Barry Dempsey outlines Chartered Accountants Ireland’s new path to real change – for tomorrow, for good.“Real change, enduring change, happens one step at a time” – the words of the inimitable Ruth Bader Ginsburg. You could argue that the change we have seen in the way we all work and live our lives since March has happened far quicker than she could have foreseen. The unprecedented aside, however, her words have real resonance for our Institute as we embark on our own period of real change as an organisation of over 28,500 members.Real change for Chartered Accountants Ireland will be guided over the coming four years by a plan that I am excited and proud to launch, Strategy24. Change is not new to the Institute; when you are more than 130 years old, it tends to become a necessity for survival! It is change by our members and for our members, and as my colleagues who have worked alongside me can attest, engagement with members has been extensive. It has also been frank and honest; we did not want members to pull any punches. Our profession is changing all around us, so we want to be on our toes, working harder than ever to be the Institute that members need. Strategy24 will help us to do this.Our vision and valuesOur vision for Chartered Accountants Ireland is that of a vibrant, modern and highly relevant organisation with a network of digitally connected members who have a strong sense of belonging, no matter what their industry or where in the world they are. While in some ways, COVID-19 has made the world suddenly feel like a much bigger place, it has also accelerated the digitisation of the Institute, giving members that sense of connection even though they are apart. This direction of travel will continue through Strategy24.The values guiding Strategy24 are:Innovation with ambitionCollaboration for impactSpeed and simplicityInclusionTrustThe final value of “For tomorrow, for good” is the hub around which all the other values exist, driving home the “enduring change” that Ruth Bader Ginsburg spoke of, and through which we will create opportunities for members and students as well as ethical, sustainable prosperity for society.Origins of Strategy24Strategy24 builds on the success of our previous strategic document, Strategy 2020, which proved an effective roadmap for us. It identified what set the Chartered Accountancy profession apart and worked to build these differentiators for the benefit of our members.The themes that underpinned Strategy 2020 were attracting the brightest and best to the profession, being relevant to our members, and being the authoritative voice of the profession.Strategy24 will build on these achievements and seek to drive some broader strategic priorities, which represent a more significant change for our Institute, all developed through extensive consultation with members and relevant key stakeholders over the last year. Again, I cannot overstate the importance of this frank and honest engagement. The resulting plan represents all members and is robust enough to guide us – even at this time of heightened uncertainty. Strategy24 is the product of collaboration, trust and new ways of thinking. It is the very manifestation of the values that will guide us towards 2024.The building blocks of Strategy24Connecting: ‘redesigning the member experience’ and ‘amplifying our voice’. We aim to be a member-centric, vibrant and relevant organisation that facilitates a diverse, digitally connected and engaged network with a strong sense of belonging. We must be the effective and leading voice for members – consulted with, and influential on, key issues affecting the profession and the broader economy.Empowering: ‘educating members career-long’ and ‘building trust’. We will design and deliver high-quality, student- and member-centred, future-focused education that develops the capabilities sought by employers, equipping our members and students to excel at all career stages. In everything we do, we will aim to be recognised as an appropriate and effective regulator that drives value for members, stakeholders and the public, ensuring confidence in – and respect for – the Institute and the profession.Evolving: ‘elevating the brand’ and ‘becoming a high-performance organisation’. We will equip members, firms and employers with a contemporary brand that consistently reinforces and epitomises the values of the Chartered Accountant profession. Under this strategy, our Institute will focus on being a financially sustainable, digitally-enabled organisation with an agile culture that supports innovation and collaboration.A strategy for uncertain times When we started work on this strategy over a year ago, it was hard to imagine a threat more real and wide-ranging than Brexit. Indeed, for most of the duration of the development of this plan, COVID-19 did not have a name, having emerged as a ‘novel coronavirus’ on the other side of the world. Contemporary business language like ‘disruption’ has taken on a whole new meaning when, in weeks, entire industries have been decimated and other, never before imagined, niche industries are up and running.From a broader perspective, globalisation and technology have transformed access. Access to markets, knowledge, expertise, learning and capital has expanded exponentially. At the same time, connections and attachments have become lighter and more transient. Where people belong and what they belong to is blurred.Strategy24 is nevertheless a strategy for this uncertain time, and our ambition matches the scale of the challenge. The impact of the global pandemic on our economies and our societies, as well as the shape of our future relationship with our nearest neighbour, are just two of the unknowns that will become more fully known throughout the life of Strategy24. The reference to ‘24’ of course refers to the strategy taking us successfully through to the year 2024, but it deliberately implies more than that. It marks the prioritisation of an always-on, responsive Institute that is attuned to – and motivated by – members’ needs, whether virtually or in person.I hope that members can support, engage with, and see tangible benefits from Strategy24 as we move forward. The collaborative approach does not end with the launch of the document, however. I will continue to encourage your feedback in the weeks and months ahead so that our strategy can achieve what it is intended to, one step at a time. Barry Dempsey is Chief Executive at Chartered Accountants Ireland.

Imelda Hurley has had a challenging start to her role as CEO at Coillte, but her training and experience have proved invaluable in dealing with the fallout from COVID-19, writes Barry McCall.Imelda Hurley’s career journey to becoming CEO of Coillte in November 2019 saw her work on every continent for a range of businesses spanning food to technology. That varied background has helped prepare her for the unprecedented disruption caused by the COVID-19 pandemic.“We have been working remotely since March, and the business has kept going throughout the pandemic,” she says. “We closed the office straight away and have had 300 people working remotely since then. Our primary focus since has been on the health, safety and wellbeing of our colleagues, and against that backdrop, on ensuring that a sustainable, viable and vibrant Coillte emerges from the crisis.”A diverse challengeThis has not been as straightforward as she makes it sound. “Coillte is a very diverse business,” she adds. “We are the largest forestry business in the country, the largest outdoor recreation provider, we enable about one-third of Ireland’s wind energy, and we have our board manufacturing business as well. We needed to continue operating as an essential service provider. That remit to operate was both a challenge and an opportunity.”The company’s timber products are essential for manufacturing the pallets required to move goods into and out of the country. “Some of our board products were used in the construction of the Nightingale Hospital in London,” she adds. “And the wind energy we enable provides electricity for people’s homes and the rest of the country.”Organisationally, the task has been to enable people to continue to do their jobs. However, the challenge varied depending on the nature of the operation involved. “In forest operations, people usually work at a distance from each other anyway, so they were able to keep going. That said, we did suspend a range of activities. We needed to continue our factory operations, but we had to slow down and reconfigure the lines for social distancing. And we kept the energy business going.”Those challenges were worsened by an ongoing issue associated with delays in the licensing of forestry activities and by the unusually dry spring weather, which created ideal conditions for forest fire outbreaks. “Even a typical forest fire season is very difficult,” she notes. “But this one was particularly difficult. In one single weekend, we had 50 fires which had to be fought while maintaining physical distancing. Very early on, we put in place fire-fighting protocols, which enabled us to keep our colleagues safe while they were out there fighting fires, and to support them in every way possible.”The lure of industryHer interest in business dates back to her childhood on the family farm near Clonakilty in Cork. “I was always interested in it, and I enjoyed accountancy in school and college at the University of Limerick. I did a work placement in Glen Dimplex and that consolidated my view that Chartered Accountancy was a good qualification that would give me the basis for an interesting career.”She went on to a training contract with Arthur Andersen in Dublin. “The firm was one of the Big 6 at the time,” she recalls. “I availed of several international opportunities while I worked there and worked in every continent apart from Asia. I really enjoyed working in Arthur Andersen, but I always had a desire to sit on the other side of the table. Some accountants prefer practice, but I enjoy the cut and thrust of business life.”That desire led her to move to Greencore. “I wanted to be near the centre of decision-making and where strategy was developed. I stayed there for ten years, learning every day.”And then she moved on to something quite different. “Sometimes in life, an opportunity comes along that makes you pause and think, ‘if I turn it down, I might regret it forever’. The opportunity was to become CFO of a Silicon Valley-backed business known as PCH, which stood for Pacific Coast Highway, which was based in Hong Kong and mainland China with offices in Ireland and San Francisco. It was involved in the supply chain for the technology industry and creating, developing and delivering industry-leading products for some of the largest brands in the world.”The experience proved invaluable. “It changed the way I thought. It was a very fast-moving business that was growing very quickly. I got to live and work in Asia and understand a new culture. I took Chinese lessons and the rest of the team took English lessons. There were 15 nationalities on the team. It was remarkably diverse in terms of demographics, gender, culture, you name it. That diversity means you find solutions you would not have found otherwise.“I spent three years with PCH and ran up half a million air miles in that time. It had a very entrepreneurial-driven start-up culture. The philosophy is to bet big, win big or fail fast. It was a whole new dynamic for me. I also got to spend a lot of time in San Francisco, the hub of the digital industry, and that was a wonderful experience as well.”Returning to IrelandImelda then returned to Ireland to become CFO of Origin Enterprises plc. “As I built my career, I always had the ambition to become CFO of a public company. And I always believed that with hard work, determination and a willingness to take a slightly different path, you will succeed. Greencore and Origin Enterprises gave me experience at both ends of the food and agriculture business; they took me from farm to fork. A few more years in Asia might have been good, but Origin Enterprises was the right opportunity to take at the time.”Her next career move saw her take up the reins as CEO of Coillte on 4 November 2019. “I always wanted to do different things, work with different organisations and with different stakeholder groups,” she points out. “Coillte is a very different business. It is the custodian of 7% of the land in Ireland, on which we manage forests for multiple benefits including wood supply. It is a fascinating company. It is an outdoor recreation enabler, with 3,000km of trails and 12 forest parks. We get 18 million visits to forests each year. We also have our forest products business – Medite Smartply. We operate across the full lifecycle of wood. We plant it and it takes 30-40 years to produce timber.”Imelda’s varied career has given her a unique perspective, which is helping her deal with the current challenges faced by Coillte. “Throughout my career, I have worked in different ownership structures and for a variety of stakeholders. I worked for public companies, a Silicon Valley-backed business, and have been in a private equity-backed business as well. Now, I am in a commercial semi-state. That has taken me across a very broad spectrum and I have learned that a business needs to be very clear on a set of things: its strategy, its values, who its stakeholders are, and how it will deliver.”Entering the ‘new’ worldWhile Coillte has kept going during the COVID-19 pandemic, it is still affected by the economic fallout. “We are experiencing a very significant impact operationally, particularly so when building sites were closed,” she says. “There has been some domestic increase in timber requirements since then, and there has been an increasing demand for pallet wood. That has had a significant financial impact and it’s why I’m focused on delivering a sustainable, vibrant and viable Coillte. We remain very focused on our operations, business and strategy. In the new post-COVID-19 world, we will need a strategy refresh. We must look at what that new world looks like, and not just in terms of COVID-19. We still have a forestry licensing crisis and Brexit to deal with.”The business does boast certain advantages going into that new world. “Our business is very relevant to that world. The need for sustainable wood products for construction is so relevant. Forests provide a carbon sink. The recreation facilities and wind energy generated on the land we own are very valuable. It may be a difficult 12-18 months or longer, but Coillte is an excellent place to be. In business, you manage risk. What we are managing is uncertainty, and that requires a dynamic and fast-paced approach. Time is the enemy now, and we are using imperfect information to make decisions, but we have to work with that.”Coillte will begin the first phase of its office reopening programme in line with Phase 4 of the Government’s plan. “We have social distancing in place and it’s quite strange to see the floor markings in the offices. We are doing it in four phases and carried out surveys to understand employee preferences. We then overlaid our office capacity with those preferences. Our employees have been fantastic in the way they supported each other right the way through the crisis.”Words of wisdomDespite the current challenges, she says she has thoroughly enjoyed the role since day one. “It would be wrong to say it’s not a challenge to walk into a business you were never involved in before and take charge, but I have a very good team. None of us succeeds on our own. We need the support of the team around us. The only way to succeed is to debate the best ideas and when there isn’t alignment, I make the final decision, but only after listening to what others have to say. You are only as good as the people around you. You’ve got to empower those people and let them get on with it.”Imelda believes her training as a Chartered Accountant has also helped. “It facilitated me in building a blended career. The pace of change is so incredibly quick today and if we do not evolve and learn, we lose relevance. Small pieces of education are also very valuable in that respect. Over the years, I did several courses including at Harvard Business School and Stanford. I love learning and I’m not finished yet. I’m a firm believer in lifelong learning.”Her advice to other Chartered Accountants starting out in their careers is to seek opportunities to broaden their experience. “Learn to be willing to ask for what you want,” she says. “Look for opportunities outside finance in commercial, procurement or operations. Look through alternative lenses to bring value. Make sure you are learning and challenging yourself all the time. Keep asking what you have added to become the leader you want to be someday.”And don’t settle for what you don’t want. “Be sure it is the career you want, rather than the one you think you want or need. It’s too easy to look at someone successful and want to emulate them. You have to ask if that is really for you. This role particularly suits me. I love the outdoors and I get to spend time out of the office in forests and recreational areas. That resonates particularly well with me.”

