After decades of barely-there inflation, a mix of issues resulting from the pandemic and the war in Ukraine has created the perfect storm for excessive inflation, writes Jim Power. A total lack of inflation has characterised the developed world economy for the past decade. Many central bankers have been focused on generating inflation using historically low interest rates and quantitative easing (QE), a mechanism for keeping long-term interest rates down and injecting liquidity into the financial system.  Indeed, the Japanese have spent 30 years trying to break a deflationary spiral.  Economists still do not fully understand the mechanics of inflation. However, it seems clear that the lack of inflation in recent years can be attributed to a combination of factors:  Globalisation;  The emergence of very low-cost producers of goods in the developing world, particularly in areas such as clothing and white goods;  Intense retail competition, particularly in the online sphere (Amazon, in particular);  Waning power of trade unions;  The growth of technology; and  The impact of the great financial crash and the policy of fiscal austerity that followed.  All has changed over the past year. Inflation has come back with a vengeance – the annual rate in the eurozone now stands at 7.4 percent; 8.5 percent in the US; seven percent in the UK; and 6.7 percent in Ireland, the highest rate recorded since October 2000.  Demand-pull vs cost-push Traditional economic theory suggests that inflation is either demand-pull or cost-push.  Demand-pull means that there is excess demand in the system, and the prices of goods and services are bid up as supply fails to match demand.  The Irish housing market is a good example of demand-pull.  Cost-push inflation arises when input costs, such as labour and raw materials, increase in price. The two oil price shocks in the 1970s provide a good example of this phenomenon for those of a certain age.  The resurgence of inflation over the past year is primarily an example of inflation driven by supply difficulties, but there is also an element of demand-driven pressures.  A crisis upon a crisis We have experienced a very unusual set of circumstances over the past couple of years. During the COVID-19 pandemic, production was significantly disrupted against a background of restricted demand and the shutdown of many businesses. There were also significant problems with shipping and logistics due to the COVID-19 restrictions.  When economies started to re-open, repressed demand was unleashed into the system, and this resurgence in demand came up against supply constraints. Prices began to rise, something particularly evident in energy markets. At the beginning of this year, the view was that as the post-COVID world returned to some semblance of normality, the supply bottlenecks would sort themselves out, the resurgence of repressed demand would ease, and inflation would come back down.  Unfortunately, we have been reminded that we should always expect the unexpected in recent weeks.  The Ukraine war is causing serious supply issues in energy, wheat and other foodstuffs, fertilisers and many industrial metals. A crisis has come upon a crisis, and the transitory inflation problem is now looking more long-lasting.  Excessive inflation Excessive inflation is a problem on several fronts.  If the rate of price increase exceeds the growth in wages, real incomes decline, and people’s purchasing power is damaged. This is a particular problem for those on fixed incomes, such as pensioners.  For a small open economy like Ireland, if inflation here is rising faster than countries with which we trade or compete, international competitiveness is eroded.  On the plus side, Ireland’s inflation problem is not unique – everybody else is grappling with the same problem. In Ireland, prices increased by 6.7 percent in March. Of this 6.7 percent increase:  housing, water, electricity and gas contributed 2.76 percent, due to higher electricity, gas and rent costs; transport contributed 2.4 percent, due to higher oil prices; alcohol contributed 0.41 percent due to the introduction of minimum unit pricing in January this year; and restaurants and hotels contributed 0.53 percent due to wage pressures and higher energy costs.  It is clear that energy has been the big driver of inflation, but it is now starting to become more deeply ingrained as the Ukraine war continues and labour shortages cause wages to rise.  The likelihood is that food price inflation will increase over the coming months due to rising food production costs and wheat prices. The possibility of the scarcity of products such as rice and sunflower oil is also high. Intense retail grocery competition might just put some brake on these price pressures. Breaking the cycle One of the problems with inflation is that it can become embedded in people’s expectations, causing them to seek higher wages which, in turn, feeds through to higher prices.  History shows that the persistence of inflation increases as the rate rises. Central banks and governments will have to work hard to break this cycle and make tough decisions with interest rates, taxation and government spending. Populist cash giveaways are not the way to respond.  Inflation and its causes are now the dark clouds threatening the economic outlook.  Jim Power is and Independent Economist and host of the podcast, The Other Hand.  

SMEs hit hard by the pandemic must now grapple with the economic fall-out of the war in Ukraine, signalling fresh uncertainty for the year ahead, so what’s the best plan of action? COVID-19 lockdowns, global supply chain disruption, inflationary pressure – and now the economic fallout from the Russian invasion of Ukraine.  The headwinds facing Ireland’s small- and medium-sized enterprises (SMEs) show no signs of easing as we enter the third quarter of 2022. Even as the year began, the imminent winding down of Government supports for COVID-hit businesses was already prompting speculation of a spike in insolvencies just around the corner. Now, Gabriel Makhlouf, Governor of the Central Bank of Ireland, has called on a “patient” approach from policymakers and creditors to help ensure that “unnecessary liquidations of viable SMEs are avoided over the coming months.” Speaking at a recent event in Dublin co-hosted by the Central Bank of Ireland, Economic and Social Research Institute, and the European Investment Bank, Makhlouf pointed to the need to “channel distressed but viable businesses towards restructuring opportunities and unviable businesses towards liquidation.” Uncertain outlook For those SMEs in the sectors hit hardest by the pandemic, the fresh economic turmoil sparked by the Ukraine invasion will be a cause for concern. “The outlook right now for SMEs generally in Ireland is very hard to determine,” said Neil McDonnell, Chief Executive of the Irish SME Association (ISME). “It will vary considerably from sector to sector, but after two bad years for hospitality and tourism due to the pandemic, the war in Ukraine is likely to mean volumes will remain low into the summer.”  Pandemic-related insolvencies have yet to spike. Research released by PwC in February found that Government support had saved at least 4,500 Irish companies from going bust during the pandemic, representing an average of 50 companies per week during the period. Insolvency rates are likely to rise in the months ahead, however, as pandemic supports are withdrawn from businesses with significant debts, and PwC estimates that there is a debt overhang of at least €10 billion among Ireland’s SMEs, made up of warehoused revenue debt, loans in forbearance, supplier debt, landlords, rates and general utilities.  “Government supports have to end at some point. We realise this, but it will be accompanied by a significant uptick in insolvencies. This is natural and to be expected, since 2020 and 2021 both had lower levels of insolvency than 2019,” said Neil McDonnell. “Aside from hard macroeconomics, however, we can’t ignore the element of sentiment in how businesses will cope. This is the third year in a row of bad news.” Confidence in the market Before taking on his current role as Managing Partner of Grant Thornton Ireland, Michael McAteer led the firm’s advisory services offering, specialising insolvency and corporate recovery. “What I’ve learned is that you really cannot underestimate the importance of confidence in the market,” said McAteer. “If we go back to 2008 – the start of the last recession – or to 2000, when the Dotcom Bubble burst, we can see that, when confidence is lacking, the pendulum can swing very quickly. “If you’d asked me a few weeks ago, before the Ukraine invasion, what lay ahead for the Irish economy this year, I would have been much more optimistic than I am now. “Yes, we were going to see some companies struggling once COVID-19 supports were withdrawn, particularly those that hadn’t kept up with changes in the marketplace that occurred during the pandemic, such as the shift to online retail – but, overall, I would have been confident. Now, it is harder to judge.” Government supports Neil McDonnell welcomed the recent introduction of the Companies (Rescue Process for Small and Micro Companies) Act 2021, which provides for a new dedicated rescue process for small companies. Introduced last December by the Department of Enterprise, Trade and Employment, the legislation provides for a new simplified restructuring process for viable small companies in difficulty. The Small Company Administrative Rescue Process (SCARP) is a more cost-effective alternative to the existing restructuring and rescue mechanisms available to SMEs, who can initiate the process themselves without the need for Court approval. “We lobbied hard for the Small Company Administrative Rescue Process legislation. The key to keeping costs down is that it avoids the necessity for parties to ‘lawyer up’ at the start of the insolvency process,” said McDonnell. “Its efficacy now will be down to the extent to which creditors engage with it and, of course, it has yet to be tested in the courts. We hope creditors will engage positively with it.” McDonnell said further government measures would be needed to help distressed SMEs in the months ahead. “We already see that SMEs are risk-averse at least as far as demand for debt is concerned. Now is the time we should be looking at the tax system to incentivise small businesses,” he said.  “Our Capital Gains Tax (CGT) rate is ridiculously high, and is losing the Exchequer potential yield. Our marginal rate cut-off must be increased to offset wage increases.  “Other supports, such as the Key Employee Engagement Programme (KEEP) and the Research and Development (R&D) Tax Credit need substantial reform to make them usable for the SME sector.” Advice for SMEs For businesses facing into a challenging trading period in the months ahead, Michael McAteer advised a proactive approach. “The advice I give everyone is to try to avoid ‘being in’ the distressed part of the business. By that, I mean: don’t wait until everything goes wrong.  “Deal with what’s in front of you – the current set of circumstances and how it is impacting your business today.  “Ask yourself: what do I need to do to protect my business in this uncertain climate, and do I have a plan A, B and C, depending on how things might play out? “Once you have your playbook, you need to communicate it – and I really can’t overstate how important the communication is.  “Talk to your bank, your suppliers, creditors, and your employees. Sometimes, we can be poor at communicating with our stakeholders. We think that if we keep the head down and keep plugging away, it will be grand.  “By taking time to communicate your plans and telling your stakeholders ‘here’s what we intend to do if A, B or C happens,’ you will bring more confidence into those relationships and that can have a really positive impact on the outlook for your business. “Your bank, your creditors and suppliers are more likely to think: ‘These people know their business. They know what they’re doing.’ If something does go wrong, they know that there is already a plan in place to deal with it.” Role of accountants Accountants and financial advisors will have an important role to play in the months ahead as distressed SMEs seek advice on the best way forward. “We are about to experience levels of inflation we have not seen since the 1980s. This will force businesses to address their cost base and prices,” said Neil McDonnell. “My advice to SMEs would be: talk to your customers, to your bank, and your accountant. Your accountant is not just there for your annual returns. They are a source of business expertise, and businesses should be willing to pay for this professional advice. No business will experience an issue their accountant will not have not come across before.” As inflation rises, SMEs are also likely to see an increase in the number of employees seeking pay increases, McDonnell added. “Anticipate those conversations, if they haven’t occurred already,” he said. “Any conversation about wages is a good time to address efficiency and productivity – is there more your business could be doing to operate more efficiently, for example, thereby mitigating inbound cost increases?”

