but he still manages to find time for his personal priorities. “I drop my kids to school every morning and then I work very hard up until the very end of the day... I then read before I go to sleep every night because it is a great way to bring the working day to an end,” he said. “I do have a young family but in that regard, I am no different from many working parents across the country. You do your best to make things work by having clear priorities and organising your time as well as you can during the day.” And as someone who sees himself as just another contributor to the country’s workforce, albeit one with significant responsibility, Donohoe is “relentlessly optimistic” about what Ireland can deliver and what he can do as the man in charge of both offices. “The challenges are many, the pressures are frequently intense, but I am really, really optimistic about what we can do, what we are doing and what we have done,” he said. “And whenever the challenges grow a little bit, I just reflect on the journey that Ireland has come from and it gives me great optimism that we can deal with the problems of today.” Accountancy Ireland expresses its thanks to Brendan Clerkin ACA for proposing Paschal Donohoe T.D. for this issue’s feature interview.

Jul 31, 2018
Personal Development

Our drive to move forward changes daily – sometimes hourly! How do we get a grip on our motivation when it sometimes seems easier to do nothing at all? By Paul Price Last week, it took you one hour to read a thirty-page document, and you easily retained all the key points. Today, a similar document takes all morning and you retain almost nothing. Why? What is it that fuels our concentration? And why, even at times when we know we ‘have to’ perform, does it evade us? This seemingly fickle ‘fuel’ that drives our concentration is called motivation. Coined as the ‘master aptitude’ by Daniel Goleman, motivation is, perhaps surprisingly, the part of EQ that is most manageable. But, before we set about trying to master our motivation, let’s first get a better sense of what it is.  What motivates us? Motivation is a combination of drive and effort; passion and commitment. It is what propels us towards our goals. Plato likened it to a chariot pulled by two horses, one spirited and wild, the other trained and noble. If we are to harness our passions we first not only need to gain awareness of them, but we also need to understand them. This is part of our continuing quest to expand our self-awareness.   We are, of course, also motivated by external factors. The most obvious one being financial reward. At work, salary increases, bonuses, share options, and promotions can be strong motivators until our physiological and safety (survival) needs are fully satisfied. In the long run, however, it is intrinsic motivators, those fuelled by our passions, that will sustain our performance. Positive intrinsic motivators include the six Cs: challenge, curiosity, control, cooperation, competition and commendation. Also, there are negative intrinsic motivators we should watch out for, including: fear, shame, guilt, envy and others. The watch-word for these is: ‘have to’; whenever we notice ourselves saying we ‘have to’ do something, we should examine our motivations.  Know your reasons for doing what you do It’s important to start paying attention to your experiences. Try to gain an early understanding of what inspires you and what makes you happy. These moments will help you discover your core values. Learning what you truly value in life will help you to do things for the right reasons. Simply knowing you’re doing what you want do rather than what you have to do will strengthen your resolve. How to tweak our motivators Let’s look at the simplified maths of motivation and performance:  performance = ability x motivation  where motivation = desire x commitment   and ability = aptitude x learning where learning = cognitive change x motivation. We recognise that the common denominator of almost every aspect of performance is motivation, and motivation we can master. Even aptitude and desire, which seem fixed by nature, can be modified over time by moving to a job that suits us better, a job we enjoy, a job in which we can actualise our potential and find what social psychologists call ‘flow’.  Taking this into account, the motivation equation can be tweaked as follows:  Optimal work performance =  right fit x right attitude. Find the career that fits Finding a job that truly suits requires matching our aptitudes and desires with what we do. Done purposefully, this solves half the motivation equation. But finding such a match will likely require some measured experimentation. Try to discover early what makes you happy at work and create a career plan to maximise those aspects. As a young accountant, I tried insolvency and corporate finance in public practice before a stint in financial reporting finally led to venture capital, where I found a job I loved.  Share your career aspirations with your employers and confide in professional mentors and peers. Let them help you in this process.  Know your passions, stay committed Doing a job you love certainly makes commitment easier. Charles Handy, an organisational behaviour expert, recommended that organisations replace their mission statements with ‘passion statements’. To excel as individuals, I believe we should do the same. However, shaping our career path to align with our values does not ensure that we will stay consistently positive. That requires special discipline and, of course, some self-compassion. Consider yourself a work-in-progress, always noticing, always learning.  Top tips to help keep you motivated Engage fully with tasks, stay emotionally present and open to others; Seek connection, nurture affiliation and celebrate others’ achievements;  Be curious, seek feedback and learn continuously; Pursue information to reduce uncertainty; Notice ways to improve; innovate, be entrepreneurial and take calculated risks; Act purposefully and be ready to make reasonable sacrifice to reach important goals. Celebrate your own successes too and, above all, always retain a sense of humour.

Jul 03, 2018
Careers Development

Join the Leinster Society in CA House on the 5th of July for a complimentary breakfast briefing on the results of the Annual salary survey. Release of annual salary survey findings with an informative session on the importance of digital branding for employers and employees by leading digital marketing speaker. The briefing will also cover remuneration levels, flexibility, work life balance and the impact or the introduction of new technologies to the profession. Book now: https://bit.ly/2I3vdMQ 