Swift and immense fiscal stimulus has driven equities to all-time highs in some cases, but inflation and interest rates could yet spoil the party.Having entered 2020 at nosebleed valuation levels, equities reacted sharply and suddenly to COVID-19 by falling by over 40% in Ireland, by over 35% in the UK and by just under 35% in the USA. But then stocks bounced right back. By mid-July, the Irish Stock Exchange index was down 16% compared to the beginning of the year, the FT 100 index was down 21% and in the USA, the S&P 500 index was down just 6%. The Nasdaq has even managed to hit new all-time highs.What is going on? The simple answer is that the world is witnessing an unprecedented level of official policy stimulus that is expected to trigger a sharp rebound in economic activity while interest rates (and corporates’ cost of capital) go lower than would otherwise have been expected. This stimulus is being felt first by financial markets but, if the past is an effective guide to the future, it will soon spread to an economy near you.The scale of the pandemic-induced fiscal stimulus announced by government treasuries and finance ministries is vast. According to BCA Research, a Toronto-based investment research boutique, it is more than double the level of stimulus the global economy got in the wake of the global financial crisis over a decade ago. Not only that, but it’s happening much more quickly. There was initially a delayed element of “crisis, what crisis?” to the last big downturn. The reaction this time has been swift and immense.The size of the fiscal response is dwarfed only by the scale of the monetary response. Even in Japan, where the annual rate of money growth has been under 3% for most of the last 30 years, M3 went up at an annualised rate of 10.5% in the three months to May. In the eurozone and the UK, the corresponding figure is about 20%. But the explosion in fresh money creation has been most evident in the USA where, in the three months to May, M3 rose at an annualised rate of almost 90%. The equivalent year-on-year rate of growth was the largest in modern peacetime history.Commenting on recent monetary policy, Tim Congdon and John Petley of the Institute of International Monetary Research concluded that unless the US Federal Reserve decides to withdraw or reduce some of that money injection, “upward pressures on asset prices, and then on prices of factors of production, and goods and services, will be a marked feature of 2021 and 2022.” Ironically, valuation levels may help contribute to yet higher equity values, despite most people believing that equities are currently levitating.A standard long-run measure of an equity’s value is its cyclically adjusted price earnings (CAPE) ratio. This eliminates the cyclical variability of profits as a factor that can distort the standard price earnings (PE) ratio by using average (inflation-adjusted) earnings over the previous ten years rather than earnings from just one year. Doing this compares a share’s price to an underlying ‘through the cycle’ measure of its earnings. The CAPE for the entire US market is nearly 30. It has only ever been this high twice before: in September 1929, just before The Great Crash, and during the 2000 tech bubble.However, it is not enough for us to look at PE ratios in isolation. We need to compare them to the valuation of competing assets. And right now, the value of the equities’ main asset competitor – bonds – are sky-high. Steve Sjuggerud, the author of investment newsletter True Wealth, charts the US 10-year bonds rate minus CAPE. This measure’s current level suggests that equities are relatively cheap! BCA Research has looked at that measure going back to 1955. They reckon it shows that US equities are historically cheap, relative to government bonds!To me, there are two key conclusions to take from this. First, the tsunami of fresh central bank liquidity being pumped into the global economic system means that, over the next 18 months, an equity melt-up (similar to those seen in Japan in 1989 and on the Nasdaq in early 2000) is far more likely than a meltdown. Second, this party will end abruptly if inflation stirs and interest rates start to rise significantly.Cormac Lucey FCA is an economic commentator and lecturer at Chartered Accountants Ireland.

Construction has been hit hard by the pandemic, but with the right initiatives and supports it could also play a pivotal role in the country’s eventual recovery, writes Annette Hughes.Ireland entered 2020 in a reasonably strong economic position – preliminary GDP figures for 2019 suggest it was the fastest growing economy in the EU27 over three years, with almost full employment. However, the shock following COVID-19 has been unprecedented.The latest EY economic forecasts (released in May) expect GDP to fall by 11.1% this year. It is envisaged that government borrowing, as opposed to tax increases and public spending cuts, will finance the restart of the economy, predicted to rebound by 6.7% in 2021. Consequently, a benign international lending environment will be crucial, and a budget deficit close to €30 billion – around 10% of GDP – will be required in 2020 (Department of Finance), depending on the evolution of the virus.While the construction sector had been enjoying a consistent, healthy performance at the start of 2020, it was halted abruptly following the onset of the pandemic. All construction and housebuilding sites closed for seven weeks on 28 March, apart from around 35 social housing sites that were deemed essential. Although sites have been re-opening since 18 May, only a slow recovery can be expected. EY-DKM projections based on initial assessments (in May) across housing, non-residential buildings, offices, industrial use and public sector construction show that the volume of construction output by 2022 is forecast at just below 80% of the corresponding volume in 2019. The overall volume of construction output is forecast to decline by 37.7% this year, followed by a rebound of 17.6% in 2021 and 7.6% in 2022.The latest assessment from Euroconstruct has the Irish and UK construction sectors as the poorest performers across 19 countries. The value of construction is estimated to have reached €27.7 billion (8% of GDP) in Ireland in 2019, but the crisis is expected to result in a contraction in construction output by almost 34% in 2020 (5.9% of GDP). In the UK, construction volumes are expected to contract by over one-third. Both Ireland and the UK have the strongest recovery prospects in construction output in 2021 at 17.6% and 22.8% respectively.Meanwhile, the closure of sites is expected to reduce levels of new house building substantially. Notwithstanding supply challenges that existed pre-COVID-19, housebuilding is expected to fall to 14,000 units in 2020, down from 21,138 in 2019 and well below the requirement of 35,000 units per annum.The hope is that the industry recovers more strongly than expected, but there are downside risks, notably uncertainty regarding the virus and fear of a second wave. As such, housing supply constraints could be more significant than they were pre-COVID-19, resulting in an even greater challenge for affordability, the private rented sector, and homelessness.Ireland has the potential to lead the way in a European rebound and there is a substantial commitment of resources for public infrastructure projects by Government in the National Development Plan 2018-2027 and Project Ireland 2040.The new partnership of Government also promised to make “transformative changes” with various actions set out to drive economic recovery and place Ireland as an exemplar in decarbonising our economy. At the time of writing, the immediate actions awaited are the July Stimulus and the distribution of the EU Recovery Fund for Ireland. For construction, it will be essential that funding focuses on capital and labour-intensive projects as well as other essential pre-committed infrastructure projects. As an open economy, Ireland’s recovery is dependent on developments in our major trading partners, notably in the UK. Investing in infrastructure must be ramped up straight away and will deliver substantial economic benefits, as the multiplier spending impacts reverberate through the rest of the economy. But while the Government can transform our country economically, the responsibility for suppressing the virus ultimately rests with the whole of society.Annette Hughes is Director, EY-DKM Economic Advisory.

Des Peelo explains why Chartered Accountants have a responsibility to work hard at good communications.Accountants produce figures; that is our professional function. However, the ability to analyse and communicate those figures is the important role. The circumstances that give rise to the necessity of a report or analysis obviously range widely, but all result in the compilation and sharing of information to be understood by others.If you are in an accounting position and want the world to understand and appreciate your good work, remember that accounting figures – no matter the circumstances – are no more than an outcome and are not in themselves a decision, a conclusion or an explanation.Figures are just that, figures. They carry no intrinsic knowledge or purpose. The real skill for a Chartered Accountant (and in my opinion, we are not good at it) is to present an understandable interpretation and communication of the figures.The higher or greater the decision to be made in business, and sometimes in politics, the more the figures will influence the decision. In my experience, however, you cannot assume – even at the highest levels of business or political life (or, for that matter, in a courtroom) – that all are capable of looking at an array of numbers and knowing what they mean.Financial illiteracy is widespread and rarely admitted. I believe that this illiteracy explains many poor business and economic decisions. It is up to us as Chartered Accountants to work hard at good communications, and as a skill, it should be top of the continuing professional development agenda.In presenting figures, remember the audience. What is the purpose of compiling the figures? Who will read them and what is expected of the audience having read the figures? This last question is most important of all. The accountant must be very careful indeed when it comes to interpretation and presentation as the outcome decision, based on the figures, may be significant capital outlays, a court judgment, a misdemeanour identified, a monetary claim pursued, and so on.What sometimes gets lost in translation is the difference between presenting facts and presenting conclusions. It is important to know and understand whether the accountant, in presentation, is being asked to present facts for the audience to make a decision or draw a conclusion, or whether the accountant is being asked to make that decision or conclusion, as supported by the facts in the presentation. A muddled financial analysis without a clear purpose is of little help to anyone, but in my experience, this is a common scenarioThe audience is not there to be impressed by the detailed calculations or workings in the presentation. A straightforward one- or two-page summary should clearly state the outcome as to the purpose of the presented figures. The detailed calculations or workings should always be shown as appendices and cross-referenced in the summary.Compiling and interpreting figures usually involves making some assumptions. These too should be listed in a separate appendix. Figures are only as good as the likely validity of any assumptions underlying them. Outcomes do not always have to be precise. A range based on valid assumptions such as ‘best’ and ‘worst’, or ‘high’ and ‘low’ is often wise as singular figures, in themselves, can give an impression of being definitive.An enduring bugbear in poor presentations is the numbering of paragraphs. The use of sections, sub-sections and Roman numerals can end up with the likes of “Paragraph 5,2(B)iv”. Most reports require cross-referencing such as “please refer to paragraphs 10 and 16 above”.There is nothing to prevent someone from presenting an entire report as simply paragraph 1, 2, 3 and so on. There can be interspersed chapters or section headings as the report goes along, but the simple numbering is continued. Some readers will be aware that simple numbering is common practice in Germany, the United States, and within multinationals and international organisations. This is standard practice when it comes to emails, as it allows for easily cross-referenced responses.Des Peelo FCA is the author of  The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.

The pandemic and Brexit both provide momentum for bigger government – but don’t expect any protestations from the public, writes Dr Brian Keegan.The late US president, Ronald Reagan, never tired of giving out about big government. It’s a crude measure of the influence of government, but the level of national debt gives us some indication of the gap between what it costs to run a nation and what that nation can legitimately collect in taxes from its citizens.National debt suffers from spikes and fluctuations from wars, recessions and – as we are now seeing – pandemics. Such things are outside our control. But even when they are within our control, the national debt can grow unexpectedly. Despite Reagan’s protestations, the US national debt grew almost threefold during his eight years in office.The current pandemic will not grow the national debt of either Ireland or the UK by a comparable amount, but that is a factor of the scale of the existing national debt. Perhaps a better way to assess the impact of government is to look at the number of government agencies we now must deal with. Ireland’s Comptroller and Auditor General has almost 300 departments and organisations to scrutinise during his audit and assurance work. The UK National Audit Office looks over 400 or so UK government entities. As if to catch up, the new Irish Government’s programme makes over 20 references to the creation of new agencies or to increasing the remit of existing ones.The creation of agencies drives public sector jobs. The Institute of Public Administration recently noted that public sector employment in the Republic of Ireland exceeded 300,000 back in 2018, thus restoring staffing to pre-great recession levels. Before the pandemic struck, public sector employment in Northern Ireland exceeded 200,000. While most of our fellow citizens in the public sector are involved in service delivery, a lot of them are involved in regulation.We are already seeing how the pandemic is driving government size. Over the past few months, much of the Institute’s advocacy work has been about brokering arrangements with government – both north and south – to make things like the Temporary Wage Subsidy Scheme and the Job Retention Scheme work better on the ground. Ensuring that these schemes work well is vital, but they take up time, eating into the capacity of both our members in business and our members in practice to deliver other added-value services. Other business supports like state-backed loan guarantee schemes are also going to bring an additional burden of compliance, assurance and red tape.Brexit too is providing momentum for bigger government. The UK Government is duplicating many control and regulatory functions that were previously unnecessary because of EU treaty arrangements or because they were within the purlieu of European institutions. This pattern is being replicated across Europe. For instance, the Revenue Commissioners were to hire 500 additional customs officers to do the additional cross-border trade checks along with apparently 750 in the Netherlands, 700 in France, and close to 400 in Belgium.By and large, business on the island of Ireland benefits from the degree of State regulation. Yet, its role in attracting and securing foreign direct investment by creating a safer investment environment can get overlooked. On the other hand, businesses do not exist to carry out paperwork. This tension was always there. What the pandemic has changed is the political appetite to increase regulation.I think any Reaganesque political campaign promising smaller government would be unlikely to succeed these days. Even if politicians were minded to rein in the regulatory horses, the pandemic has created a greater willingness among the general public on this island to be governed, as evidenced by the almost blanket acceptance of the strictures of lockdown.Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