Tackling climate change will mean embracing economic models that prioritise the many, not just the elite few, writes Kate van der Merwe. In the pursuit of a holistic and inclusive economy that can serve current and future generations, we need to take a fresh look at our economic alternatives.  We are facing existential challenges: a climate crisis that we continue to escalate; a biodiversity crisis that is the sixth mass extinction; and significant inequities that the coronavirus pandemic has served to both highlight and exacerbate.  We must review how our economy works with a focus on real value and equity. In doing so, let’s scrutinise the underlying assumptions and realities, and consider alternative options, including the transformative innovations of social and circular economies. The current context Traditionally, economics is often framed as the study of how people make choices and allocate scarce resources over time, individually and collectively — for example, forsaking consumption now for later benefit (in finance, the choice to invest). Key concepts include ‘utility’ (the satisfaction from something) and ‘consumption.’  The relationship between both is represented by the ‘utility curve,’ which defines utility in direct and positive relation to consumption. Simplified, this means that the more we consume, the happier we are.  In finance theory, utility becomes defined in terms of monetary value. The concept of ‘consumption’ also defaults to a narrow definition of a one-time event. When supply meets demand in the market, for example, economic actors (businesses) are driven to mass-produce for one-off transactions, placing emphasis on short term profits.  When core concepts are so narrowly defined, the underlying utility or value is distorted. By focusing so narrowly on monetary value, we can become disconnected from the real value of the ‘thing’ money is buying and being valued upon. An investor following these limited definitions might, for example, invest in a high-yield mining company even if those yields are derived from destroying the health and wellbeing of their community, and feasibly worsening the investor’s overall utility, particularly in the long term.  If we assume that the fulfilment of our essential physiological needs has the highest incremental utility, then a theory assuming and supporting insatiable consumption — despite the consequences of that consumption threatening our essential physiological needs — appears contradictory.  As the COVID-19 pandemic has highlighted, inequity remains a significant challenge. In the current global economy, just one percent of the population holds 38 percent of wealth, while 50 percent holds just two percent.   During the pandemic, the world’s 10 richest men doubled their wealth. As the average worker faced job insecurity, CEO compensation rocketed. In the US, the CEO-to-worker compensation ratio reached 351:1 (in 1965 it was 21:1).  The pandemic has been a relatively mild precursor to the disruption that is building because of climate change – a threat that we have created, one that our current economic system perpetuates and that we have the power to stem. In facing this disruption, we will need economic models that prioritise the many, not just the elite few.  Alternative approaches Alternative models and ideas include circular, ecological, ‘donut,’ community, collaborative or sharing, social and solidarity economies. Loosely speaking, many focus on or draw inspiration from addressing social inequity and/or the environmental crises.  They look to democratise the economy, to better address systemic inequities, as well as incorporating realistic assessments of nature’s limits, so that we might begin to tackle our self-destructive environmental trajectory. Many of these ideas are not new. They are part of our history.  Their elegance is in their flexibility and compatibility with being layered and combined, an example being a social enterprise engaged in the circular economy. Given the breadth of this topic, this article briefly discusses two of the alternative models: social economy and circular economy. The social economy While the concept of the social economy is long-standing, its definition is evolving. Existing forms of social economy businesses include cooperatives, mutuals and social enterprises. Key features include a core organisational purpose of maximising societal and/or environmental impact, not profit, through the reinvestment of profits, and often incorporating democratic governance.  Existing forms of social economy businesses include cooperatives, mutuals and social enterprises. Within the EU, 2.8 million (10 percent) of all organisations are social economy enterprises, employing 13.6 million people.  While GDP is a problematic measure, the social economy contributes eight percent of the EU’s. One growing and exciting part of the social economy are those social start-ups that are applying innovative solutions to some of our biggest problems, like climate change, often tackling social and environmental issues simultaneously.  During the COVID-19 pandemic, the social economy gained visibility for its resilience and its value creation on a broader scorecard and structural supports are developing.  Last year, when announcing social enterprise funding, Minister for Rural and Community Development, Heather Humphreys, recognised social enterprises for “the invaluable role” they played throughout the pandemic, making “an important contribution in areas such as mental health, social inclusion and the circular economy.” In 2019, the Irish Government published the National Social Enterprise Policy for Ireland 2019–2022, which is also a core component of the State’s plans for rural and community development.  The EU is also scaling up support for the social economy, publishing the Social Economy Action Plan in 2021 for implementation this year, with plans for an EU Social Taxonomy.  A European stalwart of the social economy, based in the Basque Region of Northern Spain, is the Mondragon Cooperative Corporation.  Established in 1956, Mondragon is one of the largest corporates in Spain, with sales in over 150 countries. It comprises a collection of mutually supporting social enterprises engaged in education and innovation, finance, retail, and manufacturing/engineering (including the esteemed Orbea bicycles brand and Urssa, the world-renowned steel manufacturer).  Mondragon is particularly intriguing given its social impact aspirations — the structures and practices it has created to differentiate itself as social (such as maintaining a pay ratio limit of 6:1), while maintaining success in an ill-fitting capitalist economic structure.  Ireland also has its own booming social enterprise sector, with plenty of examples across a wide range of sectors, such as:  FoodCloud (connecting retailers with charities to donate food);  Airfield Estate (a working farm, kitchen, education, and food destination in Dublin); WeMakeGood (Ireland’s first social enterprise design brand) and; Moyee Coffee (“a radical company with radical [Fairchain] impact”). The circular economy The circular economy is also gaining ground, driven by the threat of climate change. The circular economy designs out waste by optimising scarce resources to build a restorative and regenerative economy.  It does this by deploying interdisciplinary systems thinking, i.e. considering complex systems holistically, and incorporating relationships and interdependencies between parts.  A long-term approach to resources, especially minimising the use of raw materials, fundamentally contrasts the circular economy with the linear ‘take-make-waste’ economic system.  The circular economy treats natural resources as scarce, which serves to keep climate breakdown and the threat to our survival front and centre. Maintenance and repair services grow, while production becomes more focused on non-virgin sources, thereafter prioritising regenerative materials. The emphasis is on prolonging the life and utility to be gained from products. This shifts the focus from expiry-bound consumption to ongoing use. The circular economy also diversifies the ways we transact – from individual ownership to shared ownership or rental (product-as-a-service).  The Whole of Government Circular Economy Strategy 2022–2023: Living More, Using Less, the first of its kind in Ireland and the Environmental Protection Agency’s Circular Economy Programme 2021–2027, both launched in December 2021.  These are core to the Irish Government’s drive to achieve a 51 percent reduction in greenhouse gas emissions by 2030 and to reach net-zero emissions by no later than 2050. A Circular Economy Bill is also in development.  Similarly, the EU is enabling the circular economy as part of the European Green Deal, adopting a new circular economy action plan (CEAP) in March 2020.  This action plan introduces both legislative and non-legislative measures aimed at facilitating the transition to a circular economy, including the establishment of the European Circular Economy Stakeholder Platform for sharing and scaling up the circular economy. Examples of businesses successfully applying circular principles include MUD Jeans, which offers a discount on the next purchase or lease for each pair of end-of-life jeans returned, recycling the returns into new jeans, eliminating waste, and using 92 percent less water in production.  Locally, the Rediscovery Centre in Dublin is the National Centre for the Circular Economy in Ireland. It hosts four up-cycling social enterprises in fashion, furniture, bicycles, and paint, as well as an Eco Store, and provides various educational offerings. Traditional businesses are also increasingly incorporating circular elements. Harvey Norman, for example, is offering preowned, refurbished phones. Holistic view While the traditional economy has a limited singular focus on the point-of-purchase, many of the alternative economy models, such as social and circular, take a more holistic view and can recognise and pursue multiple goals simultaneously.  Such models reflect the complexities of our environment, including the challenges of climate change, and intrinsic value, more accurately. These alternative ideas are also more dynamic. They can be combined with one another and enable better designed, more resilient outcomes.  Greater care is taken in defining what an organisation does as well as how it does it, generating more equitable outcomes by holistically considering impact, and providing greater long-term efficiency in synthesising society’s needs and the management of scarce natural resources.  In doing so, these alternatives better address critical unpriced externalities and offer ways to change our current self-destructive trajectory. Our traditional economy appears to focus on scarcity of value, durable efficiency, and resources, while the alternative economy models focus on their regeneration and restoration.  These alternative ideas offer fundamentally different approaches in how value is created, measured, and maintained, and are better suited to the holistic and inclusive economy needed by current and future generations. Kate van der Merwe, FCA, is a Sustainability Advocate and member of the Institute’s Sustainable Expert Working Group.