Jun 20, 2018
Business law

Jeremy Twomey writes: Meeting General Data Protection Regulation (GDPR) compliance requirements has become a top priority for Irish businesses over recent months and accountancy practices are no different. Recognising that GDPR implementation presents both specific challenges and opportunities for accountants in practice, the Practice Consulting team has also been busy both offering advice and providing practical guidance in this area for our members. This guidance can be found at  https://www.charteredaccountants.ie/knowledge-centre/guidance/gdpr/gdpr-resources and includes the following: GDPR 8 Step Guide; Explanation of GDPR terms; GDPR Template Outline Procedures to be tailored and used by an accountancy firm; and Example paragraphs for a client engagement letter addressing GDPR and a template privacy statement. From talking with our members in practice over recent weeks, it is evident that practitioners are at different stages on their journey to GDPR compliance. While it may appear a daunting exercise at the outset, the process of becoming GDPR ready can be broken down into a few key practical steps. With this in mind, in this article, I am going to outline the key points to achieve GDPR implementation from our 8 Step Guide: 1.  Raise GPPR awareness As a starting point on your GDPR journey, the partners and staff at your firm need to be fully aware of the Regulation, the work to be undertaken to ensure compliance, the likely problems that may arise and any budgetary implications. A basic step that can be undertaken in-house at your firm is a GDPR awareness presentation for all the staff. Your clients also have to comply with GDPR, so it is worthwhile checking that they are aware of these changes, to tell them of their GDPR obligations and how your processes may be changing. Such support may be an ‘added value’ opportunity for your firm to assist your clients. 2.  Appoint someone senior to oversee the process & resource this appropriately Your firm should appoint someone internally to take control of understanding GDPR and how it will affect your practice. It is essential that this a senior member of staff who will take responsibility for overseeing the GDPR compliance process at your firm. While it is expected that the majority of the work in relation to meeting the requirements of GDPR can be undertaken internally, a project team may be required, which may include external support and assistance on certain issues. Hence, it is vital that reasonable funding and resources are set aside to achieve your GDPR requirements. It is currently envisaged that most accountancy firms will not be required to appoint a Data Protection Officer (DPO). It is, however, recommended that you still appoint someone to be responsible for data protection within the firm going forward, but give them a title other than DPO (i.e. “Data Privacy Lead”). 3.  Review and update existing information and cyber security measures Having comprehensive levels of information and cyber security is a key step towards building a resilient organisation and ensuring GDPR compliance. It is therefore recommended that members should review their existing security measures and update as necessary. Both controllers and processors are required under the Regulation to implement “appropriate technical and organisational measures” to ensure a level of security appropriate to the risks that are presented by the processing of personal information. Such measures are described as including: Pseudonymisation and encryption of data (The use of secure portals to share documents is also of benefit); The ability to ensure ongoing confidentiality, integrity, availability and resilience of processing systems and services; The ability to restore the availability and access to personal data in a timely manner in the event of a physical or technical incident; and A process for regularly testing, accessing and evaluating the effectiveness of technical and organisational measures for ensuring the security of the processing. Detailed listings of examples of both practical physical and technical security measures to aid GDPR compliance at your firm are included in the full version of our 8 Step Guide as published on the Institute website. It is important to remember that managing cyber risk is not simply about managing data within your firm. Therefore, it becomes necessary to document the security risks from your supply chain (e.g. cloud service provider), as well as your own organisation. 4.  Map your data With the many potential pitfalls of non-compliance to GDPR, taking action to map any gaps in relation to the personal data your firm holds is critical. The first step is to get started by scoping the problem and mapping the data flows associated with your firm. It involves identifying, understanding and mapping out the data flows into and out of the organisation. As the data map evolves, you should be able to identify the flow of data, as well as gaps in required contracts and consents for processing data under the GDPR, and risks in security measures etc. that will need to be prioritised and resolved to ensure compliance. This requirement for data mapping is quite far reaching when you think about it. A typical accountancy practice possesses the following: accounting and tax software, audit software, payroll software, practice management systems, network drives and, of course, paper accounting, tax, company secretarial and audit files. This review will also need to extend to the many individual devices on which information is stored (e.g. laptops, desktops, tablets, phones and memory sticks). Finally, it is important to emphasise that, when completing your data mapping, GDPR compliance is only required for personal data that you hold. Company data is, for example, beyond the scope of the regulation, however your data mapping exercise may have an added benefit of identifying efficiencies that you can implement at your firm for non-personal data as well. 5.  Review your contracts with clients and suppliers As the GDPR imposes new obligations on data controllers and data processors, you will need to make sure you understand your status and your responsibilities with regard to both client data and firm data. At the very least, firm contracts will need to be updated to reflect the requirements of the GDPR. Accountancy firms should review their existing contracts with their clients, suppliers and sub-contractors to identify whether the accountancy firm is the data controller or data processor of any personal data it processes under the different contracts. This involves identifying which party ultimately determines the purpose and means of processing data. It is of vital importance that you satisfy yourself that your firm is correctly assigned the role of either data controller or processor (with matching appropriate requirements/liabilities) before signing any contract with your client or supplier. Remember that entering into a contract on the wrong basis may potentially open both you and your firm to unnecessary requirements/liabilities that may be difficult to overturn. More detailed guidance on each of these areas is included in the full 8 Step Guide, while Section 5 of our Outline Policies and Procedures provides advice on your firm’s likely status as either a Data Controller or Processor for a variety of possible assignments that you may undertake. Both of these documents can be found on the Institute website under GDPR resources. 6.  Employment contracts & information for your employees As with existing legislation in this area, under GDPR, certain information must be supplied to employees before their personal data is collected and processed by your firm. The information will typically be provided in the form of a notice to job candidates, and a further privacy policy will be supplied to successful job applicants as part of their on-boarding induction to the firm (typically included in an Employee Handbook along with other firm policies). It is also important to remember that, for the processing of employees’ personal data, where possible, the employer should rely on performance of the employment contract as the legal basis for processing, rather than consent. Consent is a weaker legal basis for such processing, as it can for example be easily withdrawn by the data subject Finally, do not forget to review (and redraft as necessary) employment contracts to update any data protection references or sections to comply with GDPR. 7.  Draft/update data protection policies and controls to meet the new requirements The GDPR introduces the principle of ‘accountability’. This means that all organisations must not only ensure they are compliant with the GDPR, but be in a position to prove this too. The best way to prove this is to document your data protection policies and procedures. We suggest that your firm’s GDPR policies and procedures should include, but not be limited to, the following (Outline policies in several of these areas are included in “Outline GDPR Policies and Procedures” on our website): Who is responsible for GDPR at your firm and what are the reporting lines? Data Processing Your policies in this area should detail the categories of personal data collected by your firm and the purpose for which it is collected. In addition, these policies should detail your firm’s role as a Data Controller and also instances when you act as a Data Processor, together with your responsibilities in fulfilling these roles. Data Subject Rights Your firm will need to have specific policies and procedures in place to ensure the rights of your data subjects are upheld under GDPR and that you have adequate processes and resources to meet the requirements of the Regulation. Specific subject rights areas requiring defined policies and procedures include: Data Subject Access Requests (DSARs); Right of erasure (Right to be forgotten); The right to restrict processing; The right to object to processing; and The right to data portability Some of these rights may not be enforceable by the data subject where data is held under legitimate purpose.   Data Governance Example areas of data governance to be considered for inclusion in your GDPR related policies and procedures include the following: Data Protection Impact Assessments (DPIAs), Privacy by Design and Privacy Notices, Document Retention, Security and Breaches. 8.  Staff training and ongoing compliance While not all staff will need to understand the GDPR in its entirety at your firm, each of your staff should at least be aware that data protection is an issue for everyone. For staff who do not deal with personal data, training can be limited to an annual (refresher) course on information and cyber security. On the other hand, for staff who regularly deal with personal data, training should focus on security over data, plus an awareness of the firm GDPR policies and procedures on a regular basis (at a minimum annually or more often if the need arises). Again this can be tailored to their particular role and responsibilities. Ongoing testing Testing in the areas of IT Security and other key aspects of GDPR compliance (e.g. audits of records held for constant compliance) should be formalised into a regular ongoing programme of work at your firm, as well as outsourced providers. Cyber security is a rapidly evolving area. Meeting best practice in May 2018 does not mean you will maintain compliance over the months and years ahead; you will need to keep this area under review. Conclusion At first glance, the process to ensuring GDPR compliance may appear to be a massive undertaking and a drain on resources for your firm. It is important to bear in mind that most accountancy firms and small businesses are in the same boat as you, and that by breaking down the required steps into clear manageable stages as above, you too can achieve GDPR Compliance in a timely manner. Should you need further assistance, Practice Consulting has also developed a half day consultation offering. One of our consultants can visit your firm and offer practical advice and guidance on how to tailor your procedures, make progress on your GDPR journey, and meet key compliance milestones. If you have any question in relation to GDPR, please feel free to contact either Conal Kennedy or myself in Practice Consulting.