This is my first Accountancy Ireland comment piece as President. First off, I would like to say that it is a tremendous honour to be elected President of our Institute.I would like to thank my predecessor, Conall O’Halloran, for his exceptional leadership throughout a tremendously successful year. Conall can look back with great pride on his term in office.Bouncing backThe current priority remains one of public health but soon, the huge economic challenge of preserving jobs and rebalancing public and private finances will emerge. This has been made even more difficult by the constraints on both consumption and production.As we move to the next phase in continuing to suppress COVID-19, we as Chartered Accountants will have a pivotal role to play in helping to drive the economy forward and in generating growth.Working in collaboration with business, political leaders and the public sector, Chartered Accountants Ireland will be a strong supporter and advocate for the business community and the positive impact that a renewed economy can have for all in our society.I believe that our 28,500 members working in leadership, finance or advisory roles throughout Irish business will play a key role in kick-starting the recovery and ensuring that businesses bounce back strongly.Priorities for the year aheadAs President, I want to harness the ability, experience, and expertise of our membership network to support economic recovery in the aftermath of the pandemic.The strengthening of our role with the public sector will be the first of my key themes for the year. I see our profession having a much stronger role to play here.The second priority will be maintaining and enhancing the relevance of the Institute to our members from the start of their career through to retirement. We must stay connected. It is good to feel part of something, to feel a belonging to the family that is Chartered Accountants Ireland. I am proud to belong.Members will see that this sense of belonging and active participation is at the heart of the Institute’s new Strategy24, the document that will direct our work over the next four years.As Strategy24 is rolled out, members will see their Institute become more digitally driven. We believe that members will find a greater sense of connection and will see the Institute focus on being a financially sustainable, digitally-enabled organisation with an agile culture that supports innovation and collaboration.My final priority is access to our profession for potential students. We will continue to work to highlight the opportunities available to a new generation of potential trainees within an innovative, forward-looking profession.Looking forwardFollowing May’s annual general meeting, the gender balance of the Institute’s Council now stands at 50:50. I will seek to promote balance more widely across the Institute. It is worth noting that the overall membership is currently 42% female and 58% male.I am looking forward to the year ahead. Of course, there are challenges – but we have a great team at the Institute, and we will drive ahead. I am counting on your support as we work for members across the island of Ireland and beyond.Paul HenryPresident

Chartered Accountants play a critical role in operations around the world, and many are now guiding their organisations through the uncertainty and economic turmoil wreaked by COVID-19. Accountancy Ireland spoke to several members at the fore of this difficult task. Liam Woods  Director of Acute Operations at the HSE As a member of NPHET (the National Public Health Emergency Team) and with responsibility for the public hospital system in the Republic of Ireland, Liam Woods has played a central role in the country’s response to the COVID-19 crisis. In normal circumstances, Liam oversees acute services and the deployment of a €6 billion budget for the acute hospital system, which covers 48 hospitals across the country. Today, however, he is at the forefront of the public health system’s response to the global pandemic. Liam and his colleagues have worked relentlessly since December 2019, when the first case of coronavirus became known. “At that time, we were aware that there was an emerging set of concerning circumstances in China,” he said. “We are linked in with the World Health Organisation and the European Centre for Disease Control through the Department of Health, so we began receiving information on the situation almost immediately.” According to Liam, the threat to Ireland was confirmed by the Italian experience, with Ireland’s first case confirmed in late February 2020. This in turn led to an escalation of the pre-existing national crisis management structures. “Once we saw Italy’s crisis unfold, we implemented the HSE emergency management structures and assessed emerging scenarios and the subsequent requirements for intensive care capacity, acute capacity, and community capacity,” he added. “As March approached, we expected a major surge in cases of COVID-19. That surge did occur, but we didn’t see the levels experienced by Italy and that was primarily down to the public health measures taken in February and March.” As the pandemic progressed, areas under Liam’s remit such as the National Ambulance Service became increasingly critical elements of the response strategy. But as the pressure increased, so too did staff absence. “Today (30 April), 2,800 colleagues are absent in the acute system with a further 2,000 absent in the community system related to COVID-19,” he said. “That is a big challenge for the frontline, as is the procurement of personal protective equipment (PPE). Our procurement teams are working night and day to secure the necessary equipment to protect our workers.” That effort has been supplemented by the overwhelming generosity of individuals and businesses according to Liam. “We had a massive response from the business community and society as a whole, from distillery companies manufacturing antibacterial hand gel to people making face shields using 3D printers,” he added. “Beating this virus has become a truly collective effort and those working in the HSE really felt and appreciated that.” Although restrictions are now being cautiously eased, Liam expects the workload to remain relentless. “At a personal level, it is demanding but if you work in the health system and understand how it needs to operate, you at least feel that you can make a direct contribution and a lot of positivity comes from that. The response of frontline staff in hospital and community services has been amazing and the commitment to delivering care has been key to the success to date in responding to what is a global crisis.” Tia Crowley  CEO at Western Care Tia Crowley had an “unusual” induction to the role of CEO at Western Care, as her appointment coincided with Leo Varadkar’s statement in Washington on the first wave of measures to tackle COVID-19 in Ireland. Given that her organisation provides services and supports to adults and children with intellectual disabilities and/or autism in Co. Mayo, Tia was very conscious of the need for – and challenges to – the provision of her organisation’s services. “When the COVID-19 restrictions were imposed initially, we risk-assessed all areas of service provision and made the difficult decision to close day/respite services and limit community support services to essential supports that could be provided safely,” she said. Many of the organisation’s 950 staff were reassigned to support Western Care’s residential services, which now operate on a 24-hour basis. According to Tia, maintaining an optimum level of service while securing adequate PPE for frontline workers is a constant concern – but there are longer-term challenges in the horizon. “I, and the new management team, had hoped to bring in a balanced budget for 2020 after prolonged periods of cutbacks, deficits and containment cycles. However, a shock 1% cut to funding allocations across the sector coupled with the impact of COVID-19 will impact our ability to meet the demand for our services within our existing allocation,” she said. “The cost of the crisis, and the associated long-term implication for funding, is a challenge that is constantly on our minds. But at the moment, our focus has to remain on keeping our service users and staff safe.” Aside from financing, one thing preventing organisations like Western Care operating to their full potential is an overly burdensome compliance regime, Tia added. “I hope the Government recognises how organisations like Western Care responded to this crisis and the support they provided to the HSE when it was most needed,” she continued. “After the worst of this crisis passes, I would like to see a streamlined regulatory environment where, once an organisation is deemed to comply with a basic set of standards, that is accepted by all regulators. We, like others, struggle to comply with multiple regulators and compliance regimes and at last count, more than 35 different regimes applied to Western Care.” Despite the many challenges, Tia has noticed certain positives amid the bleak backdrop. “The atmosphere of cooperation throughout the organisation has reinforced my belief in human nature and I hear stories of resilience among service users, families and staff who have gone over and above to support families in crisis and keep service users happy and content,” she said. “We are also building supportive relationships with the HSE locally as we turn to them for support and guidance. But equally, we provide them with reassurance and support too because we are all in this together.” Ultimately, Tia’s hope for the future is a simple one. “I hope that we can emerge from this pandemic with a sense of pride and renewed purpose, knowing that we have come through one of the most significant events in our lifetime and that everyone in Western Care did their best.” Dermot Crowley  Dalata Hotel Group Dalata Hotel Group was quick to respond to the threat of coronavirus to its business. From cancelling its shareholder dividend to renegotiating with lenders, the company has cut its cloth and according to Dermot Crowley, Deputy Chief Executive, Dalata is well-positioned to weather a long storm. “We have always been very careful with our gearing and as things stand, we have access to €145 million in funding,” he said. “We immediately created a worst-case scenario of zero revenue for the remainder of the year. We examined every cost item and calculated our cash burn. The major fixed costs are elements of payroll, rent and interest. Having done that exercise, we were in a position to reassure our shareholders that we could survive at least until the end of the year on a zero-revenue model.” As it happens, the company is still generating revenue. Dalata raised a further €65 million in April when it sold its Clayton Charlemont Hotel in a sale and leaseback transaction and although most of the company’s hotels are formally closed, Dalata responded to requests from governments and health agencies to accommodate frontline workers, asylum seekers and the homeless – often at much-reduced costs. Meanwhile, all other hotels have management and maintenance teams in place to ensure that all properties are ready to re-open at short notice. While some workers remain, the company was forced to lay-off 3,500 staff at the outset of the crisis, but Dermot is determined to re-employ as many people as possible as restrictions ease and trading conditions improve. “One of the most frustrating things about this crisis is letting our people go. We invest a huge amount in our staff and last year alone, we had 350 colleagues in development programmes. We also take on 35 people each year through graduate programmes and we have several trainee Chartered Accountants in our employ,” he said. “We absolutely want to take everyone back on.” Despite the company’s preparations for the ‘new normal’, whatever (and whenever) that might be, Dermot remains cautious in his outlook for the sector. “Dalata is a very ambitious company and we have a lot of new hotels in the pipeline, but the reality is that we are likely to be facing lower occupancies once the restrictions are lifted,” he said. “When we re-open, the domestic market will be the first part of the business to recover but the international market could take quite some time depending on travel restrictions.” At its AGM at the end of April, the company confirmed that earnings fell almost 25% in the first three months of the year to €17.7 million. With even worse results certain for the period after 31 March and normality a distant prospect, Dermot expects the sector to experience both tragedy and opportunity in the months ahead. “Some companies will not make it through this crisis and that’s just reality,” he said. “That will create some opportunities. We built a strong company after the last crisis, but I do not see the same fallout in Ireland as in the UK this time around. The UK has many old properties and companies with high gearing ratios, so that may be where the most changes will occur.” Naomi Holland International Treasurer at Intel As International Treasurer and Senior Director of Tax at Intel, Naomi Holland had a demanding role before COVID-19 became a threat, but her role has since expanded as she – and her colleagues – seek to protect the chipmaker and its people from the threat posed by coronavirus. As leader of Intel’s Global Tax & Treasury Virus Task Force, Naomi also sits on the Global Finance Virus Task Force, which develops and implements Intel’s crisis response for the corporation’s worldwide finance function. This is not just a strategic project for Naomi, however. Her global role means that she has direct responsibility for employees in some of the worst affected areas of the world. “I have teams based in China where we were dealing with the outbreak from early 2020,” she said. While it was largely restricted at that stage, the China situation effectively became a test-run for the global pandemic that was to come.” Some employee considerations included colleagues who had returned home for the Chinese New Year and became confined to their province, others were on secondment outside their home country and Intel needed to assess the return home versus the remain in situ options, and some countries’ lockdown notice was so short that staff ended up not returning home to their families and were confined alone. In the early days of the crisis, Naomi and her colleagues engaged in extensive scenario planning. They considered single sites closing down, multiple sites closing down, and the impact of COVID-19 outbreaks on the organisation’s operability. That led to a rationalisation of activity to ensure that critical functions remained up and running. “In addition to ensuring that we had the necessary contingencies in place should a person, team or site fall victim to COVID-19, it was also essential that we prioritised our activity,” she said. “This required significant coordination as we needed to ensure that our partner organisations around the world were satisfied with what remained on our priority list and, importantly, what didn’t.” This required extensive communication, which was central to Intel’s response according to Naomi. “We were acutely aware that people needed information,” she said. “So, we focused on our internal communications and developed a ‘people’ track to complement that.” This was particularly important for Naomi, whose team spans several countries including Ireland, the Netherlands, Israel, India, and China. Her leaderhip remit meant the US teams were also on her agenda. Despite the complexity, Intel’s quick response meant that the company “didn’t miss a beat”, according to Naomi. “COVID-19 has forced all companies to assess items including their liquidity, their work-from-home capability, and their technological infrastructure,” she added. “We took all the necessary decisions, amended procedures as required and augmented our hardware in places. The greater complexity, of course, resided within our factory and logistics networks but I am proud to say that their delivery can only be described as incredible.” As the shock factor subsides and people increasingly become resigned to the prospect of living and working alongside COVID-19 for the foreseeable future, Naomi is determined to maintain her focus on her people and their mental health. “I’ve always said that people are a company’s best asset and if this crisis has taught me anything, it’s in our augmented ability to deliver when we operate as one team despite the circumstances,” she said. “The first six months of 2020 have been a traumatic time for many. However, with senior executives leading from the front and maintaining communication with their people, this crisis is in fact humanising us and helping us connect with our colleagues on a more personal level.” Shauna Burns Managing Director at Beyond Business Travel Beyond Business Travel is ten years old this year and like the rest of the travel sector, it faces severe challenges due to COVID-19. According to Shauna Burns, the company’s Managing Director, 2020 was the year the firm planned to reach £20 million in turnover and build on its investment in Ireland following last year’s opening of offices in Dublin and Cork. The impact of the pandemic was felt by the company in February, according to Shauna, when FlyBe entered administration. March then saw the domino effect of countries closing their borders, which presented a unique set of challenges. “We had clients and staff located all over the world, and we had to work 24/7 to ensure they got home quickly,” she said. The company was also involved in the Ireland’s Call initiative to bring home medical professionals to work in the HSE and NHS. After this initial flurry of activity, Shauna and her team had to take both a strategic and forensic view of the business amid a fast-changing business landscape. “Difficult but essential decisions had to be made on operational continuity and cash flow while engaging with our key stakeholders and looking into the potential for financial assistance from Government,” she added. “From the off, we were determined that our company’s core values around excellent customer service would not change. We retained some key staff to provide ongoing information and to ensure that clients who urgently need to travel can do so. This comes at a financial cost in terms of maintaining our premises and fixed overheads, but it is a decision we believe will benefit the business in the long run.” With one eye on the easing of travel restrictions, Shauna’s firm is also compiling information and advice for companies whose people must resume travel, so that they make informed decisions and manage the impact of COVID-19 on their business. The travel industry will re-open and travellers will take to the air again, she said, but they will travel less often and with an increased focus on traveller health and safety. “We expect to operate below capacity for the immediate future, so part-time furlough allows us to raise activity in line with demand,” she said. “Consequently, we are looking at our offering and service lines, and right-sizing our business for the ‘new normal’. There are opportunities to become leaner, faster, and more efficient, and digitalisation is a core element of that process. “We now have an opportunity to ask ourselves if the business were starting from scratch, what would we do differently and reimagine what this looks like ,” she added. “But for our business, restoring confidence in the safety of air travel is a vital pre-requisite to enabling recovery and with more than one third of global trade by value moving by air, it will also be vital for the recovery of the global economy.” The entrepreneurs Growing businesses with finite resources are very vulnerable to economic shocks, but one Chartered Accountant is using technology to weather the storm. Fiona Smiddy, Founder of Green Outlook, had three active revenue streams before the onset of COVID-19 – e-commerce, markets/event retail, and corporate services including speaking engagements. She is now down to one viable revenue stream, but the growth in online retail has allowed her company to grow during the pandemic. Fiona runs a tight ship from a cost perspective. She outsourced her order fulfilment activity in 2019 and engaged the services of a ‘virtual CFO’ who keeps her focused on her KPIs. “Green Outlook turned one year old at the end of March and the key challenge remains brand awareness and cash flow management,” she said. “The company is self-funded with no outside investment or loans, so I am restricted to organic growth.” Green Outlook continues to support Irish suppliers, with 22 Irish brands represented among the more than 170 sustainable, plastic-free products available online, and Fiona cites this as a contributory factor in her success. “I have noticed a huge uplift in supporting local and Irish businesses and I hope this continues post-COVID-19,” she said. Brendan Halpin, Founder of WeSwitchU.ie, also hopes to support Irish businesses and households in the months ahead. He launched his new company in March 2020, just as the lockdown came into effect, but having spent 2019 in the development phase, he is certain that now is the right time to launch a cost-saving business. WeSwicthU.ie is a digital platform that finds the best electricity and gas energy plan for individual households each year and even as COVID-19 reached Ireland, Brendan did not consider it a threat to his business. “It was pandemic-proof in a sense because our entire proposition is online. From the comfort of your home, the platform takes the stress and hassle out of switching and saving money on customers’ home electricity and gas bills,” he added. “The only change in the business plan was on the marketing side; I had intended to be out and about meeting people, but that activity simply moved online.” While the market reaction has been positive so far, Brendan is conscious that any planned expansion would require funding – and that may be a challenge as the economic malaise becomes more entrenched. “I have funded the business myself so far but if I really want to grow, the next step will involve external financing,” he said. “I do hope that the Government and State agencies will help start-ups like mine grow through their relevant phases despite the uncertainty that lies ahead.”