COVID-19 has changed the face of banking globally, but what’s next? Billy O’Connell delves into the top 10 emerging trends shaping banking this year. The COVID-19 pandemic has irrevocably changed the banking industry. Customers have become more demanding on multiple fronts - from service fees to sustainability - banks have doubled down on technology, accelerating their innovation drive, and new entrants to the market have become more ambitious, broadening the scope of services they offer. Here are the ten trends most likely to impact banking globally and locally in the months ahead.  1. Everyone wants to be a ‘super-app’ Just as the smartphone consolidated our hardware needs within a single device, super-apps are consolidating many of our retail, social and other needs.  Most digital banking consists of checking balances, paying bills, and making deposits — functionality more and more big technology players are incorporating into broader platforms alongside other services like commerce and social networks.  How should traditional banks respond when faced with the expansion of Amazon, Meta, and others into financial services?  They can try to add non-banking functionality to their own services and compete head-to-head for customer attention or partner with a super-app to provide white-label services. A third option is to wall themselves off from the fray and defend their traditional franchise.  2. Green gets real Investors and regulators will need to see environmental promises being delivered as they urge financial firms to become better stewards of the planet.  Proposed rules will require independent verification, proving that banks are living up to their claims. They will face immense pressure to redirect credit away from carbon-heavy companies toward sustainable energy.  In Ireland, lending has become increasingly ‘green.’ The main financial institutions are evolving their product offerings, focusing on supporting environmentally-friendly economic activity. These products make a real difference as they actively guide consumers towards a change in their behaviours.  3. Innovation makes a comeback Globally, the decade after the great financial crisis was a period of retrenchment in which many banks pulled back from introducing new products and focused on getting the basics right. Start-ups and digital challengers have emerged, with new offerings leveraging innovative solutions to target specific customer pain points.  The growth of Buy Now Pay Later (BNPL) providers is an example of this. However, banks are fighting back with creativity. Irish retail banks have invested significantly in the last five years in technology and innovation projects to deliver new digital services for customers.  We are seeing this in product innovation across the board – in the introduction of fully digitised customer journeys for personal lending and mortgages, instant account opening, data analytics and new digital capabilities to support SME lending.  During the pandemic, we saw retail banks improvising and innovating at speed as they leveraged their technology investments to respond with creativity and agility to the new challenges. 4. Fees Over the last several decades, banking fees have shifted from regular charges for services like account maintenance to in-built fees for facilities like overdrafts.  Fintech firms arrived, promising an array of services for the magical price of free, only to reveal later that revenue must come from somewhere.  Banks are creating features that put the users in charge of fee decisions. Fortunately, digital, AI and cloud capabilities are converging to provide the perfect platform for personalised advice that will help build consumer trust and involvement. 5. The digital brain gets a caring heart Before and during the pandemic, banks continued to invest heavily in digital technology to make banking more accessible, faster, and efficient. However, it is more difficult than ever to win customer loyalty.  Banks realise they have much to gain by learning to better understand and respond to customers’ needs and individual financial situations. Being well-positioned to meet customer needs through the challenges of the past 24 months has been important for banks and customers who needed their support.  Building on this momentum and focusing on AI and other technologies will be important to help banks predict customers’ intent and respond with more tailored messages and products. 6. Digital currencies grow up Several central banks worldwide are now launching digital currencies, and more are thinking about it. These are accompanied by maturing regulations around cryptocurrencies and a recognition that, while decentralised finance (DeFi) may still be in the experimentation phase, many of the core concepts of decentralised trust will likely have enduring value.  We will likely see more financial institutions and government agencies sharing data and ideas on how to incorporate aspects of this new type of money into the global financial system.  According to the Competition and Consumer Protection Commission (CPCC) research, one in ten Irish investors (11%) held crypto assets or cryptocurrency like Bitcoin in 2021. The number jumps to one in four (25%) for those aged between 25 and 34, indicating the appetite amongst younger generations in Ireland for digital money.  7. Smart operations put zero in their sights In 2022, banks will apply artificial intelligence and machine learning to back-office processes, enabling computers to outperform humans in some tasks. This will, eventually, decouple bank revenue from headcount.  Banks have made incremental efforts to streamline their operations at a global level. These new technologies, along with the use of the cloud and APIs, can accelerate their efforts well beyond small efficiencies and toward the long-held dream of ‘zero operations’ where waste and latency are eliminated.  8. Payments: anywhere, anytime and anyhow Getting paid and sending money are now anytime, anywhere features we’ve come to take for granted. The next step in this payment revolution is for these networks to open up. China has already demanded that internet companies accommodate rival payment services. At the same time, proposed legislation in India would force digital wallets to connect and mandate that merchants accept payments from all of them.  Banks with payment offerings will have to compete and cooperate with rival banks, fintech, and other players as the world of networks opens up. We’ve seen this gathering momentum locally, with AIB, Bank of Ireland, KBC, and Permanent TSB coming together on a joint venture to create a real-time payments app. The continued investment highlights the desire to evolve in response to customer needs and compete with digital challengers, such as Revolut.  Customer trust is an essential factor in driving success in the financial services industry. If the banks can give consumers the digital functionality they crave, alongside reliability and service, they could leapfrog their challengers. 9. Banks get on the road again Just as individuals are relishing getting out from under pandemic travel restrictions, banks too will go wandering in search of growth both at home and abroad. In Ireland, we’re already seeing M&A activity from the core banks, causing a seismic shift in the entire landscape.  This includes Bank of Ireland’s takeover of the capital markets and wealth management divisions of Davy stockbroker and its purchase of KBC’s loan book; AIB’s acquisition of Goodbody Stockbrokers and its JV with Great West LifeCo; and Permanent TSB’s purchase of Ulster Bank’s loan book.  10. The war for talent intensifies Figures released from The Workhuman Fall 2021 International Survey Report indicated that almost half (42 percent) of Irish employees plan to leave their jobs over the next twelve months.  As technology has become a critical enabler for banks, a much-publicised shortage of engineering, data and security talent presents a real challenge. Younger workers, in particular, want flexibility and to be valued in their jobs.  Forward-thinking banks are developing integrated plans that holistically address their work and talent issues. They’re mapping the skills they need now and expect to need in the future and are using a variety of approaches to recruit and retain them. They are also re-assessing their structure, culture, and work practices to improve their appeal as employers.    Time for a different approach Decades from now, the most successful banks will be those that continuously shape their businesses to the needs of customers, employees, and other stakeholders. Their greatest asset will be their ability to identify opportunities and innovate efficiently.  Billy O’Connell is Head of Financial Services business at Accenture Ireland.