Jun 01, 2018
Spotlight

To succeed as a true leader, one must embody a set of core traits and behaviours which can be developed through self-awareness and a willingness to grow. It was Mahatma Gandhi who said: “A sign of a good leader is not how many followers you have, but how many leaders you create”. This is worth reflecting on as we consider what we mean by leadership, how we prepare for it, and how we embrace it when, finally, the prize is ours. Technical competence is at the core of the Chartered Accountant – our discipline is an exacting one, and the training we undertake is rigorous and demanding. Rightly so, as many of us embark on careers in which we interpret and apply standards, guidance and codes of governance; we craft disclosures and market statements; we give the true and fair view of financial performance. Those of us who take our discipline into the non-accounting workplace bring with us that technical mindset, which provides a framework for how we approach the situations and challenges we face. Busting the myths How do we navigate the path to leadership? It is rarely something we are called upon to exhibit at the start of our career. Instead, it is something that comes later. My personal experience is of a career that happened in three phases – do, manage and lead. These are very different phases requiring very different competencies and, more importantly, dispositions. The last is perhaps the most challenging for the technically competent as to ‘lead’ is a role, an attitude, a presentation, and a way of being as opposed to a way of ‘doing’. Leadership is formed in the realm of emotional and behavioural intelligence, not in the realm of technical competence. Leading is not about authority, instruction or ordering, nor always being out front. It is a role that you embody by empowering, enabling, influencing, inspiring and impacting. To do this, you need vision and purpose. You need to see something bigger than yourself that others can identify with, believe in and follow. Starting from a technical place, how do we equip ourselves for leadership (assuming that we want to lead and know why we want it)? I will come back to the ‘why we want it’ later, as this is probably the most important determinant of just how good you can be as a leader. Don’t fall for those myths that are peddled about leadership or let some idealised notion of a leader get in the way of developing your inner leader. There is no ‘one size fits all’ – there are as many leadership styles as there are leaders and the circumstances in which you lead play a big part in informing the style you develop and adopt. You don’t have to have all the answers; you just know how to get other people to find them. You do not always have to lead from the front – not every challenge is the Somme – and it’s not all about you. In fact, very little of it is about you; it’s all about the environment you create for others. It’s not all high octane or high action; leadership requires reflection. And no-one is born to it. It’s not some ‘golden spoon’ that some are blessed with. Like a lot of things in life, it is a learnt behaviour and that learning often involves hard work with many knocks along the way. So, having busted the myths, where do vision and purpose start within a person and how do we nurture and develop those traits and behaviours that encourage others to follow us? Finding your inner leader When we are in the ‘do’ and ‘manage’ phases of our lives, we are very caught up in a ‘production’ environment which, on the surface, doesn’t require any great thinking around purpose or vision. But these are the very places where we should start to give ourselves the time and space to think beyond the immediate and ask: what is the end game, and why am I doing this? If you are interested in challenging yourself with these questions, you may well have an inner leader that is trying to get out. Very often, in the depths of doing you find the opportunity to lead – I found that in managing a structured asset finance business. In looking at how to optimise the balance sheet, I had a vision of a different way of managing risk and reward and from that, I lead a European risk syndication business. At first, I had few followers but senior people bought into the vision, trusted me to realise it and allowed me to get on with it.  Vision without purpose and values will not get you very far. I learnt quickly that it is not enough to have messianic zeal and passion – you must articulate a better place if you want people to go there for you – it must make sense, serve a higher purpose, meet a greater need and be supported by values that people can relate to. Now, I am a business person and I wasn’t taking anyone to the promised land but I could see a place where, if we changed what we did, we could do more of it and I knew that was what people wanted. When you take that step into leadership, make no mistake – you are putting yourself out there. You are separating yourself from the crowd and saying “look at me and follow me”. To succeed, I suggest there are a set of core traits and behaviours that true leaders have which can be developed through self-awareness and a willingness to grow. Authenticity and values Oprah Winfrey said: “I had no idea that being your authentic self could make me as rich as I’ve become. If I had, I’d have done it a lot earlier”. It was no doubt said firmly ‘tongue-in-cheek’ but as ever, Oprah was on to something here. Why limit our thinking to assume she just meant money? Consider the influence this woman has and the impact her actions have on thought formation and activism across the world. We feel we know who she is when she speaks. This is because she appears true to herself and has the courage to let people see that self in all its elements. Then we identify, then we empathise because the leader has taken the first steps to demonstrate authenticity and opened themselves up to possible rejection – now that’s putting yourself out there. Values are the soul-mate of authenticity. Without values, authenticity is hollow and people quickly see through it. Values take us beyond the charisma and allure of the person and into the heart of what the person is really about. When we know a person’s values, we can begin to understand their purpose. This allows us to interpret the vision that they are proposing we follow. More wise words from Mahatma Gandhi: “You must be the change you want to see in the world”. Leadership is fundamentally about consistency – who you present; what you present; the values you promote; the purpose you articulate; the example you set; what you say; what you do; how you treat others. If all of these do not connect consistently, you are not authentic. You may get things done, you may make people do things for you, but they will not be following you and you will not be leading. Reflection Making and taking time to reflect is so important. Very often, we are all just too busy ‘doing’ to carve out time to reflect. Ponder that old saying: “If you don’t know where you’re going, any road will take you there” and you will see that purpose and values, the cornerstones of leadership, are impossible to form and articulate without reflection. The phrase “ancore imparo” translates to “I am still learning”. I have a beautiful bronze plaque with this quote attributed to Leonardo da Vinci. When we are open, we are always learning – about the world, about others and about ourselves. Take all that learning and reflect upon it. Do this daily; challenge yourself to rationalise what you are doing and why you are doing it. How does it inform and support your purpose and the leadership that you show? Hear what others say about you, to you, think about you – learn from it. Have the confidence to take the hard stuff on board that will make you better and trust yourself to discard the envious and mean-spirited elements that can get in the way. Trust and respect Trusting yourself and trusting others is something that leaders seem to do effortlessly. This suggests an inner confidence, security and balance. This comes from self-knowledge, authenticity and values which support your vision and purpose. You are not playing at being something or somebody, so you can be free to enjoy leading and trust yourself to do the right thing. You can also trust others and when you do that, you prove Gandhi’s point because as a leader, you make more leaders and create a virtuous circle of empowerment and impact. The ability to trust has never been more important. We live in a mobile, integrated, technology-literate world. You cannot be everywhere, attend every meeting, always be with those you lead. So, share the leadership by creating other leaders. Disseminate your message through others and trust others to be the ambassadors of a shared vision and trust those who will realise that vision. In realising it, they make it their own. As Lao Tzu once said: “A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves”. Finally, respect. This encompasses self-respect and the respect of others, both received and given. Don’t waste your time seeking popularity, it’s a fad, it’s fickle and easily replaced by the next more appealing thing on offer. Instead, earn and give respect. Respect is based on mutual understanding, hearing the voices of others and considering them. It is not earned by being always right. In my own experience, I have earned more respect from admitting to being wrong than I ever got from being right. Do the right thing by others – they may not agree with you, they may not like you, but they will respect you. Mentoring in both directions To be mentored and to mentor is an experience that will enrich your self-knowledge and aid your development and the development of others. Leadership is something that is learnt and what better way to learn than being mentored by a person whom you respect and see as a role model. While doing this, you too can be the mentor to someone who sees in you the character and values that they aspire to. In this relationship, you can discover how in leading you will create other leaders. So, what you gain from one experience is channelled into the other and the cycle of learning turns to the advantage of all concerned. Conclusion Let us go back to the question of why you would want to lead and how that determines the leader you can be. Why you want to lead is derived from your vision and purpose. When people see that your vision and purpose extend far beyond any personal self-interest and speak to something far bigger, they begin to listen; they begin to think about following you to the place you want them to go – to that place you have articulated and you exemplify every day in how you live the purpose that you promote. Lynda Carroll is Head of Capital Allocation and Risk-Based Pricing at AIB.