John Kennedy explains why knowing too much can harm your practice, and where you should apply your focus instead. When I ask Chartered Accountants to make a list of the problems that hold them back from getting new clients, I am sometimes surprised at the issues they include. One point never makes the list, yet it is often a challenge – they just know too much. How can that be a problem? Surely every client wants a highly knowledgeable accountant, someone who is on top of all of the details and knows all of the angles?This is partly true, but it hides how you can inadvertently damage your practice. Unless you take time to step back, think clearly from the perspective of the client and shape your words to meet their needs, you can quickly lose their attention. This problem is compounded by the assumption that your clients pay you for your knowledge of accountancy, but that is not why clients pay you. Why do clients pay you? This is a deceptively simple question. Is it because of the things you know or because of the things you do for them? Or is it because your qualifications mean you are empowered to authorise documents? Each answer constitutes some part of the reason, but each also obscures a vitally important point. There are two crucial distinctions. First, clients do not pay you for the things you do; they pay you for the value you deliver. Second, the value you provide is only partially expressed in monetary terms. The fundamental truth is that, in many cases, clients most value the way you make them feel. Where your real value lies When you were studying as an undergraduate, the emphasis was on increasing your knowledge. You bought textbooks, you attended lectures, you completed assignments and the focus was always on what you knew – more facts, more information, more knowledge. Your exams tested and confirmed your knowledge; the more you could prove all you knew, the higher the grades. And the more you knew, the better you felt and the better you were regarded by the training firms for whom you hoped to work. With this relentless emphasis on knowing more and more, it is unsurprising that you came to assume that knowledge was where your value as an accountant lay. Then you became a trainee Chartered Accountant in a firm. In your application, your interview and all of the tasks you were given, it was assumed that you had the knowledge required. At this point, the emphasis began to shift to the things you did. You were given specific tasks; what you did and the time it took was captured in timesheets. The emphasis of virtually every aspect of your work, your day and your value revolved around recording your activity in your timesheets. And then you set up your own practice. By now, the emphasis had become so engrained – entrenched even – that you assumed that the key to building a successful practice revolved around turning what you knew into what you do, and recording that in timesheets to bill your client. This focus transferred to your client, but the truth is that this is not where your greatest value – nor your greatest opportunity – lies. Your client wants your value, not your time To build a successful practice, you need to move your thinking – and the focus for your client – beyond what you do and towards the value you provide. This involves two steps. The first step is to consciously move the emphasis from the things you do to the value you deliver. This first step is widely accepted but poorly implemented in practice. The second step is perhaps even more critical if much less understood. To build a practice with strong bonds with long-term clients, you need to move the emphasis from facts to feelings. Human beings like to believe that our species is more rational than it really is. We believe that we see or hear something, we analyse it rationally, and we decide. But do you suppress your feelings at work and give dispassionate advice? Are you always logical and provide clients with clearly thought-out analysis? This is what we like to believe, but it is often untrue. The reality looks much more like this: we see or hear something; we filter it through our emotions; we interpret it and tell ourselves a story; and on that basis, we decide if it is right or wrong. This filtering process happens all the time and while every client wants the facts dealt with, they assume that this is the minimum level of service they will receive from their accountant. The bonds that make clients work with you and generate referrals are forged beneath the level of conscious thoughts. Even in business, the way we feel is of enormous importance so you can create a genuine edge by understanding and applying this. The positive feelings generated by your work include peace of mind, increased confidence in decision-making, or the anticipation of a comfortable retirement. These are important sources of value, yet few realise just how vital these submerged feelings are – even in the most dispassionate business transaction. Every interaction has a submerged, and usually unstated, emotional aspect. As a practice owner, you must understand this and use it to your advantage. When making the shift in focus from the things you do to the value you deliver, you must take account of the genuine feelings at play. Value is about more than money Feelings are always there and are an important part of the value provided by a Chartered Accountant – no matter how much we try to convince ourselves that it is “just business”. Everyone has clients they like and clients they do not like; phone calls they look forward to making and phone calls they hate making; tasks they like doing and tasks they hate. We are very skilled at telling ourselves stories that turn these feelings into apparently rational explanations supported by facts to support our conclusions – but there is no avoiding the reality that feelings are very powerful, and this is the same for your client. Let us take an example that shows just how powerful this concept is. Complete this sentence: “More than anything, I want my children to be…” I have used this example for decades and the answer is almost always “happy”. Occasionally, the respondent will say “content” or “fulfilled”, but in each case the answer is an emotion. It is never a financial or factual answer. This is a simple example of just how important feelings are. How to gain an advantage Gaining a client does not begin and end with you making clear all of the things you will do for them. For an individual to act, they must first feel confident that you understand what they want. And more importantly, they must also be convinced and motivated to the point that they are committed to working with you. Being convinced and motivated depends on your ability to address the feelings that so often remain submerged, unexamined, and unaddressed. I have heard about all the effort accountants put into planning and preparing for meetings with potential clients, often spending hours crafting a well-designed and high-quality document and accompanying presentation. But they then go on to tell me that, even as they are discussing the document or giving the presentation, they know it is just not working. Almost everyone has experienced this in some way, but many simply continue as if the submerged feelings are not there or are insignificant. The habitual pattern is to press on with more information, more facts, more details. The result is that you completely overlook the reality that the submerged feelings are the decisive factor in the ultimate success of any relationship. It is much more useful to bring these feelings to the surface. You do this by using questions to draw out how the work you are discussing with your client will make them feel. The truth is that few clients care about exemplary management accounts or pristine submissions. Some do want to use their cash more effectively or to have a clear tax plan in place, but everyone wants to feel the peace of mind or sense of security that these actions bring. Yet, many accountants spend too much time talking about the surface facts, the facts that – even when they are dealt with well – are, at best, efficient and uninspiring. The often-unacknowledged truth is that the feelings you create in your clients are just as valuable in building long-term relationships as the work you do. When you deal with the surface facts well, but the submerged feelings are left unattended, there is the illusion of progress, but the relationship is merely routine with little enthusiasm. New clients in particular will sometimes engage you as part of their initial wave of enthusiasm, irrespective of the work you have done, but that will undoubtedly be a passing phase. The worst-case scenario is where the factual, practical aspects of the relationship are not adequately clarified and addressed, and the submerged feelings are also poorly dealt with. If this is the case, the client may accept you as a necessary evil, and you both bump along for a short time until your client moves to another practice. Even if they stay, these are the clients that are difficult to deal with, slow to pay, and frustrating to have. Only when you take control of, and actively deal with, both the surface level factual tasks and the submerged feelings do relationships take off. When this happens, it is of real value to both you and your client. These are the client relationships you want – you are both in step, you both work well together, and you both feel positive about the work. Too often, however, this kind of relationship is left to chance because the influential role of submerged feelings is seldom acknowledged, discussed, and actively addressed. But you can make these positive and rewarding client relationships a matter of choice. Just get into the habit of raising your clients’ understanding of the importance of the positive feelings generated by working constructively with you as their accountant. Ask about the areas they want to be confident in; probe how putting their affairs in order will reduce stress; and test and draw out the peace of mind they will get. As you become skilled at eliciting and addressing these submerged feelings, you will set yourself apart from your competitors. Move your emphasis from what you do to the value it brings, and then take the critical step of drawing out and addressing the submerged feelings that are most important to your client.   John Kennedy is a strategic advisor. He has worked with leaders and senior management teams in a range of organisations and sectors.

Dr Annette Clancy explains why employees’ mental health should be the organising principle for businesses in the 21st century. 20-30% of us will experience mental health issues during our lifetime. Could the quantity and quality of work have something to do with this?  A recent study conducted in the UK shows that one-third of us are not happy about the amount of time we spend at work. More than 40% of employees are neglecting other aspects of their life because of work, which may increase their vulnerability to mental health problems. As a person’s weekly hours increase, so do their feelings of unhappiness, worry and anxiety. Employees’ mental health is affected by their roles. For example, we might expect to see mental health issues in workers who deal with trauma and violence every day, but studies also show that workplace culture, bullying, disciplinary processes, and toxic workplace relationships all contribute to deteriorating mental health. Many businesses have policies for mental health and workplace wellness, but for those who are trying to cope with challenging workloads and suffering at the same time, policies may not be enough. Very often, people hide what they are feeling for fear they will be stigmatised or punished. Policies need to be backed up with empathetic intervention by managers who have the right combination of ‘hard’ and ‘soft’ skills. Yet, managers are rarely trained to either recognise or manage conversations with team members who may be experiencing mental health difficulties. So, what can managers do to de-stigmatise mental health issues? 1. Create an organisational culture where there is respect for people. This sounds simple, but in practice, it rarely is. Most mental health issues arise from toxic relationships, bullying, harassment or power dynamics. Changing the culture around this would go a long way in helping to eliminate some mental health issues. 2. Train all managers and team leaders in ‘soft’ skills. Help people develop the ability to listen to what is not being said and read body language so that they can pay attention to those they manage. Stress and anxiety are felt, not spoken, so managers must be attuned to how it is expressed. 3. Encourage a culture of openness about time constraints and workload. Employees must feel able to speak up if the demands placed on them are too high. Also, ensure that employees’ jobs are manageable within the time for which they are contracted. Expanding job creep is one starting place for stress in organisations. Monitoring this aspect of an organisation’s behaviour alone could impact significantly on mental health. 4. Allow staff to attend counselling and support services during working hours, as they would for other medical appointments. This proactive initiative sends an important signal that mental health is a priority in your organisation. The World Health Organisation (WHO) defines mental health as “the state of wellbeing in which every individual realises his or her own potential, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make a contribution to her or his community”. The WHO definition provides a policy template for organisations wishing to create a culture in which the mental health of all workers is prioritised, not only those with mental health issues. It offers an interesting insight into how an organisation might be structured if mental wellbeing was the organising principle. As mental health issues continue to increase both within and beyond the workplace, perhaps the WHO definition isn’t so far-fetched. Putting people at the centre of organisations used to be the way we did things; putting the mental health of employees at the centre of organisations may be the way we need to do things in the 21st century. Dr Annette Clancy is Assistant Professor of Management at UCD School of Art, History and Cultural Policy.