Mairead McGuinness, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, talks to Elaine O’Regan about her role in implementing sanctions to stop the “Kremlin war machine”, her ongoing contribution to the future of sustainable finance  and her role in laying the foundations for the Capital Markets Union. You’re 18 months into your role as EU Commissioner. What do you see as your most important achievements so far, and what are your priorities now? I am responsible for sanctions and their implementation by the Commission and this is top of my agenda right now, given the terrible war in Ukraine and the need to respond to Russian aggression. We want to cut off funding to the Kremlin war machine.  We’ve listed hundreds of individuals, including Vladimir Putin, his Foreign Minister Sergey Lavrov and dozens of oligarchs, which means their assets are frozen. They can’t be provided with funds, and they are also subject to travel bans.  We’ve cut Russian access to EU capital markets, including a full asset freeze on three Russian banks with strong links to the Russian state, excluding seven key Russian banks from Swift, and blocking Russia’s EU-held foreign exchange reserves.  We also have measures on energy, transport, dual-use technologies, trade, visas for diplomats and disinformation. And, we have sharpened sanctions against Belarus, so it cannot be used by Russia to evade our sanctions.  At the same time, we’ve been working closely with our partners, including the US, Britain, Canada, Australia, Japan and others, to impose comprehensive and complementary measures that ensure Russia’s illegal actions bear a high cost. The focus now is on making sure that the sanctions are properly implemented so they are as effective as possible – and we stand ready to put more sanctions in place as the situation evolves. Beyond this, over the past 18 months my work on sustainable finance and the contribution of finance to tackling climate change has been important, as well as work on building up the Capital Markets Union to give companies across the EU better access to finance.  I’m also passionate about using my role to highlight the importance of financial literacy. People should understand how the financial system works, how they can make the best use of their money, and be confident enough to ask the right questions about their personal finances. The Ukraine invasion has placed energy supply at the forefront of the EU agenda. How do you expect the situation in Ukraine, and its impact on the flow of energy supply globally, to influence the policy initiatives laid out in the EU Green Deal?  Russia’s aggression against Ukraine makes a rapid transition to clean energy more urgent than ever. We’re too dependent on Russian gas. We must have a reliable, secure, and affordable supply of energy for Europe.  We already have the Green Deal indicating where we need to go, but Russia’s aggression has brought into very sharp focus our vulnerabilities and why we need to accelerate the transition to a more sustainable economy.  The Commission adopted a plan in March – REPowerEU – with new ways to ramp up green energy production, diversify supplies, and reduce demand for Russian gas.  The financial system has a key role to play in the Green Deal. The goal is both “to green finance” and “to finance green” to help the financial sector become sustainable and to make sure that the financial sector provides the money for business to become sustainable.  We’ve put clear and consistent rules in place, namely the EU Taxonomy, a disclosure regime for non-financial and financial companies; and investment tools, including benchmarks and standards like the European Green Bond Standard.  We are now increasingly moving to the implementation phase to make sure these rules are effective.  How far along is the Taxonomy at this point, and what are the next steps in the pipeline for the year ahead? What do companies operating in the EU need to know? The Taxonomy helps signpost the way for private investment to contribute to our climate goals: it provides clear definitions for sustainable economic activities. Companies can use it to plan their transition and to show the market what they are doing.  Last year, we adopted the first rules on activities that make a substantial contribution to adapting to and mitigating climate change.  They cover 170 economic activities, representing about 40 per cent of listed companies in the EU, in sectors responsible for around 80 per cent of direct greenhouse gas emissions in Europe.  The rules are applicable from January 2022. We have also specified how market players should disclose the extent that their activities are taxonomy-aligned. We’ve put forward proposals for how gas and nuclear can make a contribution to the transition to sustainability. We have not designated gas and nuclear as “green”, but we have recognised the specific role certain nuclear and gas activities can play in the transition to full sustainability, subject to very strict conditions and phase-out periods. This proposal is now under scrutiny by the European Parliament and the Member States. We have work to do on including more sectors in the Taxonomy and we will be preparing details on the four remaining environmental objectives – water quality, circular economy, biodiversity, and pollution prevention. The International Sustainability Standards Board (ISSB) is expected to put its first set of standards to public consultation later this month. How do you foresee the EU Commission working with the ISSB to progress the wider ESG reporting agenda?  The EU has been the global leader on sustainable finance. We are ahead when it comes to the contribution of the financial system to tackling climate change. So, we’ve gone further than others, and we’ve done that faster – which is important given the urgency of the climate challenge. But, of course, the climate challenge is global, and markets are global too. So, we are fully engaged in efforts on global standards. EU sustainability reporting standards have shown the way, to a great extent, and informed the international context.  We see global standards as a common baseline that allow us to go further to meet the ambition set out in the EU Green Deal.  At a practical level, the body that drafts EU accountancy and sustainability standards – the European Financial Reporting Advisory Group (EFRAG) – has established close cooperation with the ISSB. The CSRD proposal – and the reporting standards that will be part of it – will ensure that corporates disclose sustainability information that underpin the rest of the sustainable finance agenda.  EU standards must be coherent with the EU’s political ambitions and with our existing framework for sustainable finance, including the Taxonomy and the Sustainable Finance Disclosure Regulation.  From the beginning, EU standards will cover all ESG topics under a double materiality perspective – companies will have to report about how sustainability issues affect them and about their own impact on society and the environment.  In contrast, the standards set by the ISSB only look at risks to companies, but not at the impact of companies, and in the first instance they are focusing on climate.  EU standards will build on and contribute to global standardisation initiatives. We should build on what exists, and seek as much compatibility as possible, while also meeting Europe’s specific needs. At the recent IIF Sustainable Finance Summit, UBS Chairman Axel Weber said “banks can be a facilitator of channelling money into the right uses for a carbon transformation of the economy, but it’s not a banking issue.” What’s your take on this stance? All financial institutions, including banks, but others too, need to play their part in the transition to climate neutrality and improve their environmental performance as part of their financing, lending, and underwriting activities.  Financial institutions should integrate EU sustainability goals into their long-term financing strategies and investment decision-making processes.  We will help them accelerate their contribution to the transition, by reinforcing science-based target setting, disclosure and effectiveness of decarbonisation action, but also monitoring the financial sector’s commitments. The Corporate Sustainability Reporting Directive (CSRD) is being viewed as a crucial step in bringing sustainable reporting on par with financial reporting. It will require assurance on non-financial statements, however. Who do you foresee this responsibility falling to? The CSRD proposal requires statutory auditors to give an opinion on sustainability reporting – the idea is to ensure that the sustainability information disclosed is credible.  This will require statutory auditors to have the necessary skills in the assurance of sustainability reporting, helping to ensure that financial and sustainability information is connected and consistent.  We are mindful of the potential risk that the audit market could become even more concentrated, however. That’s why the proposal allows Member States to accredit independent assurance service providers to verify sustainability reporting. The proposal for the EU Green Bond Standard was published by the European Commission in July 2021 as part of the Strategy for Financing the Transition to a Sustainable Economy. Tell us about this proposed regulation.  Green bonds offer a great opportunity for financial markets to directly support the transition to a climate-neutral economy. They bring issuers reputational benefits and sometimes also a lower cost of funding.  They give investors transparency about how companies allocate their money. So green bonds make business sense as well as climate sense — and the market is booming. Last year, after many years of on average 40 percent growth, issuance increased by another 65 percent compared to the previous year.  However, there are some challenges. As new issuers enter the market, there is less consensus on what is green. This means more effort for issuers to prove their green credentials, and more work for investors to check them.  Companies acting as external reviewers of green bonds help investors navigate this complex landscape, but the wide range of methodologies they use can also be a source of confusion.  That’s why in July 2021, the Commission adopted a legislative proposal for a European green bond standard, as part of its work to guide investors towards greener investments. The overall aim is to create a new gold standard available to all green bond issuers on a voluntary basis.  While building on market best practice on reporting and external review, this standard would add two important new elements. First, full alignment with the EU Taxonomy, to ensure that funds raised by these bonds are spent on economic activities that are sustainable. Second, supervision by ESMA of external reviewers that provide opinions on the alignment with the standard.  There is already a lot of interest from both issuers and investors. But, in the end, success depends on whether we keep the environmental ambition high, and the unnecessary burden on issuers low. Negotiations are ongoing in the European Parliament and the Council, and we are hoping that an agreement can be reached as soon as possible.   You recently indicated that a bill to introduce a digital euro may be tabled in the EU in early 2023, providing a legislative framework for the ongoing work of the European Central Bank on a digital version of the euro. What are the potential benefits of introducing this digital euro? A digital euro would be to complement cash – which remains vital – and other means of payment provided by the private sector.  A digital euro would provide a digitalised form of money backed by a central bank, which would be designed to allow everyone to use it, from the tech savvy to those excluded by the financial system. How exactly it should be designed to meet those goals is currently being examined.  Other countries are working on or are already issuing central bank digital currencies, and the use of stablecoins is increasing. A digital euro would strengthen the EU’s ability to determine its own course and maintain the autonomy of EU monetary policy.  The digital euro raises challenges, but also opportunities. This is why we are working hand in hand with the ECB and listening to all stakeholders on this key project.  The ECB would be responsible for issuing any digital euro, while the Commission would need to put forward the legislative framework to allow the ECB to do so.  Currently, we are looking at early 2023 to introduce the proposal to give time for the Parliament and EU Member States to work before the ECB would decide how and whether to issue a digital euro. The EU is responding to the need for improved online security for cryptocurrencies with the Markets in Crypto-Assets Regulation and Digital Operational Resilience Act. What do you see as the biggest risks in this area? Unfortunately, the level of operational resilience in the crypto-asset space is not good enough. There are also a lot of hacks and thefts.  The Markets in Crypto-Assets Regulation (MiCA) will bring crypto into the regulated space and will mean that crypto service providers are covered by financial services legislation.  MiCA will put in place consumer protection measures and limit the risk of fraudulent behaviour in the market.  The Digital Operational Resilience Act (DORA) is for the whole of the financial services sector, to ensure ICT risks are better managed by financial companies. When MiCA enters into force, crypto service providers will have to adhere to the highest levels of operational resilience, as they will also be covered by DORA. DORA and MiCA are currently part of negotiations between the EU institutions. 