Jun 01, 2018
Management

If your workplace is being held hostage to a toxic atmosphere, it is time to tackle the issue head on. They notice every minor fault. They dampen a productive conversation with a mean-spirited put-down. They find no pleasure in success and their greatest joy is nit-picking every management decision. Chronic complainers are hard work, dispiriting and difficult to manage. Working with a negative colleague can be depressing yet if not addressed, the constant complaining can infect the workplace with negativity. How do you deal with it? Acknowledge the problem Dismissing a negative colleague as simply somebody who is having a bad day undermines the feelings of those who have to work in close proximity to the negativity. Management must first recognise that there is a problem. One way of doing this is by tuning into the emotional temperature of your office. Is it upbeat and friendly? Is it downbeat and cold? Are people tiptoeing around someone? Attuning yourself to this type of data can give you an insight into the experience of your staff. Are they right? It is easy to place the blame for a toxic office atmosphere on one person. It is more difficult to ask whether they might actually be right. Does the nit-picker have a point? Are they pointing out (albeit irritatingly) a pattern of problematic decision-making or highlighting an office issue that is simply being ignored? Asking this type of question may allow you to view the problem in a systemic context. Sometimes, complainers complain because it is an effective means of drawing attention to what is being covered up or ignored by the wider organisation. In this sense, complaining can be seen as a style of whistle-blowing. If they are not… If you are certain that you have a lone complainer and that they are impacting negatively on the atmosphere in the office, then it is time to take action. Ignoring the mounting tension or trying to rationalise the individual’s behaviour will only damage your credibility in the long run. Here are three strategies to deal with the situation: Create clear expectations for workplace engagement. Make staff accountable not just for reporting what isn’t working, but for contributing to what is. Moaning about the negative co-worker beside the water cooler is contributing to the atmosphere, not alleviating it. Dealing directly with workplace behaviour by discussing it with line managers is a more honest way of addressing the atmosphere; What does your staff member hope to gain by complaining in this way? Complaining is an attention-seeking behaviour that immediately gets results, either informal or formal. Listen for what the complainer is really getting at – it is most likely some kind of unmet need, vulnerability or a sense that they are being ignored or not being heard. There may be a more subtle way of reducing the negativity by focusing on a positive intervention; and If all else fails, refer the complainer to a business coach and set out clear areas for development. It is perfectly reasonable to expect a staff member to complete a course of coaching if you believe their behaviour is having a negative impact on performance or morale. There is rarely a ‘one size fits all’ solution to chronic complainers but everyone is in agreement that a healthy workplace cannot be held hostage to a toxic atmosphere. Hiring the right people may be the first step, but dealing with the fall-out of a negative colleague may be one of the ongoing challenges of managing people at work. Dr Annette Clancy is a Lecturer in Organisational Behaviour at University College Dublin and ran her own consultancy practice for over 17 years prior to joining UCD. 