Ronan Dunne draws on his experience at the highest echelons of business to share his six leadership lessons. When I first worked in London as a banker, I was promoted three times in a period of about 15 months. I was an eager and highly qualified Chartered Accountant but in the first 12 months I worked late every evening. Then, I started working on Saturday and Sunday. I worked my socks off and for the first year, it was a remarkably successful strategy – but then, I hit a wall. I had no more capacity. It was a completely unsustainable model and it did not take me long to realise that unless I could invent an eighth day in the week, I would need to change my management style. The lessons that follow are based on my experience as a Chartered Accountant in business, and one who often had to learn lessons the hard way. Some may be more relevant to you than others, but I nevertheless hope that you find them useful. Lesson 1: It is not what you do, it is what you make happen When Chartered Accountants start out in their careers, they are largely personal contributors. They have a very specific role and success is defined by the outcome or the output of their particular job. Increasingly, however, we realise that this approach is based on an old-fashioned, hierarchical business model. In modern society, and for millennials in particular, painting inside the lines is not an attractive proposition – even in your first job. So, discover as early as possible in your career that your success does not just depend exclusively on what you do; it also hinges on what you make happen. Your capacity to impact and influence is infinite but your output is simply defined by hours in the day, no matter how hard and fast you work. At every point in your career, you have the opportunity to impact and influence those around you. Key takeaway: Take the opportunity to make a difference when it comes your way. Lesson 2: To be an effective leader, build an effective team The capacity to exceed expectations lies in how you blend the skills and capabilities of those around you. Effective teams do not simply do what any other team would; effective teams harness the unique talent, perspectives, and experience of their individual members in a way that enables the collective to achieve outcomes that would not otherwise be possible. When considering team formation, we sometimes think “I need someone for finance, someone for marketing, someone for legal” and so on. But actually, if you build a team correctly, you create space for each person to bring their own personality and their own unique perspective to the team. That is the secret ingredient to superior outcomes. Key takeaway: Every person within the team has a unique contribution to make. Lesson 3: Exercise judgement as to when to exercise judgement This might sound like a play on words but in my experience, people early in their career often have a desire to impress their superiors. They sometimes seek out opportunities to act decisively, to jump in and make a decision in order to demonstrate that they have what it takes to be a manager or a leader. In fact, they often demonstrate their inexperience by attempting to find a moment to showcase their decisiveness and by consequence, unwittingly illustrate their impatience. Very often, the wisest thing to do is to explain why a decision cannot be made due to a lack of information or context, for example. By all means, look for opportunities to exercise judgement but remember that judgement can sometimes be best exercised by not deciding and explaining why. Key takeaway: When meeting with senior executives, remember that rushing to make an impact may make you look like an idiot. Lesson 4: Leadership should happen at every level In business, decisions are best made closest to the point of impact. An effective organisation therefore ensures that those who make decisions have the right context and the discretion to decide, because hierarchy on its own does not always work. In a team, the most senior member is not always the natural leader on a particular topic or project so to be continually effective, teams should encourage those closer to the issue to take the helm. That means cultivating the flexibility to have junior members lead the way. Indeed, the biggest challenge facing larger organisations is their established hierarchical models. Such companies recruit bright, young, and digitally literate people but in too many cases they leave after a year or two because they get completely disillusioned. Despite understanding more about behavioural trends or other issues that may be affecting the business, their opinion is never sought out because they are three or four levels down in the organisation. Leaders need to empower those people and accept a certain amount of risk. There must be permission to fail but even in organisations with a mild risk tolerance, this concept creates a space in which an organisation’s collective potential can be nurtured. Key takeaway: Acknowledging context is critical to effective decision-making. Couple that with delegated authority and permission to fail, and you have a solid foundation for a highly effective organisation. Lesson 5: Authenticity is the gateway to true leadership My view of authenticity is built on two ideas – one is a personal insight and the other builds on the elements discussed above. I became a CEO for the first time with O2 in the UK when we were on the cusp of a major recession. I had a successful career up to that point but when I took over as CEO, I struggled for the first six months because I spent a lot of time wondering what other people would have done in my situation. In many jobs, you are the subject matter expert but as CEO, you are a jack of all trades and often master of none. Then, I had an almost spiritual moment when I realised that I had 27 years of rich experience. It became clear that the only way I could do my job was to be myself. So, as a leader, you need to ask yourself: who are you? People rarely challenge themselves with this question. I describe myself as chief cheerleader and chief storyteller. I am an extrovert, a joiner-upper, an enthusiast – and I use that to be a front-row leader because that just happens to be my natural style. So ultimately, the best way to be successful in any role is to be yourself. The second thing is that when you are the boss, nobody asks you a question that they know the answer to. This leaves you with a strange obligation to know the answer to everything, but CEOs manage uncertainty amid many shades of grey and it can be quite liberating to realise that the CEO can and should say: “You know what, I am concerned about that as well.” If you do that, you help your people work things out, find solutions, and build answers to organisational challenges with a sense of togetherness. Key takeaway: Know your strengths and acknowledge that you do not – and should not – have the answer to every question. Lesson 6: Know the question before you try to answer it There is massive structural impatience in organisations and as a result, I see much more ‘ready, fire, aim’ than ‘ready, aim, fire’. Too often organisations run towards an assumption of what the question (and answer) is; they are in action mode immediately. But a little time working out the precise nature of the question will invariably bring you closer to the answer. Organisations consistently do two things wrong: they press ahead to answer a part-formed question, and they do not allow talent to flourish because hierarchy gets in the way. Key takeaway: Define the question clearly before embarking on the search for an answer. Ronan Dunne FCA is CEO at Verizon Consumer Group.

Although the cost of examinership may be prohibitive for smaller entities, Companies Act 2014 provides two alternative restructuring mechanisms that are both less complicated and less costly. Declan de Lacy reports. The restrictions imposed to stem the spread of COVID-19 have caused an unprecedented economic shock. The IMF’s Economic Outlook forecasts that the global economy will experience its worst recession since the 1930s, with Ireland experiencing a fall of nearly 7% in GDP and a rise of almost 150% in unemployment. The oncoming recession will inevitably result in companies failing at even higher rates than were seen during the downturn a decade ago. It is equally inevitable that many of the companies which will ultimately fail could be made viable by restructuring their debts and other obligations. It is incumbent on our profession to steer troubled companies through this crisis and give them the best possible chance of survival. The examinership process is the most widely recognised mechanism for restructuring insolvent companies. This mechanism is not suitable for small and medium-sized enterprises (SMEs), for whom the cost of examinership is prohibitive. That is not to say that formal debt restructuring is not accessible for SMEs. Companies Act 2014 provides two alternative restructuring mechanisms that are both less complicated and less costly. These mechanisms are the schemes of arrangement provided for by Sections 449-455 and Section 676 of Companies Act 2014. Neither mechanism is well-known or widely used, even though they have existed in one form or another for more than 50 years. Companies Act 2014 introduced the most recent version of these schemes and made the Section 449 scheme much more accessible. The infrequency with which these mechanisms are used is not a reflection on their effectiveness. They have recently been used by international companies to restructure hundreds of millions of euro worth of debt. They were also used to restructure the obligations of the property funds operated by Custom House Capital and by the company at the centre of the pork dioxin scare of 2008. Both schemes provide mechanisms by which a company may propose an arrangement in which the amounts due to creditors are either written off, deferred or otherwise compromised. If the requisite majority of creditors approve the arrangement, it can then become binding on all creditors. In practice, creditors need to be offered some quid pro quo to induce them to accept the proposals. This might be the introduction of new funds to partially reduce creditor balances or future payments linked to trading results. In each case, the outcome for creditors must be no worse than in a liquidation scenario as otherwise, an aggrieved creditor would have grounds to ask the court to refuse to permit the implementation of the arrangement. It is not necessary to treat all creditors in the same manner. Indeed, it is likely that any arrangement would involve secured creditors, preferential creditors and trade creditors being treated differently. Unlike examinership, neither scheme provides a mechanism by which onerous leases may be disclaimed. Notwithstanding this, landlords are likely to support proposals to reduce excessive rents to market rates if the alternative is the termination of the contract when their tenant goes into liquidation. A significant advantage of a scheme of arrangement over an examinership is that a company’s directors can commence the process without going to the High Court. There is also no requirement for an independent accountant’s report to be prepared. This means that a scheme of arrangement can be implemented for a fraction of the cost of an examinership. A further advantage of a scheme of arrangement is that the company does not automatically go into liquidation if a scheme is proposed, but not approved. The Section 449-455 Scheme There are no criteria that a company must satisfy before proposing a scheme of arrangement under Section 449-455. The first step in preparing to implement an arrangement is to identify the separate classes of proposed affected creditors. These might typically include preferential creditors, secured creditors, trade creditors, and related parties. A meeting of each category of creditor must be convened to consider the proposed arrangement. A ‘scheme circular’ must be prepared, in which the company sets out details of the proposed arrangement and how each class of creditor will be affected. Once notice of the class meetings has been issued, the company may apply to the Court for an order giving it protection from existing and new proceedings. This application is unlikely to be made unless a company is under immediate pressure from creditors. An arrangement becomes binding on all of a company’s creditors if 75%, by number and value, of the creditors represented at each class meeting votes in favour, the arrangement is sanctioned by the Court, and a copy of the order is filed with the Companies Registration Office (CRO). The Court has recently held that it should sanction a scheme unless “it is satisfied that an honest, intelligent and reasonable member of the class could not have voted for the scheme”. By comparison, a proposal by a company in examinership may be approved by the Court if it is agreed to by more than 50% of only one class of affected creditors. The Section 676 Scheme Any company that is either being, or is about to be, wound-up may propose a scheme of arrangement under Section 676 of Companies Act 2014. This means that the company must be in liquidation, or that a winding-up petition has been filed, or that an extraordinary general meeting (EGM) and creditors meeting to pass a winding-up resolution and appoint a liquidator has been summoned. Of course, if the proposed arrangement is approved, the winding-up need not proceed. A scheme pursuant to Section 676 is less complicated to implement than either an examinership or a scheme under Section 449-455. There is no requirement to distinguish separate classes of creditors or to obtain separate approval from each class. Additionally, an arrangement approved by the requisite majority of creditors becomes binding without the need to be sanctioned by the Court. The Court only becomes involved in the arrangement if an aggrieved creditor applies to have it amended or varied. The major disadvantage of the Section 676 arrangement is that it must be approved by 75% of all of the company’s creditors, and not only by 75% of those represented at the meeting where it is considered. This means that a proposed arrangement could fail through creditor apathy and not because of any opposition by creditors. Conclusion Neither scheme offers a perfect solution, either for companies or their creditors. The requirement in a Section 449 scheme to obtain the agreement of a majority of all classes of creditor means that a class comprising a small fraction of a company’s overall indebtedness can frustrate the wishes of the majority. The requirement in a Section 676 scheme to obtain the agreement of 75% of all creditors, and not only those who choose to make their views known, means that a meritorious proposal could fail due to creditor apathy. In many cases, onerous contracts, including leases, may be the reason for insolvency and the absence of a means to repudiate them is a defect in these schemes. It is not controversial to say that the restructuring options available to SMEs require improvement. As long ago as 2011, the programme for government adopted by Fine Gael and Labour included plans to introduce new restructuring mechanisms for SMEs that did not require court involvement. The Company Law Review Group made recommendations on the matter in 2012. More recently, in 2019, the European Union issued a new directive on restructuring and insolvency, which will require changes to our restructuring law and must be implemented by July 2021. In the meantime, directors of SMEs will need expert guidance if they are to avail of the imperfect restructuring options available to them today. Members of the Institute should be mindful that they must hold an insolvency practising certificate to advise companies in connection with arranging schemes of arrangements. The approach of Revenue and public bodies to schemes of arrangement In most companies, the debt due to the Collector General will represent more than 25% of the debts due to the preferential class of creditors. In such circumstances, Revenue’s agreement will be essential to securing the agreement of 75% of each class of a company’s creditors, as required for a Section 449 arrangement to succeed. Companies Act 2014 explicitly states that State authorities may accept proposals made under a scheme of arrangement that would result in their claim being impaired. This means that debts for taxes, local authority rates, and redundancy payments may be compromised as part of an arrangement. Notwithstanding this, the section of the Revenue Commissioners’ collection manual dealing with Section 449-455 proposals indicates that, where a company “wishes to put forward proposals, Revenue would be prepared to consider them but that they are unlikely to be accepted if they do not provide for full payment of the tax debt”. Interestingly, the section of the same document that deals with examinership indicates that “Revenue’s position will depend on the circumstances of the case (e.g. previous tax collection history, whether there will be a change of directors etc.)”. It therefore seems that Revenue approaches proposed write-downs of tax debts in examinership cases with a more open mind than they would for Section 449 proposals. This suggests that SMEs, for which the cost of examinership is prohibitive, may be treated less favourably by Revenue than larger enterprises, for which examinership is an option. Revenue’s response to the COVID-19 pandemic has been extraordinary and has gone so far as to suspend debt collection procedures entirely. In this context, it might be expected that Revenue will now adopt a more open mind to proposed arrangements in the interest of preserving industry and employment.   Declan de Lacy leads the Advisory and Restructuring Department at PKF O’Connor, Leddy & Holmes.