Russia’s invasion of Ukraine has dampened the global economic outlook, prompting predictions of spiralling price hikes not seen since the 1980s and looming recession. But, is it too soon to predict with any accuracy what really lies ahead? Professor Anthony Foley investigates. After two years of economic uncertainty because of the pandemic, Russia’s invasion of Ukraine, and its associated sanctions, have unsettled our markets once again, lowering projected GDP growth rates and increasing global inflation rates in 2022 and, to a lesser extent, in 2023.  However, the exact scale of the impact is as yet uncertain. It will depend on several factors, including the duration of the conflict, developments in economic sanctions — both in terms of impositions on Russia and its own retaliative measures — and the nature of any possible peace deal.  Together, Russia and Ukraine comprise a relatively small part of the global economy, making up about two percent of GDP internationally. They are important players in the markets for certain products, accounting for about 30 percent of global exports of wheat, 20 percent of corn, roughly 20 percent of fertilisers, 20 percent of natural gas and 11 percent of oil.  Both countries also have substantial uranium reserves and are significant suppliers of the inert gases used to make semiconductors and the titanium sponge used in aircraft manufacturing.  On top of that, Russia is a major supplier of the palladium used in the catalytic converters for cars and the nickel used in batteries and steel, while Ukraine is among the world’s foremost producers of sunflower oil and sugar beet. Mechanisms of the economic impact of war There are several mechanisms through which war has an economic impact. Trade flows are suppressed, hitting integrated global supply chains. The rising cost of commodities like gas, fertiliser and oil upends business cost models and lowers real consumer income.  Even had there been no response from the rest of the world to the Russian invasion, Ukraine would still be unable to maintain existing supplies of products, such as wheat and minerals, to the global market. This alone would result in supply chain disruption and price hikes for certain products.  Uncertainty, in general, suppresses economic growth, muting confidence and lowering consumer spending and enterprise investment — and this is especially true of the current situation in Ukraine. The intervention of the West thus far, through economic sanctions imposed on Russia and Belarus, has increased the economic impact of the war by limiting trade engagement with Russia.  Russia may retaliate against these sanctions by restricting gas supplies or defaulting on sovereign debt, which would further deepen the economic impact.  Energy prices were rising even before the Ukraine invasion, but the war has now accelerated the rate of inflation. Even if a country has no direct trade link with Russia, it will be affected by ongoing global price hikes.  Countries with trade links to Russia will have lower growth rates, curtailing their capacity to trade with other countries – even those with no direct trade links to Russia — triggering further global economic impact. Hundreds of western companies have opted to cut business ties with Russia, even if not required by official sanctions, including big brand names like Coca-Cola, McDonald’s and Nike. In addition, there are implications for the public finances of those countries taking refugees from and sending aid to Ukraine. If a peace settlement is reached, there will then be the cost of rebuilding Ukraine.  Irish trade with Ukraine & Russia Ireland exported goods worth €627 million to Russia in 2021 (just 0.4% of its total exports) and imported goods worth €598.1 million from Russia. In the same period, goods exported to Ukraine totalled €91.7 million, while imports came to €70.2 million.   The imports of goods are dominated by petroleum and petroleum products (€231 million), coal and coke (€140 million) and fertilisers (€134 million). These three imports are 84 percent of total Irish imports from Russia.  The value of services traded with Russia is much higher, however. Ireland’s service exports to Russia were valued at €3,242 million in 2020 (i.e. 1.3% of total service exports). The value of services imported to Ireland from Russia in the same year was €360 million. The main services exported to Russia were computer services (€1,840 million), operational leasing (€926 million), financial services (€81 million) and insurance (€27 million). The main service imports from Russia were business services. Service exports to Ukraine were €647 million in 2020, and imports were €49 million. Impact on economic growth and inflation There is significant uncertainty about the magnitude and duration of the economic impact of the war. However, the OECD, the National Institute of Economic and Social Research in the UK and the European Central Bank (ECB) have all recently attempted to quantify the economic impact.  The OECD estimates that in 2022, the war will reduce global growth by about one percent, from 4.5 percent to 3.5 percent. Global 2022 inflation will increase by 2.5 percent from 4.2 percent to 6.7 percent.   The Euro area economic growth will drop by about 1.4 percent from 4.3 percent to about 2.9 percent. Euro area inflation will increase from 2.7 percent to about five percent in 2022. The estimated impact on the US is almost one percent off the growth rate and 1.5 percent on the inflation rate. The assessment by the National Institute of Economic and Social Research in the UK is a little more optimistic but broadly similar to that of the OECD. Global growth this year may fall by 0.5 percent, while inflation could rise by about three percent.  Next year’s impact will not be as drastic, but it is something to watch out for. In 2023, we will see about one percent less in growth and an added two percent on the inflation rate. Euro area growth this year will fall by 0.9 percent, and inflation will rise from 3.1 percent to 5.5 percent. Euro area growth would be about 1.5 percent lower in 2023, and inflation would be about 0.8 percent higher.  Three economic scenarios The ECB recently undertook a detailed analysis of the economic impact and presented three scenarios (Table 1). In December 2021, the ECB forecast a GDP growth rate of 4.2 percent and 3.2 percent for the Euro area in 2022. These figures were revised in March, following the Russian invasion, to GDP growth of 3.7 percent and inflation of 5.1 percent.  This “baseline projection” assumes that current disruptions to energy supplies and suppressed confidence are temporary and that global supply chains are not significantly affected.  The ECB also produced forecasts based on two more negative but possible scenarios.  The adverse scenario assumes a worsening in all three impact mechanisms of trade, prices and economic confidence. The severe scenario assumes a more significant and prolonged increase in commodity prices, leading to second-round inflation and financial system impacts.  The differences between the severe scenario and the pre-war forecasts here are substantial. The growth rate drops by almost half from 4.2 percent to 2.3 percent, and the inflation rate more than doubles from 3.2 percent to 7.1 percent.  Of course, we do not yet know what the eventual impact of the Russian invasion of Ukraine will be. We can be sure there will be lower growth, and inflation will rise. On the most extreme assumptions, growth could almost halve, and inflation could more than double compared with the forecasts for the Euro area before the invasion. The ECB has also considered the potential longer-term impact of the Ukraine invasion on growth and inflation in the Euro area into 2023 (Table 2).  The news here is relatively positive, in that growth is closer to the ECB’s pre-war forecast of 2.3 percent on the severe assumptions, compared to 2.9 percent in December 2021. The same is true for inflation — 2.7 percent on the severe assumption compared to 1.8 percent in December 2021. Possible economic impact on Ireland Before the Russian invasion of Ukraine, the economy was expected to perform well in 2022. The Stability Programme Update, published by the Department of Finance in April 2021, forecast GDP growth of five percent this year, followed by 3.5 percent in 2023.  Modified domestic demand was expected to grow by 7.4 percent this year and 3.8 percent next. Inflation was expected to be 1.9 percent in 2022 and 1.5 percent in 2023. Up until the invasion of Ukraine, this forecast was expected to be exceeded.  The forecasts underestimated the rise in inflation, however – the October 2021 budget forecast Irish inflation rates of 2.2 percent in 2022 and 1.9 percent in 2023.  Using the relativities of the severe ECB scenario, Ireland might face a growth rate of about 3.5 percent instead of around six percent in 2022 and inflation of eight percent instead of four percent.  The good news is that growth is still likely in Ireland and the Euro area because of the relatively high growth rates before the effects of the war.  Of course, particular sectors face a more daunting situation. Ireland’s aircraft leasing sector has high exposure to Russia, and it is uncertain how this will play out in terms of aircraft recovery.  International tourism was expected to rebound after COVID-19 in 2022, but the war may have a dampening effect, particularly in the case of US tourists. Many enterprises in Ireland have had to pause or end their business activities in, and trade contacts with, Russia. Ireland must now cope with the financial requirements of taking in possibly 100,000 Ukrainian war refugees. However hard this may be, consider the position of Poland with millions of refugees to support. The major immediate economic problem is the very high inflation rate to which the war has contributed but is not entirely responsible. How will consumers and producers cope with the price increases? To what extent can the Government shield households from the effects of rising energy prices?  It is already clear that the economic impact of the war is substantial, and the scale and duration of the impact are still unclear, but, as of now, we should be able to avoid recession. Over the longer term, the economic impact will depend on whether there is a return to the pre-war normal (which is unlikely) and what the new normal will be in terms of trading blocs, continuing sanctions, higher defence spending, cyberwar, political tensions and bank payment systems. Anthony Foley is Emeritus Associate Professor of Economics at Dublin City University Business School.