Jun 01, 2018
Management

When poor performance or unacceptable behaviour can no longer be tolerated, employers must proceed with caution. Regrettable though it may be, there are occasions when – despite one’s best efforts – the ‘problem employee’ must be tackled. In such circumstances, adherence to proper procedure is influential in the majority of court determinations on such matters. Indeed, such judgments frequently focus more on the procedural provisions than the merits of the case. In 2015, the Workplace Relations Commission (WRC) issued instructions to employers availing of its services under such circumstances. The instructions stated that, prior to the hearing, employers “must set out the facts of the events leading to the dismissal including, where relevant, disciplinary meeting(s) held, investigation undertaken, disciplinary hearing(s) conducted, internal appeal(s) conducted...” This instruction goes to the heart of many unfair dismissal judgments, as the Courts have always taken the view that procedural fairness is a key dimension in its determinations. Consequently, to get the best out of the all-important hearing and to avoid unfavourable findings down the road, it is advisable that disciplinary interviewers proceed with caution before, during and after such interviews. Before the disciplinary interview An inadequate investigation of a situation on the part of an employer may give rise to a dismissal or disciplinary action being deemed unfair. Accordingly, a reasonable and fair investigation of the matter should be undertaken prior to a decision to initiate disciplinary proceedings or dismissal. An appropriate investigation will involve establishing the facts of the case, the range of relevant documents on the employee’s personal file (e.g. previous warnings, training received, appraisal records etc.), the required and average performance standards on the job, and the organisation’s disciplinary procedure and precedents. Indeed, it may be that, having completed the investigation, one decides to take no action or to settle for an informal ‘off the record’ counselling session. Depending on the nature of the alleged offence, the timing of the interview will normally be close to the incident. However, it shouldn’t compromise management’s responsibility to do the all-important preparatory work. In some instances, a cooling off period may be required to ensure that all parties approach the interview rationally rather than emotionally. If the alleged offence is adjudged to be of a serious nature, the employee should be advised immediately of the situation in the presence of her or his representative or nominated colleague and given an opportunity to respond. The employee in question may even be suspended (with pay) pending the investigation into the alleged misconduct. Management should then plan the interview structure and agree on the key questions. This can entail writing down all the facts and being prepared to substantiate each one. One should also note any assumptions and be prepared to inquire into them. Decisions will need to be taken as to the personnel to be involved in the process, ensuring that no-one plays two roles in the process (for example, witness and investigator). Where issues have reached a serious stage, at least two management representatives should be present to ensure correct and consistent application of the rules and procedures. One should also be clear as to who has the authority to formally warn or dismiss staff. The Government-issued Code of Practice on Grievance and Disciplinary Procedures recommends – in addition to the employee’s right to be accompanied by a representative – that the employee concerned be allowed to confront or question witnesses. Notably, a recent High Court judgment indicated that where serious allegations are being made that could result in dismissal or reputational damage, a right to legal representation also applies. Having completed the preparatory work, the employee should be advised of the interview’s time, place and purpose, and their representation entitlement. Where appropriate, the employee should also be provided with supporting evidence from the investigation. During the disciplinary interview Don’t be cosy, yet don’t be rude at the disciplinary hearing – strike the right balance. In any interview, the interviewee deserves a fair hearing. You don’t want to intimidate the employee to the extent that you only hear her or his side of the story when it is told by her or his legal representative at the WRC or the Labour Court. Management should make the opening statement. This can take the form of advising those present that – without pre-judgement – it is an interview under the organisation’s disciplinary procedure, the stage the procedure is currently at, one’s role relative to the procedure, and the function of other people present including ‘on call’ witnesses. The structure of the meeting should then be outlined. The structure of the meeting entails the aforementioned opening statement and posing questions. The employee and her or his representative will then reply, question witnesses and produce their own witnesses. One can then further question the employee and her or his witnesses. The employee should also be encouraged to highlight any issues she or he considers important, including any mitigating circumstances. Having determined whether there is any mitigating evidence, the action that management takes depends on such circumstances and the seriousness of the offence. When determining the action to be taken, the test of ‘reasonableness’ (i.e. does the punishment fit the crime?) must be borne in mind and should take account of these mitigating factors. In effect, this means that every situation must be evaluated on its own merits – though one must also be careful to be consistent, ensuring that one individual isn’t victimised or disciplined for behaviour that is tolerated elsewhere in the organisation. Prior to closing the disciplinary meeting, management should summarise to ensure that everyone understands the key issues. This summary should reflect the key points of the original case, the employee’s reply, the changes to the original case that have arisen during the meeting, the circumstances pertaining to the case as it now stands and the matters that warrant consideration or investigation during the adjournment. After this adjournment, one reconvenes the meeting to convey the decision, outline the outcome and state the action to be taken. Should the evidence point toward disciplinary action, management’s position should be explained to the employee who should be made fully aware of her or his shortcomings, the nature of the improvement required and the means for its achievement, together with the consequences of future transgressions. This is also an appropriate time to remind parties of their right of appeal. After the disciplinary interview After the disciplinary hearing, management must write up the records, advise relevant personnel, and send copies to appropriate parties (the human resources department, the employee and her or his representative, for example). Accurate records should be kept of all disciplinary issues but in particular, they should set down the dates, parties involved, the original case, the changes to that case arising in the proceedings, management’s action and its relationship to previous actions, and the particular circumstances of the case and how they affected the final action. Of course, good managers will work to prevent any deterioration in relationships. Disciplinary action can be a source of discomfort and resentment. While management’s final action may be fair and reasonable in the circumstances, it may not endear one to staff. Hence, the disciplinary action should be followed up to ensure that the problem does not arise again and that the process has been approached in a manner designed to help avoid the unacceptable behaviour or performance from recurring. Finally, the slate should be wiped clean in due course (if appropriate), as warnings should remain on an employee’s record only for as long as is consistent with the nature of the offence and in accordance with the organisation’s rules and practice. Gerard McMahon is Managing Director at Productive Personnel Ltd., a HR consultancy and training company.