As the saying goes, rough seas make great sailors and the new President of Chartered Accountants Ireland, Paul Henry, has abundant experience of leading in times of crisis. Perhaps in a sign of the times, Paul Henry sat down at his desk at home in Belfast to conduct this interview. With the lockdown in full effect, he was working from home as he sought to run his commercial property business and prepare for the year ahead as President of Chartered Accountants Ireland. And it will be a busy year indeed. In July, Paul will also become Chair of CCAB – a forum of five professional accountancy bodies that collaborate on matters affecting the profession and the broader economy. There will undoubtedly be much to discuss. From recovery to regulation, Paul will lead the charge for both Chartered Accountants Ireland and CCAB at a turbulent and fragile time in the island’s history. The global COVID-19 pandemic has spawned an economic malaise that may well be compounded by the effects of Brexit but leading through such crises was far from his mind when he decided to become a Chartered Accountant in the 1980s. The path to industry From an early age, Paul was determined to become both a Chartered Accountant and businessman – influenced in part by the apparent success of his friends’ parents. Upon leaving his science-focused secondary school in North Belfast, Paul attended Queen’s University Belfast where he studied accounting at undergraduate level before completing what was then known as the Postgraduate Diploma in Accounting. He readily admits that his first year studying accounting was “a wee bit of a mystery” but with some perseverance, both the art and the science of the subject began to make sense. Paul went on to qualify as a Chartered Accountant with PwC Northern Ireland in 1989, where he met his wife, Siân. He subsequently held positions with the Industrial Development Board, Enterprise Equity, PwC (for a second spell), and ASM Chartered Accountants before joining his current firm, Osborne King, where he is now a Director and equity partner. The move from practice to real estate advisory came about when Paul was working with ASM Chartered Accountants, primarily on corporate finance projects. “I had been speaking with the team at Osborne King about developing the business and the commercial skills they would need to do that, so I helped to shape a role and job specification for them,” he said. “They went to market with the role and close to the closing date for applications, one of the team said: ‘We’ve received some good applications, but we didn’t receive one from you’. For me, that was the light bulb moment because it was precisely the career I wanted. So, I went through the application process and thankfully landed the job.” Becoming a businessman Paul’s evolution did not end there, however. Having joined Osborne King in 2000, he led transactions involving sophisticated financial structures including private finance initiative and public/private partnership deals. Business was booming but unbeknownst to most, the financial crash of 2008/09 was not far away. The global downturn that followed decimated many sectors and industries – not least commercial property. Osborne King, like many others, felt the pinch but out of crisis comes opportunity and Paul went on to achieve his second childhood dream: becoming a fully-fledged businessman. “Through a series of developments and the downturn in particular, I ended up completing a management buyout of Osborne King with one other colleague. We restructured the business and the shareholders haven’t looked back since,” he said. With the benefit of hindsight, Paul can identify several lessons that are pertinent today as employers attempt to stay solvent and keep their businesses afloat. “The critical thing is to be open and honest with your people. In a downturn such as this, businesses must reduce their cost base and conserve cash, and that means having difficult conversations – particularly with staff and suppliers,” he said. “But if you communicate clearly and often, people will trust you and that is a precious asset to have. So be straight with them about the challenges facing your business, but don’t forget to repay that trust when the business landscape improves.” Indeed, one of Paul’s proudest achievements is keeping the full Osborne King team intact throughout the 2008/09 crisis and its aftermath. “We were probably the only commercial real estate firm that didn’t make any redundancies during the last recession,” he added. “We did that because, in my mind, we have great people and it is our people that will help us thrive once the economy recovers.” The current crisis Nobody expected to be in an even worse economic predicament just 12 years later, but the onset of the COVID-19 pandemic has led to plunging world economic growth. Businesses are operating in a near-absolute environment of uncertainty as governments scramble to provide the necessary lifelines for corporations, entrepreneurs, and their staff. In that context, Paul has been impressed by the agility and ingenuity of the governments in the Republic of Ireland and Northern Ireland in responding to the needs of both businesses and citizens. “People are often very critical of the public service but in recent months, we have seen its very best elements – not least in the health sector and emergency services. We owe a huge debt of gratitude to those who put themselves in harm’s way to keep us safe,” he said. Paul is also keen to highlight the vital role of the Institute in helping its members through the pandemic. “In times of adversity, we become incredibly creative and innovative and the Institute has responded very well to offer members even more services – whether it’s the COVID-19 Hub on the website or our regular webinars on soft skills or the Wage Subsidy Scheme,” he added. “Since March 2020, the level of member engagement with the Institute has increased significantly so we can see clearly that our Digital First programme is the right strategy. If there is a silver lining to all of this, it is that we have been forced to accelerate many of the innovative member services initiatives that were already on our agenda for 2020 and beyond.” All of this, he said, complements the traditional role of the Institute as a source of support for its 28,500 members. “CA Support is there to support all members and students in times of difficulty or crisis, and the service has seen an increase in activity in recent months,” Paul said. “Whether you have lost your job, are struggling to cope with uncertainty, or feeling lonely, all members and students can turn to their member organisation for support and guidance, and that is something that makes me immensely proud.” The role of the Chartered Accountant In addition to helping each other, Chartered Accountants will also be relied upon to help steer businesses through the pandemic and towards a sustainable future in what remains a very uncertain economic and regulatory landscape. Paul is hopeful that the global economy will recover relatively quickly, but there remains much to be done even if the economic signals begin to improve. “As we work through the fallout of the pandemic, businesses will need to be aware of the ‘wall of creditors’ waiting for them on the other side of the crisis,” he said. “Although survival is the name of the game at the moment, rent, commercial rates, and other obligations will need to be settled at some stage and Chartered Accountants – both in business and as advisors to business – will need to turn their focus to that issue.” All the while, Brexit rumbles on in the background and although it has the potential to compound the economic woes bestowed on the island of Ireland, Paul points to the profession’s pragmatism as its most valuable asset in navigating the added uncertainty. “The Institute has made clear that it would be preferable if Brexit did not happen, or if it did, that it happened in a planned and managed way with ample time for businesses to acclimatise to the new reality. But Chartered Accountants will play the hand they are dealt and work to understand what role they must play in making Brexit work without judgement,” he said. The President’s priorities Paul takes the helm at Chartered Accountants Ireland at a distinctly turbulent time but as the saying goes, rough seas make great sailors and Paul’s experience – both in industry and practice – gives him a rounded view of the needs of the membership during times of crisis in particular. In the year ahead, the Institute will launch a new four-year strategy that will hopefully outlive both COVID-19 and Brexit and despite the uncertainties, Paul’s focus will remain very much on people, talent, and potential. “When I joined Enterprise Equity, my chief executive said ‘Paul, it’s going to cost me £1 million to train you’. I was thrilled because I thought I was going to be educated in the best universities in the world, but he really meant that I would make many costly mistakes along the way,” Paul said. “In business, you are often backing the jockey and not the horse. It is the people, team and leaders that will get you around the course and win the race, and this focus on people will be a core element of my Presidency in the year ahead.” Paul will also focus on other strategic imperatives during his tenure: building on the recent evolution of the education syllabus, supporting the Institute’s Digital First initiative, and adapting to the ‘new normal’ for students, members and staff – whatever that ‘new normal’ might be. “My key priorities will revolve around member experience. It is vital that we engage with members, both at home and overseas, and become increasingly relevant to members in all sectors,” he said. “Building engagement with our members will be central to that sense of relevance. And as someone who wasn’t engaged with the Institute for many years, I can say with conviction that once members engage with Chartered Accountants Ireland and come to understand the breadth of services and support available to members and students alike, they will be amazed.” Conclusion Paul’s presidency will be a presidency like no other. Travel will be restricted in the short-term, a global recession is looming, and the world of professional services work has undergone a dramatic upheaval. But Paul remains optimistic for the future. “Through our education system, we are equipping the next generation of Chartered Accountants with the skills and expertise necessary to lead businesses into the future and support economic recovery and growth,” he said. “Meanwhile, our members continue to be relied upon as the people who connect the dots, bring people together and make individual elements more effective and valuable by creating and leading great teams. For me, the future is all about empathy, people, and teams – and if we get that right, we can and will recover.”

Teresa Stapleton explains how senior leaders and managers can create a high-performance culture with loyal, engaged, and motivated employees. An estimated two-thirds of companies still conduct annual performance reviews, despite extensive research and employee feedback which suggests that they are outdated. What most companies hope to get from performance management is engaged, motivated, high-performing employees and business success. But the reality is that annual and bi-annual reviews fall well short in supporting these aspirations. They typically involve time-consuming and detailed write-ups of past performance, which have little impact on future results. More and more companies are questioning the value of analysing past performance based on goals set 12 months ago and rating individual performance on a scale to determine rewards. Most managers and staff dread the whole process. Research by Willis Towers Watson found that only 48% of employees report that performance reviews have helped improve their performance, and just 52% think their performance was accurately evaluated. There is widespread consensus that ongoing performance management and the provision of feedback and coaching is a better approach to creating an engaged, motivated workforce. However, the challenges involved in replacing the annual review process, which has been embedded in organisations for many years, can seem daunting. Over the last ten years, several companies have successfully done just that – transformed their performance management processes to re-energise their organisation and employees. While there’s no one-size-fits-all solution, the following themes are worth considering when re-thinking performance management. Performance management philosophy The starting point for changing any process is deciding what you want to achieve. Defining what specific behaviours, values and results you want to encourage, and whether individual accomplishments or team collaboration – or indeed, a mix of both – will be recognised and rewarded is a good first step. Many companies share their vision, values, culture, performance management philosophy, and employee development approach on their websites as it is where prospective candidates go to get a feel for the company and whether it would be a good fit for them.  The traditional levers for recruiting and motivating employees are attractive pay and benefits, competitive bonus schemes, job security and career development prospects. Also, employee engagement and employee experience are increasingly recognised as being of equal importance to attract talent and drive productivity. Some companies have adjusted their rewards model to empower managers to offer smaller incentives more regularly when goals are achieved. Others offer training, educational support, or development programmes to reward strong performance. Providing a positive working environment where employees feel that their work is meaningful and their contributions are valued is now seen as central to attracting and retaining talent. Senior leaders and managers have a critical role to play in building an environment and culture where their teams enjoy coming to work and are committed to delivering exceptional results. Performance appraisal model Companies often adjust their performance management approach over time to reflect changing economic conditions and the latest thinking on business leadership. The bell curve system of performance appraisal, which was widely used for decades by large companies, has been abandoned by most. This model forces managers to rank employees into a bell-shaped distribution curve, with 20% high performers, 70% middle performers, and 10% low performers. The advantages of the bell curve model are that it helps managers differentiate rewards based on contribution and forces them to tackle low performers. However, the drawbacks of the model are generally believed to outweigh the benefits as it can create unhealthy internal competition to be a top performer and get high rewards and undermine collaboration across teams. It was also viewed as unfair and demotivating to employees pushed into the ‘middle’ or ‘low’ categories to hit the numeric requirements of the curve if this does not reflect their actual performance. Many companies have replaced the bell curve model with less rigid approaches that focus on continuous performance management, providing real-time feedback and coaching to improve performance and support personal development. Some companies have even dropped performance ratings altogether as they focus performance discussions too much on past events, shifting instead to highlight learnings from past experiences and create personal development plans for each employee to increase future impact. Objectives and key results There is a real art in setting meaningful and achievable targets that motivate staff to deliver great results. The biggest challenge is often distilling the broad range of activities each employee is responsible for to highlight the objectives that will contribute most to the overall success of the business. All too often, individual commitments or goals are a long list of activities and deliverables, making it hard for employees to see what is truly important and creates the most impact. Including granular details of job responsibilities or adding broad commitments that apply to all employees, while well-intentioned, often dilute the focus on clear, meaningful, personalised priorities. A growing number of companies like Google, Intel and LinkedIn have adopted the ‘Objectives and Key Results’ (OKR) framework to align company, team and individual goals and set targets. The process involves defining three to five objectives for each individual, with key results that are usually stated as numeric targets or other clear measures to track progress. While setting clear expectations upfront is essential, it is just as important to update them regularly to reflect changing company priorities and business direction. Regular performance check-ins Managers play a crucial role in setting their teams up for success by getting to know the strengths and capabilities of each team member and matching each individual’s skills to meaningful goals. Open communication is essential to set performance expectations, stay aligned on progress, and provide real-time feedback to address issues before things go off course – or to capitalise on opportunities to do things quicker or better. Performance and development discussions should take place on an ongoing basis and not be reserved for a formal review meeting once or twice a year. If regular check-ins are happening, there should be no surprises when it comes to performance assessment and rewards discussions. Most companies have performance management tools to track and monitor performance processes. Automated systems can also help streamline the process of capturing peer-to-peer feedback, highlighting blind spots or behavioural issues that managers should address. Conclusion Modernising performance management requires re-thinking the whole employee/employer value exchange. Employees want to do meaningful work, aligned with their values, where they feel they can grow, flourish and be justly rewarded. Senior leaders and managers have a critical role to play in creating a high-performance culture with loyal, engaged, and motivated employees to sustain business growth and long-term success. Teresa Stapleton is an Executive Coach at Stapleton Coaching.