Dee France, Member & Student Support and Well-being Lead, explores why students use the hub and what they can do to support their own mental health.  Being an accounting student is challenging. You have to contend with work, lectures, study, the pressure of exams and new ways of learning in a remote or hybrid working world. At the same time, you may be experiencing personal obstacles. Over time, these duties and responsibilities combined can give rise to sustained pressure, to the detriment of your well-being.  Why do people need help? Our lives and past experiences shape us, affecting our mental health, and the factors that can cause a decline in our well-being differ for everyone. Students come to us for help for various reasons, but the primary motivators tend to centre on exam pressure and stress, workplace grievances, poor work-life balance, and other personal circumstances, such as illness, grief or family and relationship matters. In 2021, we witnessed a significant increase in the number of students contacting Thrive for help.  Most seek support during study leave or exam periods. It is encouraging to see so many take the brave and difficult step to seek help, but earlier intervention in the student journey is important. We want to help prevent students from becoming too overwhelmed and offer support before they falter under the pressure and demands.  Numerous factors can negatively impact our mental well-being. Some we can control. Here are five steps you can take yourself to help your mental health: 1. Nourish your mind and body  Good nutrition and regular physical activity can offset and relieve stress and feelings of anxiety. Simple things like staying hydrated, reducing caffeine intake, and walking in nature can help. 2. Rest The power of sleep in helping to regulate our stress levels should not be understated. Stress and anxiety can lead to sleeping problems, and a lack of sleep can affect your general well-being.  3. Practise mindfulness and meditation  Practising mindfulness allows you to become more aware of your emotions and help manage them. Mindfulness can become a valuable tool for easing stress and anxious thoughts with regular practice.  4. Engage in self-compassion and self-care  Be kind and encourage yourself. Being hard on ourselves is an all-too-common pattern. Self-compassion is the ability to treat yourself with the same care and kindness as you would a good friend who is going through a difficult or stressful time. Developing compassion within ourselves can help us cope with adversity and make difficult situations more manageable.  5. Seek out professional services, like Thrive  How we feel can become all-consuming. If you are struggling, the best thing you can do for your mental health and well-being is to reach out and talk to a professional. Seeking professional support can help you manage stress and poor mental health.  The Thrive well-being hub provides a comprehensive mental health and well-being programme that offers a wide range of services tailored to our students’ well-being. All services are delivered in complete confidence and are available at any stage of your journey with the Institute.  For more advice or information, check out Thrive’s dedicated well-being hub. Alternatively, you can contact the well-being team by email at: thrive@charteredaccountants.ie or phone: (+353) 86 0243294.

John McNamara explains the purpose of the Institute’s new LGBTQ+ allies network group, why it’s essential and what it hopes to accomplish for the profession. Being involved in BALANCE, the Institute’s new LGBTQ+ allies network group, feels a little like pushing an open door. My time on the Institute’s Diversity and Inclusion (D&I) committee has already shown me two things: the progress we are making and all the potential we have yet to realise.  Where it began – the diversity journey The Institute’s first Diversity committee was formed in 2016 and has since become the Diversity and Inclusion committee, an increasingly active group whose remit is to promote a culture of diversity and inclusion, both within the Institute and among our stakeholders.  The committee actively seeks input from both members and students. We want to ensure that we continue to accurately represent their voices across all touchpoints in the profession. We engage with the Institute’s members, students and staff on dedicated events around Pride and International Women’s Day, for example, but we also work to create resources like webinars, podcasts and articles so we can help to inform and educate.  What we do is aimed as much at you, our students, as it is members, staff, and the firms we engage with — and we encourage you to get involved!  Your involvement matters. We believe this passionately, and we are working continually to increase your awareness of the committee and determine how best we can engage with you. You are at the gateway to your future profession, and your perspectives and actions have the power to enact change and shape our future. Don’t forget this. In all our social and professional interactions, we will inevitably fall into one of two categories – the majority or the minority. Which category we find ourselves in will change from one day to the next and from meeting to meeting.  In one scenario, we might be the only person in the group of a particular profile. In another, we might be viewed as part of the majority. Whether we are in the majority or the minority, we need to be visible to the other to achieve our aims so that we might understand one other.  BALANCE Network Group Every aspect of society is multifaceted: schools, homes, businesses, governments… everything. This creates diversity, richness, and, yes, sometimes complications and challenges. Because of these complications and challenges, we need committees and other groups like BALANCE. I joined BALANCE last year when the committee was formed. I firmly believe diversity and inclusion is something we all need to be aware of and engage with, whether as an active participant or as an ally and colleague. We can raise our own voices and support others to raise theirs by getting involved. BALANCE: our purpose Simply put, BALANCE exists to promote awareness of LGBTQ+ inclusion. We want to encourage visibility and ensure students and members can be their authentic selves during their studies and in their workplace. We want to build and strengthen relationships with our LGBTQ+ allies who work to ensure that the LGBTQ+ perspective is represented at all tiers.  We know the value of inclusion in personal and professional development, and we want to achieve the same sense of inclusion on behalf of everyone. We are more aware of this now than ever as we emerge from the COVID-19 pandemic.  BALANCE wants to make Chartered Accountancy a career choice for the LGBTQ+ community by saying, “there is a place for you here”. And, of course, we want to make sure that, as a career path, it is thoroughly enjoyable for all.  We all know that networking is a professional ‘must’ these days, and it can be a lot of fun. We hope our events will be engaging for all who participate, whether as attendees, speakers, or organisers. Why we need BALANCE Recent research from Chartered Accountants Ireland found that 62 percent of its students feel accountancy is open to all, and 59 percent see it as an inclusive profession. This suggests the profession is in a positive place. However, there is still a lot to do to push that dial closer to greater accessibility and openness.  Having a network like BALANCE can help members and students become more empowered in themselves, foster inclusivity within their workplaces and personal lives. Visibility is key. Having the confidence to speak as an LGBTQ+ staff member or advocate for your LGBTQ+ colleague means that we can all go into our next interaction with confidence that we will be accepted and respected, and trust that our colleagues will have the same experience.  However, the data from the Chartered Accountants Ireland survey found just 16 percent of students were aware of the D&I committee, and further responses showed reasonably low awareness of specific initiatives, like Pride and International Women’s Day events.  We want students to be involved in both the Institute’s Diversity and Inclusion committee and BALANCE itself by planning activities and creating resources that are effective, appropriate and capture attention. Having been an LGBTQ+ student myself, I know how daunting it can feel to put yourself out there. The committee aims to make you feel comfortable doing that, whatever your role in this community. And, there are lots of ways to get involved. What you can do You should participate in whatever way you feel comfortable. Personally, I got involved because I strongly believe that we need to support the ethos of equality and that the Institute is ideally placed to promote and perpetuate this. I am proud to be the committee’s first chair, and I am excited to work with committee members towards our aims to encourage a sense of belonging, mobility and diversity among our current LGBTQ+ members and students — and, indeed, our students of the future. If you would like to join the committee, we would love to hear from you. Equally, if you want to suggest an area of focus, an activity or resources you feel our audience should have access to, please get in touch. When we came into being as a committee, we immediately started receiving enquiries from people wanting to know how they could get involved, or reached out to wish us good luck and share supportive comments. It is very heartening to know that we have been noticed even at this early stage.  Our launch event on 25 February was a great success, and I’d like to take this opportunity to thank our panel who participated in a lively discussion on the day: Tiernan Brady, Sinéad Donovan, Aisling Gannon and Michael J. Walls. We were so pleased to welcome RTÉ’s Audrey Carville as moderator.  The future of BALANCE We are all encouraged by the success of our recent launch event, and we are looking forward to working with the Institute to drive our agenda forward. We are engaging with the broader Diversity and Inclusion committee, CA Support, Thrive wellbeing hub, Education and Careers teams, and others — and we will continue to engage with you.  I encourage you to look at our web page to find out more about BALANCE, access links to resources you may find helpful and see what events we have coming up. Most importantly, you will find our contact information. Please do get in touch if you have any questions or suggestions.  You can contact BALANCE by email at diversity@charteredaccountants.ie. We’d love to hear from you. John McNamara is the Managing Director of Canada Life International Assurance. 