Jun 01, 2018
Management

Six executive coaches reflect on the benefit of reflection at an individual, team and organisational level. Six executive coaches walk into a bar where their main objective was to discuss the type of cultural environment that makes it easy for an organisation to benefit from highly effective teamwork amongst its people. For the sake of anonymity, we’re calling them C1 to C6. For the sake of transparency, we need to admit that two of them were us. Learning and blame “Above all else, teams need to work within a learning culture,” began C2 when the first round was safely in. “As David Garvin wrote in the Harvard Business Review: ‘The world is changing. We’ve got new business models. If your rate of learning isn’t greater than the rate of change, you’re going to fall behind.’ I’ve been thinking about this a lot.” “Oh yeah,” exclaimed C1. “I like that a lot.” As did C6, adding, “This makes real sense to me as a coach. It provides clarity around what I’m seeking to achieve. I want to help organisations create an environment in which team members are constantly learning and refining what they do. But sometimes it’s hard to get there, isn’t it?” “Definitely,” said C3. “I’m working with a team right now who really struggle to reflect meaningfully on the ‘what just happened?’ question. The members seem more interested in justifying their positions than in harvesting any lessons from the outcomes that derive from their work together.” “Ah,” muttered C5. “It’s the old blame culture, isn’t it? I come across that so often in the organisations I work with and it’s so crippling, so counterproductive. It’s like Matthew Syed wrote in Black Box Thinking, ‘When something goes wrong, we like to point the finger at someone else.’ It’s hard to learn from ‘what just happened’ when we’re counting the fingers that are pointing at us.” At which point, five fingers turned towards C5, suggesting that it might be time for the next round. Resilience and business as usual By the time C5 returned from the bar, the conversation had moved on and C4 was holding court. “I think there may be too much talk of resilience within some of the organisations I work with. Do you not think that sometimes, staff are expected to bear too much?” “Absolutely,” replied C1. “Perhaps we should be coaching them around how best to resist, rather than to be resilient.” At which point, C3 reached for a handy napkin that was lying on the table and drew the following diagram while the rest looked on: “You see,” said C3 when the masterpiece was complete, “I’m getting worried that in some of the organisations I’m working with, resilience is now being seen as being a prerequisite for carrying out business as usual, rather than as a way to manage stress when something tough comes along, which requires you to dig deep.” “You know,” interjected C6, “that’s got me thinking. I mean, if the pressure to produce is so high in an organisation that its people need resilience just to get through a typical working day, what resource can they reach for when a crisis hits their sector or their company? That’s a great diagram, C3.” “Thanks,” said C3 modestly. “I suppose I’m just learning to use caution while seeking to develop greater levels of personal and team resilience with my clients. I see it as avoiding collusion with any organisational stakeholder whose world-view is one of ‘weaponising’ resilience by cranking up performance requirements to the point where it becomes a non-negotiable necessity when carrying out business as usual.” “Wise words,” said C2. “Now, go and get your round in.” Alignment and emotional intelligence “I’d like to talk a bit about the whole notion of alignment for a while,” said C2. “There’s a lot of talk about how important it is for an organisation’s people and teams to be aligned to its mission and values, but what does that mean in the real world? Is this really something it makes sense for teams to align to?” “Particularly in light of the ‘values inconsistency’ we so often see coming down to middle managers from boards,” chipped in C1. “That really confuses a lot of the people I coach.” “But,” asked C3, “if we don’t have a clearly articulated mission and values, how do people answer the ‘what do we do now?’ question?” This drew quite a lengthy response from C5: “I listened to a podcast recently in which alignment was described in terms of a person or team being tuned into what their system was wanting, saying or feeling at any one moment. The speaker felt that meaningful organisational alignment occurred when a team could match up the stuff it was feeling, wanting or saying as an entity in its own right, with the bigger picture; with the stuff that was being felt, required and articulated across the organisation as a whole.  They called it emotional alignment – I liked that.” “I heard that podcast too,” said C4. “It’s the one where the speaker talks about an organisation having an essence and a character. And that essence and character having a voice to which its people and teams can learn to attune their own voice. Perhaps it’s helpful to look at this as the deepening of collective emotional intelligence across an organisation and its various teams. Would that be helpful, do you think?”  “Speaking of the group collective voice...,” said C1 and headed swiftly towards the bar. Trust and vulnerability “A lot of this stuff comes back to trust, doesn’t it?” asked C1 on returning from the bar. “I’m finding quite a bit of cynicism in some of the teams I work with. It seems to be rooted in a dilution of trust both amongst colleagues and between an organisation and its people.” “Yes,” answered C3. “It’s like Amy Edmonson says in Teaming: when people trust and respect each other, it produces a sense of confidence and psychological safety. And this, in turn, encourages them to share their thinking without fear of being embarrassed or rejected.” “Patrick Lencioni calls that the ability to be vulnerable,” said C2, “because team members have a confidence that their peers’ intentions are always good so there’s no need to be self-protective. That, I think, ties back to the whole blame culture stuff we were discussing earlier.” “Yes, Lencioni says that a dilution of trust is the first and perhaps most important sign of a dysfunctional team,” said C4. “I find that to be true so often. It’s been particularly so in the climate of competitiveness that seems to be a necessary evil in many organisations. It’s hard to turn off those competitive instincts to develop a trusting environment within your team.” “I think the wider organisation needs to involve itself in helping to make this happen,” added C5. “It’s in their interests. I mean, think of the time and energy that’s wasted in teams trying to understand and manage other team members’ intentions. It’s a shocking waste of resource and really serves as a drain on morale.” Reflecting on organisational culture The issues discussed by C1 to C6 are all big issues for reflection at an individual, team and organisational level. Time spent reflecting on these issues can pay big dividends in terms of morale, engagement and performance. We don’t always have to reflect together in the boardroom. It’s often better to visit a decent coffee shop, restaurant or the local pub – or even organise a hotel-based away day. All of these discussion points offer an opportunity to establish some ground rules around banishing blame and exploring vulnerability – at least for the duration of the conversation – while considering some of these hugely important organisational culture issues. We’ve found reflective practice amongst peers to be a highly effective approach, both in our own firm and in working with our clients. We recommend it wholeheartedly to all organisations. Ian Mitchell and Siân Lumsden are partners in Eighty20Focus, a boutique firm of consultants, executive coaches and leadership trainers.

Jun 01, 2018
Ethics and Governance

There is an oft used, simple, but valid summary that “ethics is about doing the right thing”. However, what action to take in an ethical dilemma is not always so simple. What we consider to be right and wrong is influenced by what we know. What we do is influenced not only by our knowledge, but our instincts and the specific circumstances in which we find ourselves. To help you prepare for the day you encounter a difficult ethical dilemma, Chartered Accountants Ireland has launched an ethics quick reference guide, Five Fundamental Principles, Five Practical Steps. The concept of the guide is simple: it contains a summary of the five fundamental principles contained in the current Chartered Accountants Ireland Code of Ethics and includes a unique five-step ethical thought process to guide you in your decision-making. While the five fundamental principles form only one part of the 182-page Code, they are a core part of the conceptual framework that is embedded throughout the entire Code. Many Chartered Accountants will be familiar with these principles from either their days as a trainee accountant or from their most recent bout of Continuous Professional Development (CPD) referencing ethics in the accounting profession. While many Chartered Accountants will be familiar, we hope the principles summarised in the guide will resonate with all of you. The five practical steps outlined in the guide are designed to get you thinking about how you might behave in response to an ethical dilemma. Well-constructed codes are always useful and should be referenced at some stage in your ethical thought process. However, rather than basing the five steps on any particular code of ethics, they are based upon practical considerations of how one can respond to an ethical dilemma. Dealing with a front-line ethical dilemma is not always simple. The first challenge can often be to recognise that you are experiencing an ethical dilemma. We won’t right all the wrongs with one simple guide but if we succeed in getting professionals and business leaders thinking, we have a chance of righting some wrongs – or at least avoiding others.  The guide can be downloaded from the Ethics Resource Centre on  www.charteredaccountants.ie.