We are in the middle of an unprecedented health emergency. In recent weeks, many of us have had loved ones, friends and acquaintances suffer illness, hospitalisation or worse. It is an extremely difficult time for many. We must hope that the actions of businesses and the general public in following the official safety guidelines, combined with the herculean efforts of healthcare workers, will effectively curtail the spread of COVID-19 and a more normal life can resume sooner rather than later. After safety, our key priority has been to ensure that we maintain the highest level of service possible for members and students during the health crisis. In terms of our staff, the collaboration across the board to bring all of our processes into a new way of working has been rapid. For members, we have provided a vast range of insights, services and supports – from CA Support to Practice Consulting and Professional Standards supports – to individual members and firms through a busy schedule of webinars. The COVID-19 Hub also provides a one-stop-shop for members seeking information and guidance. We are providing our members with the best information, skills, and guidance that we can. For students, we have moved quickly to accelerate the changes that were already planned. Our e-assessment pilot interim exam has now concluded and sets us up well for the next development phase, to cover main exams later this year. On the delivery side, we see great innovation as we move online, supporting digital enrolment and changing how we support training organisations. We exist to serve our members and students, and Chartered Accountants Ireland is a mirror of the profession. Our member firms, members, their clients, and students are under severe pressure and are experiencing some very challenging circumstances. The crisis will also undoubtedly have some longer-term economic effects, and the expertise of our members will be vital in helping business and broader society overcome these challenges. Over the past weeks, the Institute has moved quickly to step-up service to our members in their time of need, and our staff have responded rapidly to adapt to new ways of working. I know that our Institute will come through this crisis as a stronger, smarter organisation. As an Institute and as a profession, we are all in this together. Our Officers, our volunteers, and our staff right across the island of Ireland and beyond may be required to work from home, but they continue to work hard to support members in their professional lives. We know that the skills of our members will be needed more than ever throughout the crisis and in the period of rebuilding ahead. We pledge to do all that we can to continue to effectively support our members, member firms, and students to make that vital contribution. Barry Dempsey Chief Executive

Given the world’s fragmented approach to the COVID-19 crisis, Dr Brian Keegan considers the potential for lasting suspicion of international standards of all sorts – not least accounting. There is a theory that suggests that 150 is the maximum number of people with whom any one individual can meaningfully interact. This number, known as Dunbar’s number after the anthropologist who came up with the idea, feeds into a myriad of management texts. Working in Chartered Accountants Ireland, whose staff complement is close to 150, Dunbar’s idea feels right. There is a sense of community and shared purpose here which, if anything, has been highlighted by the coronavirus crisis. But just as there may be a ‘best’ maximum number of staff in an organisation or business division, is there a maximum population beyond which meaningful government responses to crises cannot be developed? Big is not always best The varying coronavirus experiences and responses of countries right across the world suggest that big may not be best unless the government is of a totalitarian hue, as in China. It is surely no coincidence that the most populous countries in Europe – Spain, Italy, France, and the UK – have suffered some of the worst impacts of coronavirus per head of population. Germany, of course, is somewhat of an outlier; but then again, when is it not? The challenges of scale seem even more pronounced beyond national borders. Where the power of local or national government is subordinated to international organisations – or international treaties or federal systems, as in the case of the EU and the federal government in the US – official responses seem either inappropriate or inadequate. A fragmented response The EU’s approach to tackling the pandemic has been, to put it charitably, fragmented. The EU does not have a core role in health matters, but it does when it comes to financial supports. The Commission seemed slow out of the blocks in its initial response. Countries that usually see eye-to-eye on fiscal issues, such as Ireland and the Netherlands, found themselves at odds with each other over the issue of eurobonds to support bailouts for individual member nations. The G7 group of the world’s wealthiest nations couldn’t even come up with a joint declaration on the pandemic in March, apparently because the US Secretary of State, Mike Pompeo, insisted on referring to the disease as the “Wuhan virus”. The US also very publicly pulled its support for the World Health Organisation (WHO), but perhaps more insidious than that were the suggestions that its Ethiopian chief executive was unduly influenced by Chinese investment in his home country. The seemingly unstoppable momentum for international corporation tax reform sponsored by the OECD has waned, with crucial decisions adjourned sine die by governments with more pressing matters on their agendas. A newfound suspicion If the authority of major agencies like the EU Commission, the OECD, the WHO and the G7 is being diluted, undermined or plain ignored as governments attempt to tackle the pandemic, it seems that global approaches aren’t entirely cutting it. An international reach used to be enough for these agencies to assert their authority, but not anymore. That is not great news for a profession like accountancy, which prides itself on its global approach. One lasting legacy of the pandemic could be a suspicion of, and resistance to, efforts to establish international standards of all descriptions, accounting among them. Who will be trusted by governments to set and maintain the standards in accounting if countries can’t even agree on who should set the standards on issues like healthcare? A new Dunbar’s number is becoming apparent for the number of countries that can act together in any kind of meaningful way when dealing with a crisis. That number is not higher than one.   Dr Brian Keegan is Director, Advocacy & Voice, at Chartered Accountants Ireland.

There are several signs that the EU may be splintering at the edges, writes Cormac Lucey. One of our weaknesses as a species is our self-regard. Sitting at the top of the evolutionary tree, we are in danger of overlooking some fundamental weaknesses. One is the conceit that we make critical decisions based on our thoughts when there is considerable evidence that feelings heavily influence our decision-making. A prime example of feelings misleading decision-making occurred in the Irish property market in the years 2006 and 2007. In a Davy research note published in March 2006, Rossa White (then the stockbroker’s chief economist, now occupying that position with the National Treasury Management Agency) issued a warning in the note’s title “Dublin house prices headed for 100 times rent earned”. He cautioned investors that “the fundamentals suggest that it will be an adjustment in prices – rather than rents – that will eventually bring valuations down to more realistic levels”. The problem was that investors had extremely positive feelings about property as an investment class resulting from its extremely strong performance in the preceding decade and a half. Feelings trumped thought. Thousands got caught in the resulting carnage. There is a danger that similar forces may blindside us to weaknesses developing within the European Union (EU) today. When we look back, we see a relatively strong and united body. From an Irish perspective, we associate the dramatic rise in our prosperity in recent decades with our EU membership (much more than with our turbo-charged foreign direct investment sector). But there are several signs that the EU may be splintering at the edges. Faultline one… There have been recent calls from the Élysée Palace for the EU to issue jointly guaranteed bonds (debt securities) to help those member states worst afflicted by COVID-19. The alternative, according to the French president, is to risk the collapse of the EU as “a political project”. What you may not be aware of is that in 2019, before any of us had heard of the virus, France and Italy already had the second and third largest budget deficits in the EU. Having maxed-out their own national credit cards, they now want to use the hard-won creditworthiness of others to borrow more. Faultline two… The differing borrowing capacity of various EU member states has resulted in widely varying budgetary responses to the pandemic. Germany, which went into the crisis with relatively healthy public finances, plans to spend more than 6% of GDP to boost its economy, before considering the effect of loans and guarantees. Italy, by contrast, entered 2020 with a weak fiscal position and can afford an immediate fiscal impulse of less than 1% of GDP, even though it has been hit much harder by the pandemic than Germany. France is similarly constrained. We can look forward to more wailing from the Élysée Palace. Faultline three… The actions of the European Central Bank (ECB) are increasingly running up against political and legal constraints. The German Federal Constitutional Court recently ruled that the ECB had exceeded its legal mandate and “manifestly” breached the principle of proportionality with bond purchases made under previous quantitative easing programmes. How might it rule on the ECB’s current programme, which has been deliberately disproportionate to reduce financial strains in Italy? A related problem concerns the ECB’s Target 2 balances. They are a key measure of financial market strains within the euro area. They record how much a national central bank is borrowing from the ECB to lend to domestic commercial banks that are suffering deposit withdrawals. For years, Italy and Spain have been borrowers while Germany has been on the opposite side of the equation, helping to fund the ECB. In March, the Italian central bank’s borrowing jumped by over €100 billion to €492 billion, while the amount the Germans lent into the system rose by more than €100 billion to €935 billion. As the US economist Herb Stein quipped, “if something cannot go on forever, it will stop”. We just do not know when. Cormac Lucey FCA is an economic commentator and lecturer at Chartered Accountants Ireland.

Annette Hughes outlines the four consumer behaviour trends that have emerged from the COVID-19 pandemic. The COVID-19 crisis is being defined by four distinct consumer behaviour responses, according to the first edition of the EY Future Consumer Index. The survey tracks consumer sentiment and behaviour across several geographies, but these four behaviours, outlined below, are all evident in Ireland and have implications for the pending economic recovery. Cut deep (27%): these consumers are mainly more than 45 years old and have seen the biggest impact on their employment status. Almost one-quarter have seen their jobs suspended, either temporarily or permanently. 78% are shopping less frequently, while 64% are only buying essentials. Stay calm, carry on (26%): these consumers do not feel directly impacted by the pandemic and are not changing their spending habits. Just 21% are spending more on groceries, compared with 18% who are spending less. Save and stockpile (35%): this segment has a particular concern for their families and the long-term outlook. 36% are spending more on groceries, while most are spending less on clothing (72%) and leisure (85%). Hibernate and spend (11%): usually aged between 18-44, these consumers are most concerned about the impact of the pandemic with 40% shopping less frequently. Rationalised personal consumption From the Irish economy’s perspective, the unprecedented impact on the labour market has a significant effect on consumer spending. Personal consumption accounts for around one-third of Ireland’s GDP. Before COVID-19, the economic recovery was associated with a healthy annual average growth in consumer spending of 3.5% over the last five years. With the categories affected by containment measures accounting for around one-half of consumer spending, according to the Central Bank of Ireland, a sharp contraction in consumer spending is expected in 2020, which in turn impacts on investment and overall GDP. Recent projections from the Department of Finance forecast that personal consumption will contract by 14.2% this year, with GDP down by 10.5% (April 2020). The impact of the pandemic on employment, supply chains, travel and tourism, and mobility has hugely reduced consumer confidence and spending – and the shock is likely to be felt for some time to come. Looking beyond the immediate effects of COVID-19, few consumers expect to revert to pre-crisis behaviours any time soon. Overall, 42% of respondents believe that the way they shop will fundamentally change as a result of the COVID-19 outbreak. Plummeting consumer confidence While these four segments could morph as the crisis abates, the adverse impact of the pandemic on consumer confidence remains. In an Irish context, the KBC Consumer Confidence Index fell to its lowest level in the survey’s 24-year history due to a combination of weak conditions and the risk of poorer prospects. 584,600 people are in receipt of the Pandemic Unemployment Payment while the unadjusted Live Register total for April 2020 was 214,741. An additional 425,204 are being facilitated through Revenue’s Temporary COVID-19 Wage Subsidy Scheme. This implies that in the region of 1.224 million people – or almost 50% of the workforce – are in receipt of some form of income support. Joined-up thinking required The recovery in consumption will depend on the extent to which the unemployment situation is reversed. Companies that were struggling to keep up with changing consumer behaviour before the pandemic are now faced with the challenge of anticipating how consumers will evolve beyond the pandemic. The Government’s roadmap to ease COVID-19 restrictions and re-open Ireland’s economy and society on a phased basis are welcome, but the pace at which different sectors and regions begin to recover will vary greatly. While smaller towns may benefit from increased local spending, online sales are likely to remain high, at least in the short-term. We must look at what business and governments can do together to help everyone get through what continues to be an incredibly difficult period to ensure that they are all ready to participate in the recovery when it comes.   Annette Hughes is an Economist and Director at EY-DKM Economic Advisory.

