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.