Jun 01, 2018
Spotlight

Ambitious women face many hurdles, but these can be overcome in the search for a place at the top table.  The issues of gender discrimination in the workforce and the gender pay gap are subject to increasing analysis – and rightly so. Given the amount of catching up to do, the equalisation of gender at the most senior levels of business should be on the agenda of companies in all professions, including accountancy. Discrimination and pay are two critical issues that need to be addressed for a fairer working world and it is important that the accountancy profession continues to encourage women to aspire to positions of leadership within the industry. Those who climb the leadership ladder will in turn inspire others as they lead the way. I truly hope that any woman reading this article and planning for promotion has never felt discriminated against or held back in so may me way because of their gender. Accountancy is a great career choice for women and men alike, and it offers huge scope for ambitious and consistent people. The business case for equality So, why does the accountancy profession – or, indeed, any profession – need more women on board? According to a study by The Centre for Creative Leadership, having more women in the workplace simply makes an organisation a better place in which to work. Not only that, having a higher percentage of female talent in an organisation predicted more job satisfaction; more organisational dedication; more meaningful work; and less burnout. But that’s not all. The researchers also found that having more women in the workplace was positively related to employee engagement and retention. Specifically, when asked why they stay with their current employer, people from organisations with a high percentage of women were more likely to cite positive and meaningful organisational culture. This includes enjoyable work; a job that fits well with other areas of their life; and opportunities to make a difference. These new findings persist regardless of participants’ age, industry, organisation size, leadership level, ethnicity or gender. In fact, while both men and women in our survey responded with this same positive pattern of results, the findings were even stronger for men on some measures. The emotional quotient Research has shown that women are more naturally empathetic and have a slightly higher level of emotional intelligence functioning than men. When in leadership positions, emotional intelligence can set you apart and allow you to better handle yourself, others and what is happening around you. Women can read a room in less than a second and generally have an easier time stepping into others’ shoes and showing empathy. These are incredibly powerful skills. We know that there is a growing empathy deficit in workplaces and that social connectedness increases performance and drive within a workplace, but if fewer women occupy leadership roles, this deficit may widen. The women leaders I am privileged enough to work with agree that it is vital that women do not feel that they must behave as a man would. They urge women to use their femininity and unique style to lead. Empower through trust To achieve gender equality, organisations must first learn how best to empower their female employees. In so doing, they will also improve the engagement, outcome, performance and happiness of both men and women in the workplace. To have an attractive employer brand, organisations must also find ways to encourage a more flexible and trusting workplace – one that encourages ownership and responsibility for work delivery on-site as well as remotely when required. This is not a gender issue; it is more about flexibility for both men and women that accommodates the need to balance personal and family demands and provides a roadmap to share the burdens and responsibilities of family life more effectively. One way to do this is to ensure that remote working systems are in place, including protocols for managing physical files. A cultural shift may also be required, one that gives employees the flexibility to work away from their desks, and trust is at the core. The millennial question Organisations must also consider the young women rising through the ranks who typically fall into the ‘millennial’ category. Millennials are more likely to expect their workplace to be flexible and don’t always see the value in adhering to ‘traditional’ rules. They also need to feel a connection to their work and want mentors to teach and inspire them. They want a clear career plan and although professionally immature, they need to feel that they will be provided with the scope and opportunities to progress. If we truly wish to encourage women leaders of the future, we must consider this millennial group and show them how other women have succeeded in their journey to the leadership table. Without this inspiration, they may falter. Strategies for success Leadership is quite the enigma, irrespective of gender. While some leaders have natural skills in influence, for example, they may lack natural skills in business strategy. Leadership therefore requires skills development and continued learning. Managers in today’s evolving corporate landscape face regular recalibration and with this comes challenge. Building resilience is a must for any leader, and this must be done while adapting to continued globalisation, tightening budgets and stricter reporting deadlines. Every leader needs an up-to-date tool-kit to help them improve their interpersonal skills incrementally and consistently. Men and women share a number of common leadership weaknesses. With daily stresses, even highly functioning leaders react to situations as they happen but don’t necessarily know how to carve out the time required to reflect on, and analyse, situations under pressure. For those females with promotion ambitions, here are some strategies that will help you advance your cause: Seek out mentors. Ideally, they should be women in your industry and in positions to which you aspire. Study what makes them successful; Partner with and support your boss in reaching his or her goals. This is about learning the skills to ‘manage up’; and Look for every opportunity to demonstrate your leadership capability and skills at work And here are some pitfalls to avoid: Don’t allow yourself to be overtaken by the distraction of your ambition or goals for development. Remember, you have a day job so do it well. This will ensure you are not dispensable; and Don’t put off any plans for leadership development training that will improve your self-awareness and influencing ability. Invest in building these leadership capabilities. And finally, a recently-published Accenture report offers three powerful accelerators to help women close the pay gap: Career strategy: aim high, make informed choices, and manage your career pro-actively; Tech immersion: acquire stronger technology and digital skills; and Mentoring: find a suitable mentor who will inspire you to become a leader. Performance matters To master your leadership edge in the field of accountancy, you need to shine a spotlight on your leadership style. Remember, your role in your company isn’t that of a superhero – rather, it is that of a transformative finance partner. To cultivate this reputation, be seen as someone who constantly monitors their own performance and that of others. In doing so, you will take a significant step towards career equalisation for women. Jane is author of The Career Book and co-founder of The Leadership Rooms.