Des Peelo shares his one guiding principle for setting a fair professional fee. Professional fees occur in many occupations including dentists, doctors, accountants, solicitors, barristers, and architects. Public relations practitioners, management consultants, estate agents, investment bankers and technical advisers of all kinds also charge professional fees, as do lecturers and conference speakers. But how should you calculate a professional fee? There are no guidelines as such, other than custom and practice within a particular sector. Competition law prevents price-fixing within a sector. Nevertheless, norms or rules of thumb usually develop over time. Enquiry suggests that a routine GP visit costs between €55 and €70, while a medical consultant may charge between €250 and €300. An estate agent may charge 1-2% plus outlays and VAT on the sale price of a property, and an architect may charge a percentage of the project costs. Practising accountants typically charge an hourly rate for routine services such as audit, accountancy, and tax work. For more complex work, mainly carried out by larger firms, such as a major investigation or a difficult liquidation, an hourly rate of €450 per hour plus VAT has been quoted in the High Court for a partner’s time. This €450 currently seems a benchmark rate and is scaled downwards for less senior staff. In general, straightforward work such as audits for an accountant, conveyancing or probate work for a solicitor or routine dental work for a dentist is competitive, and fees fall within identifiable ranges. It is difficult, however, to generalise in linking a fee to the mix of expertise provided, responsibility taken, and the value to the client. What is the value of a careful and competent diagnosis of a malady from a GP, or a substantial tax saving through expert knowledge? What is the value of the identification and rectification of a serious IT glitch, or a crisis successfully managed by a skilled public relations practitioner? Round sum fees are common for non-routine work or work not measured in terms of time incurred. There is the story of a computer glitch that closed down an entire business. A technician arrived, turned a nut, and got the system up and running again. The bill was €1 million, and the client demanded a breakdown. The response was €100 for the hour in turning the nut, and €999,900 for “knowing which nut to turn”. Legal fees, apart from routine matters, can be a mystery – particularly in litigation. There are regular reports of substantial fees across all types of litigation. A UK judge once remarked that the Savoy Hotel and the courts are open to everyone. In my experience, this is because of the extensive input necessary in almost any litigation, such as identifying the issues and the law relating thereto; assembling the relevant documentation and preparing the required procedural paperwork; accessing expert evidence; consultations; and, of course, the actual court hearing. There is an amusing story about legal fees allegedly involving a firm of solicitors in the United Kingdom. A long and complex litigation case had come to a satisfactory conclusion, and it was time to finalise the bill. The more technical aspects had already been completed as to measuring the files at £100 per inch and weighing the files at £150 per pound. Instead, each partner had to review the files and put his or her estimate of the total fee in a sealed envelope, placed in a box. When the box was opened, the partner with the lowest estimate did not share in those fees and the partner with the highest estimate had to collect the fees. An optimum balance. Investment bankers charge astronomical fees. This is because they can. The transactions involved are mega takeovers or the funding of large projects. The enormous sums of money involved are often backed by prestigious names, not necessarily professional expertise, and this is what underpins the hefty fees. Fees of 1-3% of the amounts involved do not seem unduly high when expressed that way, but these percentages translate into millions of dollars or euro. George Bernard Shaw observed that professions were conspiracies against the laity. This, of course, does not refer to Chartered Accountants and professional fees. A guiding principle as to good professional practice is to ensure that the subsequent fee is not a surprise to the client. Service before remuneration.   Des Peelo FCA is the author of The Valuation of Businesses and Shares, which is published by Chartered Accountants Ireland and now in its second edition.

Richard Day and Alannah Comerford look at how Chartered Accountants can explore the potential for robotic process automation using UiPath. In this series of articles, we are exploring the power of visualisation and data analytics and the benefits it can bring to Chartered Accountants. As you may know, the FAE syllabus was recently updated to include data analytics concepts and tools such as Tableau, Alteryx, and UiPath. Previous articles dealt with the concept of data visualisation and the value it can bring to an accountant, and most recently we covered the data processing tool, Alteryx, and the significant advantages it affords when performing data transformations and calculations. In this article, we will move to the more advanced area of automation. Robotic Process Automation (RPA) is an acronym you are probably familiar with, as more and more businesses seek to streamline their operations and exploit the advantages of automation. UiPath, which has been selected by the Institute, and similar tools enable RPA at a practical level. UiPath is a software solution that acts like a robot, programmed to perform the various activities in a process just as a human would. The tool can be used to run without human supervision or can work as an assistant. Automation without human supervision is extremely difficult and may not be the answer for complex processes that require significant judgement, reasoning or analysis from the person performing them. In such cases, automation may still support the person who is completing these tasks as an assistant, but human intervention is vital. However, if we consider those processes that are suitable for automation, they can usually be described as highly repetitive, manual processes where the employee does not exert judgement. All decisions are made based on business rules and pre-defined logic. Significant value can be derived from automation where there is interaction between multiple systems, but the inputs required are standard, making the process tedious and time heavy. Similarly, when the current manual procedure is inadequate for standardising a process and remains subject to error, automation – which has the power to perform the process accurately every time – can be invaluable. As an accountant, you might think that opportunities for automation should fall under the remit of those working in IT. Accountants, with their holistic knowledge of how a business operates and analytical nature, are ideally placed to identify potential automation opportunities and act as a key stakeholder throughout the process. Automation at work Consider a simple process whereby you are required to run reports or extracts from different systems and perform some data transformation and analytics on the information to produce an output, perhaps in the form of a reporting dashboard. Alteryx can be set-up to run workflows to deal with inputs from different systems and produce the desired output. However, you would still need to run the input files and refresh the dashboard manually. Incorporating UiPath can automate the process even further. UiPath can log-in to each system and can be used to run specific reports from different systems at set times, replacing the need to download data manually. It can then load this data into Alteryx, run a pre-defined workflow, and produce the desired dataset. This information can then be brought into Tableau to refresh a dashboard with the current information. In this way, UiPath can be configured as an interface between systems to offer a fully integrated solution. These processes can be as simple as taking a list of suppliers from one system, along with balances from another. UiPath can automate the production of these lists and balances for processing in Alteryx to produce a customer statement. This statement is then converted to a named PDF document and emailed to each customer. In an audit context, where proof of delivery can provide recognition of a sale, client records can be reconciled with those from a third-party delivery company, exceptions identified and presented for further investigation by the auditor. A business can reap many rewards from automation. While efficiency and time-saving with a shorter cycle time immediately spring to mind, increased quality and compliance as a result of a reduction in errors and an increase in accuracy are also often seen. Unlike mere mortals, robots never sleep and processes can operate autonomously 24/7, driving real-time transactions and analysis. While certainly more challenging to measure than the benefits outlined above, increased employee satisfaction through a focus on higher-value activities and a reduction in time spent on menial, repetitive tasks is a clear benefit. It helps shift the priorities of the employee to innovation, strategy and activities that add value to the business proposition, resulting in a happy and productive workforce and consequently, higher output. While the benefits that automation can bring when applied to appropriate processes are clear, we must bear in mind that, while automation can reduce hours in the long run, up-front investment is required to get it right. Also, control-aware accountants would know that any automated process requires ongoing review. A successful move towards automation requires the skills that accountants use all the time. For example, detailed process maps that are validated by walk-throughs are essential as well as thorough testing with scenario analysis. Consideration of the impact on controls, appropriate training, procedures, and user manuals are also required along with a measurement of actual versus expected results and periodic performance assessments. Accountants are likely to be key stakeholders in each of these activities. Admittedly, we have only just skimmed the surface of the potential of UiPath and what it can be used for. Still, given the myriad of considerations included above, this is hopefully understandable. We hope we have sparked a reflection on potential use cases in your own business and perhaps demonstrated areas where Alteryx alone may not go far enough. We encourage you to consider these use cases, investigate whether your organisation has the necessary experience and consider a proof of concept. In the world of RPA, do not be afraid to consult and draw on experience.   Richard Day FCA is Partner, Risk Assurance Leader, at PwC Ireland. Alannah Comerford ACA is Senior Manager, Data Analytics & Assurance, at PwC Ireland.

With fintech innovation transforming the financial services sector, banks must undergo a strategic revolution – as IBM did in the 1990s – to survive and thrive. When your Irish mammy says she’ll “Revolut ye some money” for her grandson’s birthday, you know that fintech has moved mainstream. Leading fintech firms now have market cap valuations to rival the banks, with investors (or speculators) pricing in significant growth expectations at the expense of incumbents.  As banking boardrooms grapple with their response to the fintech onslaught, they could do worse than look through the lens of history to find inspiration from a similarly disruptive period in the IT sector in the 1990s.    Sword to a gun fight Gary Hammel, who is one of the most significant strategic thinkers of the 20th century, once prophesied that “in the new economy, those who live by the sword will be shot by those who don’t”. He observed that, when technological disruption occurs in a mature sector, dominant incumbents often suffer from the “tyranny of success”. They rigidly stick to the business model that delivered decades of success in the misguided belief that it will sustain success into the future. Before they know it, they become irrelevant and decline. Roll forward to 2020 and observe the vast sums of global capital that have been invested in fintech organisations over the past decade, as investors believe they can tap the vast profit pools (and data) that banks have had to themselves for centuries. While global bank CEOs were at first in denial, and even complacent about the fintech threat, many are now concerned by the exponential disruption to their core revenue lines. In considering a response, bankers could do worse than study IBM’s resurrection in the 1990s and how it underwent a strategic revolution to renew its lease on success. But before we go there, let us delve deeper into the disruption that is happening in financial services in 2020 and the banks’ response thus far. Fintech disruption A holy trinity of tailwind forces are driving fintech’s disruption of banking: A technological revolution (e.g. data and artificial intelligence); A paradigm shift in customer expectations (e.g. those who demand low effort and excellent user experience banking); and Favourable regulatory changes (e.g. the second Payment Services Directive (PSD2), which has opened up banks’ transaction data to fintech companies). Fintech companies have developed superior value propositions across nearly every product line. This allows consumers to send and convert money more cheaply, pay for goods and services much more easily, borrow money in an instant (no form-filling), and invest money smartly at a fraction of the cost charged by incumbents. They have perfected these propositions with helpful feedback from digital-savvy early adopters and now have their focus set on acquiring the banks’ core customers. Bank executives attempt to counter the fintech threat by allocating finite investment resources to one product line under massive attack (payments, for example), leaving other product lines open to disruption (business lending or investments, for example). The multi-flank offensive is stretching banks beyond their capacity to respond, but the fintech companies are only getting started. The greatest corporate turnaround of them all Before a mortal blow is delivered, banking CEOs should learn from the greatest corporate turnaround of them all. When Lou Gerstner took over as IBM CEO in 1993, he inherited a sprawling, rigid, loss-making organisation in rapid decline. They could not match the pace of product innovation from a new breed of agile competitors. Each competitor’s specialist focus on a part of the IT value chain enabled them to develop value propositions far superior to the ‘jack of all trades and master of none’ IBM. Within a decade, Gerstner had led IBM through one of the most successful corporate turnarounds and reinventions of all time. Gerstner and his team observed that, while corporate CEOs/CIOs were choosing IT products from competitors, the result was an IT architecture stack encompassing many different suppliers, which brought huge frustrations. These same corporations now needed a ‘technology integrator’ partner with a whole-market knowledge who could help them select, integrate and manage their portfolio of IT suppliers. For Gerstner, this was the eureka moment. This significant emerging customer need showed him that the future of IT would be services-led, not product-led. IBM’s perceived greatest weakness became their most significant asset, as they had the market knowledge needed to win in this lucrative new services market. How could this play out for banking? Let us imagine how this could play out for banking. We are in the year 2030 and the ‘platformification’ of financial services has occurred, with a handful of trusted financial platforms banking all of Europe’s consumers and offering any banking/fintech product these consumers could need. Think Amazon, but for financial services. 90% of incumbent banks will have missed the boat by 2030. They either went bust or are now operating as a utility company, offering commoditised financial products through these platforms. Fintech companies are also resigned to offering their products through these platforms, as the cost and effort involved in customer acquisition became too high. ABC Bank is the exception and has become the dominant consumer financial services platform player in the UK, Ireland, Benelux and the Nordics with 50 million customers. In 2020, ABC Bank saw an emerging market need for a trusted ‘financial integrator’, one that could make sense of – and harness – the multitude of great fintech offerings for the benefit of the consumer. The bank was brave and decisive, investing heavily in the right capabilities to become the Amazon of financial services. In particular, it invested in its digital front-end, third-party management capabilities, and data analytics capabilities. Consumers in these markets know that ABC Bank’s intuitive and secure platform can help them find the leading and best value fintech product offerings on the market. Customers are reassured that ABC Bank has properly scrutinised any fintech offering listed on the platform before giving the green light to offer their services. They have no worries, therefore, about their data or the security of their money. As consumers’ financial affairs (and data) are managed within one platform – cash, investments, pension and expenditure – ABC Bank has a holistic view. Remember, data is more valuable than gold. ABC Bank is, therefore, in a unique position to provide higher value in-house services, such as holistic analysis and advice to help consumers make better-informed financial decisions. If all this seems a bit far-fetched and futuristic, it is worth noting that this change has already occurred in Asia with the meteoric rise of Ant Financial. This financial services platform did not exist five years ago and is now worth $150 billion. Conclusion As banking boardrooms regroup following the pandemic and look once again to the future, perhaps they can dust-down the IBM playbook. They can position themselves at the centre of their customers’ financial lives as the financial integrator, making sense of – and harnessing – the power of fintech innovation for their customers’ benefit. Those who move swiftly and decisively can seize the day. Those who procrastinate and live by the sword will be shot by those who don’t. Vincent Colgan is a financial services strategist with expertise in banking and fintech collaboration.