Richard Howard and Ryan Mathers share their insights on the cloudy topic of accounting for software-as-a-service costs. Accounting for software costs has traditionally lagged behind technological developments, so it is little wonder that there is some uncertainty around accounting for cloud computing costs. A recent International Financial Reporting Standards Interpretations Committee (IFRIC) agenda decision on cloud computing costs, while employing a sound decision-making framework, gave an answer at odds with the perception of many financial statement preparers. Before IFRS, we had FRSs, and FRS 10 set out that software that made a computer productive was classed as a fixed asset. Software was viewed as an integral part of the hardware. This standard was introduced in 1997, when software was only beginning to become a differentiated product from the computer or server it sat on. Even at this early stage, accounting standards lagged what was happening in practice. We have recently seen the move to cloud computing and software-as-a-service (SaaS). To illustrate the importance of cloud-based expenditure to the global economy, a Gartner survey from October 2021 estimated global IT expenditure of $4.47 trillion. Hardware constituted 18% of this spend, with the remainder spent on software, communications and data centres. Most of that will be spent on implementation and ongoing services for cloud-based software, cloud-hosted data, infrastructure as a service, and platforms. We have seen two recent IFRIC decisions on the topic of SaaS. The first agenda decision, published in March 2019, concludes that SaaS arrangements are likely to be service arrangements rather than intangible or leased assets. This is because the customer typically only has a right to receive future access to the supplier’s software running on the supplier’s cloud infrastructure. Therefore, the supplier controls the intellectual property (IP) of the underlying software code. On its own, many would see this as a logical conclusion. The second agenda decision, published in April 2021, deals with specific circumstances concerning configuration and customisation costs incurred in implementing SaaS. In limited circumstances, certain configuration and customisation activities undertaken in implementing SaaS arrangements may give rise to a separate asset where the customer controls the IP of the underlying software code. For example, the development of bridging modules to existing on-premises systems or bespoke additional software capability. In all other instances, the IFRIC agenda decision is that configuration and customisation costs will be an operating expense. Accordingly, they are generally recognised in profit or loss as the customisation and configuration services are performed or, in certain circumstances, over the SaaS contract term when access to the cloud application software is provided. The March 2019 decision largely endorsed what was general practice. Companies were receiving a service over a period, and companies agreed with the substance of that. The April 2021 decision, however, has been heavily debated. In discussions with many preparers of financial statements, few have agreed with the decision. While CEOs are talking about their digital transformation, this IFRIC decision tells the CFO how to account for the up-front configuration and customisation of that digital transformation, which in most cases is to expense it as incurred. This is at odds with a simple view expressed by many that the benefit of these costs accrue over a period, so why would they not be capitalised? The April 2021 decision, however, is based on various principles that, in aggregate, gives a decision at odds with the view of many CFOs. To understand their decision, it is helpful to summarise the difference between on-premise software and software as a service (see Table 1). In March 2019, IFRIC observed that a right to receive future access to the supplier’s software running on the supplier’s cloud infrastructure does not, in itself, give the customer any decision-making rights about how and for what purpose the software is used. Nor does it, at the contract commencement date, give the customer power to obtain the future economic benefits from the software itself and restrict others’ access to those benefits. Consequently, IFRIC concluded that a contract that conveys to the customer only the right to receive access to the supplier’s application software in the future is neither a software lease nor an intangible software asset, but rather a service the customer receives over the contract term. Some scenarios were set out where the SaaS expenditure may meet the criteria for being an intangible asset, including where the customer is allowed to take ownership of the asset during the contract or where the customer is allowed to run the software on their own hardware (consistent with FRS 10 in 1997!) The April 2021 decision led on from this train of thought, which can be summarised as: “If you incur expenditure connecting your business to a cloud-based solution, you do not own that asset. As it is not your asset, you cannot capitalise costs you incurred in customising or configuring that software.” So, the question arises: are there any scenarios where an entity may capitalise configuration and customisation services? The simple answer is yes, and this occurs when the entity can control the software. For example, this may arise where the customer has the right to keep the software on-premise on their own servers or behind their own firewall. For on-premise software, the activities likely represent the transfer of an asset that the entity controls because it enhances, improves, or customises an existing on-premise software asset of the entity. While IFRIC only discussed configuration and customisation activities of implementing a SaaS arrangement, the full SaaS implementation includes various activities. Table 2 illustrates some examples (not all-inclusive) of typical costs incurred in SaaS arrangements and the likely accounting treatment of each. Practical implications Beyond complying with IFRIC’s meeting agenda decision, there are some considerations for the many companies who have undertaken, or are undertaking, SaaS implementation projects: IAS 8 requires an entity to retrospectively apply an accounting policy change as if the entity had always applied the new policy. Companies may need to determine if they have capitalised costs that IFRIC may suggest should not have been capitalised and if this impacts comparative periods. Budgetary decisions may have been made based on digital transformation projects being largely capital in nature. However, with such costs now being expenses, it may impact performance when reviewed against budget or external forecasts. Some banking covenants contain EBITA or capital expenditure requirements, so the impact on covenant compliance may need to be assessed. Conclusion Interestingly, while the IFRIC Committee agreed with the interpretation from April 2021, out of the 19 comment letters received, only five respondents agreed with the analysis and conclusion. This would suggest that many see an issue with practicality in the decision. Many companies we have spoken to point to the long-term benefit of such costs as the reason they view capitalisation as the appropriate route for configuring and customising software. Others have cited that it is an upgrade on the previously on-premise capitalised costs, hence appropriate to capitalise. As we continue to use assets such as SaaS or other cloud-based solutions, it will be interesting to see how GAAP develops to recognise that software and hardware are no longer interdependent. Other topics such as accounting for open-source software development, open network cooperation, and platform arrangements will be interesting when they become material in the business world. Richard Howard is a Partner in Deloitte’s Technology, Media and Telecommunications industry group. Ryan Mathers is a Manager in Deloitte’s Technology, Media and Telecommunications industry group.