Jun 01, 2018
Spotlight

What are the determinants of leader success in a volatile, uncertain, complex and ambiguous world? Recent times have been commonly described as volatile, uncertain, complex and ambiguous (VUCA). The VUCA world has been propelled by three fundamental shifts. First, the convergence of a couple of great disruptors – technology and globalisation – has made the pace and scope of change far greater than it has been since the industrial revolution. The emergence of new disruptive technologies and business models is becoming more commonplace and is reshaping the nature of competition across industries. As a result, executives may need to master additional skills to redirect their organisations in the face of attacks from a wider array of competitors than ever before, who create value for customers in fundamentally new ways. Second, and on a related note, executives are faced with a constant stream of information and trends that have become more readily available. It is therefore difficult to distinguish noise from actionable intelligence. As a result, executives may need to make decisions and advocate for them with little clarity on environmental trends. Finally, a fundamental shift is under way in the psychological contract between employers and employees. Unlike the past, when individuals often remained with a given employer for most or all of their working lives, individuals are now more likely to change jobs multiple times over the course of their career and employers are less likely to offer stable employment than prior generations. As workplaces come to be characterised by frequent turnover of staff and an increase in contractual and temporary staffing arrangements, leaders face increasing challenges in hiring, motivating and retaining employees and in preventing the loss of valuable skills and knowledge. When one considers the fundamental changes ushered in by these developments, it is not surprising that there is much interest among executives, consultants and academics alike in understanding the key leadership skills that can drive organisational success in a VUCA world. Questions have also been asked about how these leadership skills compare to those that drove success in prior decades. A key determinant of leader success in a VUCA world will continue to be the ability to effectively manage talent in one’s organisation. In particular, managing talent is becoming the foremost strategic priority and requires even greater executive attention. We are conscious that there isn’t any one boiler-plate or leadership template for managing talent. Rather, our aim is to discuss a few challenges leaders may encounter in a VUCA world and share examples of some practices that can enhance the probability of leader success. The hiring process The first and foremost talent management challenge facing leaders in a VUCA world is getting the hiring process right and treating it at par with other significant resource allocation decisions – but getting this right is easier said than done. Research has found that executives often staff their organisations with individuals with homogeneous skillsets and work experiences, often mirroring those of executives themselves. In doing so, they may create a ‘tunnel vision’ of sorts in the organisation when instead, greater diversity of thought and skills is likely to be needed for organisations to navigate the current VUCA times. There is also the temptation to make recruiting choices based on the immediate operational needs of the organisation or by prospective candidates’ fit with current activities instead of acquiring talent that will support the organisation in the medium- and long-term. One example is the need for technology-savvy individuals who are able to help the organisation capitalise on the digital and analytics disruptions that are reshaping the business world. As the famous hockey player Wayne Gretzky once said: “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” Nurturing talent A second, not-so-obvious challenge facing executives in a VUCA world is avoiding the extremes of either neglecting their top talent or singularly focusing on top talent while ignoring other employees. On the one hand, top talent disproportionately contributes to organisational performance despite being in the minority. Top talent is also generally highly mobile. Thus, leaders cannot afford to take these individuals for granted and must make efforts to motivate and retain them. On the other hand, the features of a VUCA world also imply that organisational performance is increasingly dependent on team effort as much as solo efforts by key employees. Important contributions to team effort are often made by employees who may not be the top-most performers, but are nevertheless good organisational citizens who provide valuable stability. Organisations should therefore be mindful of the unintended emergence of a vicious cycle whereby the nurturing of top talent comes at the cost of denying growth opportunities to others. The balancing act that leaders need to perform in order to retain and reward their top talent without alienating others often proves difficult. Good inductions, coaching, and emphasising and encouraging collaborative behaviour are a some actions leaders can take. Incentive and reward systems A third challenge facing executives in a VUCA world is preventing potential distortions triggered by the design of organisational incentive and reward systems. One such distortion can result from adopting incentive systems that are at odds with organisational objectives. This possibility was extensively discussed in the seminal article, On the Folly of Rewarding A while Hoping for B. For example, organisations commonly provide incentives for the achievement of individual targets while stating a desire for a collaborative organisational culture. Another distortion that can occur as a result of organisations’ incentive and reward systems is employees being promoted based on their performance in their current roles as opposed to their potential and suitability for future roles. Google’s ‘Project Oxygen’, for instance, revealed that individuals who were promoted to managerial roles largely on the basis of their current technical skills and performance were often not effective in these roles, as good managers also needed softer skills such as listening, coaching, developing others, and the ability to delegate. More generally, organisations’ incentives and reward systems could also generate distortions when they focus on a narrow set of behaviours and outcomes, thus inadvertently discouraging other value-creating behaviours and outcomes. For example, it is quite possible that a great salesperson may neither want to be a sales manager nor would make a good sales manager. Creating incentive and recognition systems that seek to recognise the different ways in which employees contribute to organisational success could be one way to avoid this. Conclusion A VUCA world has created immense opportunities for companies to tip the balance of competition in their favour and create the preconditions for lasting success. In doing so, leaders must approach the selection, motivation and retention of talent as a strategic priority. Karan Sonpar and Federica Pazzaglia are both Professors in the management subject area of UCD Smurfit School of Business.

Jun 01, 2018
Strategy

General practitioners can capitalise on the trend towards sector specialism, but planning is required.  The accountancy sector, like other professional service sectors, has witnessed an increased focus on sector specialisation to bolster general practice activities over the last decade. This trend is largely driven by clients who want their advisers to be experts not just in technical accounting issues, but also in the issues that impact a particular industry or client type. Niche services can be very profitable provided you choose the right niche. However, it is vital to ensure that the demand for your services will be sufficient for your firm to develop a sustainable and profitable business model – and that is where research comes in. Research the opportunity Once you have identified your target market, the next step is to define your service offering by focusing on your clients’ needs; the aspects of your services that meet those needs; and, importantly, the skills and talents that differentiate you from your competitors. Take time to get to know your target market and bear in mind that this is not a once-off exercise. Businesses evolve and client needs will change over time. It is therefore vital that small- and medium-sized practices (SMPs) are proactive and agile enough to anticipate trends and respond appropriately. The aim is to build a business model that is efficient and easy to replicate for the full spectrum of clients in your chosen sector. If your chosen niche is freelance IT business owners, for example, and you successfully develop a service offering that saves clients time and money while providing value-adding insights that ultimately help their businesses develop and grow, it is likely that your clients will refer other potential customers to you. Communicate your offering Having identified your target niche and refined your service offering, the next challenge is to let people know about it. There are various ways to reach your target market. Your website is important – not from an SEO point of view, although that can sometimes be useful, but because it will likely be the first port of call for prospective clients when they hear about your firm. Your website should be intuitive and easy to navigate. It should provide details of your expertise in plain English so potential clients can easily understand what services you have to offer, and it should provide your contact details. It is important that someone in the firm is responsible for monitoring website queries and responding promptly. Failure to get these basics right can result in lost opportunities. Utilise your website Your website can also act as a platform for your firm’s thought leadership activities – an increasingly popular way for businesses to share their expertise and showcase their abilities. Make it easy for potential clients to read your blogs, insights, press releases and news. If you are active on social media, provide links on your website to make it easy for potential clients to follow and connect with you. Surveys are very useful in generating insights that add value for clients. They can also provide excellent material for press releases, web and social media content. Similarly, attending, speaking at and hosting events for your target market is a great way to build your firm’s brand and profile in the marketplace. To maximise the value of these opportunities, it is essential to invest time in pre-event and post-event activity. Lastly, subject matter experts within your firm should be prepared and willing to accept media invitations for interview. Many accountants are apprehensive about speaking on air and therefore miss out on opportunities to showcase their professional expertise. Media training will help you develop the skills necessary for this valuable activity. Risk versus reward A limited budget doesn’t have to be an obstacle to effective marketing. The key thing is to know your target market and ensure that your message is relevant. Money spent educating yourself about your target market’s sector will deliver more long-term value than vying for attention in a crowded marketplace where your competitors might have deeper pockets. All of the top 10 accountancy firms in Ireland have clearly identified industry sectors in which they specialise. In my experience, if firms spread themselves thinly as generalists, they preclude the opportunity to build the deep, meaningful expertise necessary to reach beyond geographic or traditional markets. While focusing on a narrow market may feel risky as it ultimately means excluding other sectors, a practice that focuses on a small number of specialist areas has well-defined audiences to communicate with. As a result, its message is more likely to be heard.  I was recently chatting about this concept with an astute PR consultant who asked me why a firm would “take the risk” to focus on a narrow industry. But given the opportunity to develop a profitable, sustainable portfolio and win referrals, why wouldn’t they? Mary Cloonan is a freelance marketing professional and founder of Marketing Clever.

Jun 01, 2018

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