Professor Anne Marie Ward and Professor Niamh Brennan, both Chartered Accountants, make the case for diversified accounting faculties with a healthy proportion of accounting academics who are professionally and doctoral qualified. The accounting profession comprises three pillars: research, policy, and practice. Rigorous research should inform policy, which leads to best practice. Accounting faculties in higher education institutions can foster links between the three pillars. They prepare students for entry to the accountancy profession; hence, they have the potential to influence future practice. They also undertake research that can inform policy, including regulation of the profession, standard-setting, accounting education, and ethical approaches. What is the problem? Some argue that accounting education is too focused on techniques, rules, processes, and procedures, with insufficient focus on the ethical implications of accounting and its role in the economy and society. Some also argue that accounting research is too academic, unrelated to accounting practice and hence has little impact on policy formulation. In academic circles, this is referred to as the ‘theory-practice gap’. We believe that having a healthy proportion of accounting academics with both a professional qualification and an academic qualification (i.e. PhD) within accounting faculties can help resolve these problems. As these individuals have experience in practice, they can better inform student learning. In addition, they are best placed to identify research areas that would benefit the profession. Unfortunately, however, the proportion of professionally trained and research-trained academics within accounting faculties across the globe is dwindling due to retirements and a dearth of accounting doctoral graduates. University ranking metrics have not helped. For example, recruitment policies in the UK since the 1980s have largely ignored the professional accountant pool due to pressures from higher-education performance metrics. Research scoring systems, such as the UK Research Excellence Framework, feed into university rankings and influence university funding. Consequently, university managers focus on recruiting individuals with PhDs who are more likely to achieve the research outputs required to enable the university to move up the rankings and optimise funding. Therefore, there has been a shift to recruiting PhD graduates from other disciplines, for example economics and engineering, to accounting posts because of a lack of accounting doctoral graduates. However, these individuals are not equipped to service technical accounting subjects. Thus, university managers employ non-research trained professional accountants as teaching associates/part-time lecturers to service professionally accredited modules. As a result, accounting faculties in some universities comprise two cohorts: those academically trained (i.e. PhDs) and those professionally trained and qualified (e.g. Chartered Accountants). This dichotomy is concerning for the future of accounting as an academic discipline, as it serves to widen the gap between theory and practice. Indeed, academics argue that the future of accounting as a separate academic discipline is at a crisis point, with accounting departments increasingly seen as service providers (‘cash cows’) that help to finance other academic subject areas, as opposed to being a premium academic subject in its own right. International interventions Accounting profession representative bodies and policymakers in the US, England and Wales consider it strategically important to retain accounting as a quality academic subject area that actively produces research to inform accounting policy and practice. To this end, they have implemented strategies to reduce the shortfall of academically trained professional accountants. For example, the American Institute of Certified Public Accountants’ (AICPA) Accounting Doctoral Scholars (ADS) programme manages the largest investment ever made by the accounting profession to address the shortage of accounting faculty members (www.adsphd.org). This started in 2008 when accounting firms, state CPA societies, the AICPA Foundation and others invested over $17 million in the programme. By 2020, this funding had helped more than 100 CPAs transition into academic careers. In the UK, the Institute of Chartered Accountants England and Wales, (ICAEW) Livery Charity provides four grants every year to successful ICAEW members who decide to pursue a career in academia and undertake doctoral studies. The total grant is £15,000 per successful applicant and is paid on a pro-rata basis throughout the doctoral programme. The situation in Ireland In Ireland, the links between the accounting profession and higher education institutions are strong and recruitment policies to accounting faculty posts have historically favoured professionally qualified candidates. Thus, most Irish higher education institutions have a diverse mix of accounting academics, including those who are: Both professionally and research trained; Research trained only; and Professionally trained only. This diverse range of backgrounds should foster communion between research, policy, and practice. However, increasing pressure on higher education institutions to meet the performance targets required under university quality ranking systems means that recruitment strategies now favour doctoral qualified candidates. Care is needed to ensure that the dichotomy observed in other countries does not become a feature of Ireland’s accounting faculties. A balance between the three pillars is necessary to ensure that accounting remains an important academic subject in its own right within higher education institutions and not a cash cow that generates income to fund other academic subject areas. Lecturers with both professional and academic skills can serve as a bridge between academia and practitioners and between non-professionally qualified, research-focused academics and teaching associates. Combining the skills of a professionally orientated faculty alongside relevant and high-impact academic research not only prepares students for the future of work as professionally trained accountants, it also contributes favourably to the development of accounting, business, society, and the broader economy. The UK Research Excellence Framework places a premium on research that has impact, where research can be proven to have informed society or business. This is more achievable if accounting faculties include professionally qualified individuals with links to the profession who are also research trained. Research has shown that university managers identify an ideal academic as someone who can produce “rigorous and high-quality research, to teach to a high standard, to fuse academic and professional knowledge and experience, and foster relationships with the wider accounting community”.1 This suggests a market for accounting lecturers that are both professionally and academically trained. Why do professional accountants enrol for doctoral education? Research has not examined what drives professionally qualified accountants, who have an established career, to start again at the bottom rung of the ladder in academia. In response to this gap in knowledge, we addressed two questions in our research: What motivates students to enrol in accounting doctoral programmes? Is there a difference in the motivation of professionally qualified and non-professionally qualified accounting doctoral students to enrol?2 To investigate these issues, we surveyed and interviewed 36 accounting doctoral students enrolled at higher education institutions on the island of Ireland. Of these, 13 were professionally qualified. In total, 14 reasons for enrolling for doctoral education were uncovered. Interviewees reported that their main motivations for enrolling for doctoral education were expectations of a career in academia, enjoyment of research or interest in their doctoral topic, the status of the PhD qualification and work-life balance. In terms of differences, non-professionally qualified doctoral students were predominately motivated to enrol by the pursuit of knowledge and financial rewards. In contrast, most professionally qualified doctoral researchers were initially motivated to enrol because of dissatisfaction with their professional careers. In the main, they felt they lacked autonomy over their work and work-life balance. Autonomy is a key psychological need. When individuals consider that they do not have autonomy over their life, it can affect their well-being and happiness. In addition, about half of the 13 professionally qualified interviewees felt that they did not have a sense of belonging in the profession. Those dissatisfied with their professional career anticipated that an academic career would enable them to have more autonomy over their work and work-life balance. In addition, they were attracted by the status of the PhD qualification, and most interviewees identified that they were interested in researching a topic in depth. A career in academia? We end this article with a call to Chartered Accountants wishing to change careers. If you enjoy learning new things, working independently, and being challenged, you will enjoy research. If you enjoy developing other people, you will enjoy teaching. Finally, if you are ambitious, you will be given plenty of leadership opportunities. Most lecturers are course directors or have other leadership positions from early in their careers. Therefore, if you are considering a career change, why not consider a career in academia? 1 Paisey, C., and Paisey, N.J. (2017). The decline of the professionally-qualified accounting academic: Recruitment into the accounting academic community, Accounting Forum, 14(2), 57–76. 2 Ward, A.M., Brennan, N., and Wylie, J. (2021) Enrolment motivation of accounting doctoral students: Professionally qualified and non-professionally qualified accountants, Accounting Forum, 1–24.  This research was funded by the Chartered Accountants Irish Educational Accountancy Trust, CAIET Grant number 201/15. Full details of our research study are available at the following link: https://doi.org/10.1080/01559982.2021.2001127 Anne Marie Ward FCA is Professor of Accounting at Ulster University. Niamh Brennan FCA is Michael MacCormac Professor of Management at University College Dublin.

In the nearly six years since the UK public voted to leave the EU, negotiators have yet to come up with a plan that meets the needs of both sides with regards to Northern Ireland. Tony Connelly outlines the negotiation issues, the problem with the NI Protocol and what could change in the future. As 2022 gets underway, it is striking to realise that it is nearly six years since the Brexit referendum and a full year since Britain’s formal departure from the European Union (EU). Despite the desires among fervent Brexiteers for a clean break, the past year has taught us that Britain and the EU will remain entangled in each other’s affairs for some time to come. The problem of the NI Protocol The Northern Ireland Protocol remains at the heart of that entanglement. While European capitals are growing weary of the perpetual antagonism over Britain’s departure – including the Irish question – the incoming French Presidency of the EU has made it clear the first step in normalising a post-Brexit relationship is a resolution to the Protocol standoff. The EU’s support for Ireland’s position remains striking. Irish diplomats have always feared that the Irish border question would end up as the “stone in the shoe” – a minor, regional irritation that should not stand in the way of a broader EU–UK relationship. So far, that has not come to pass despite some reliably-sourced occasions where the UK has appealed bilaterally to capitals for a more pro-British understanding of the Protocol. Dublin, indeed, remains alert to the UK’s efforts to place the problems of the Protocol in a broader geopolitical context. In her first detailed remarks on the subject, the UK’s new Brexit negotiator, Liz Truss, specifically linked the Protocol negotiations to conflicts elsewhere. “I believe that the United Kingdom and the EU, as believers in freedom and democracy, are capable of working out a solution which delivers for the people of Northern Ireland,” the Foreign Secretary wrote in the Sunday Telegraph on 8 January. “This will enable us to focus our energies on major external threats – such as Russia’s aggressive activity towards Ukraine – and building our economies following this pandemic.” The EU would undoubtedly like to deepen its strategic relationship with the UK. The UK resisted any attempt to include a treaty-based relationship on foreign and security policy in the Trade and Cooperation Agreement (TCA). However, Brussels would still like one to develop. “There is a common-sense willingness and political will [among member states] to engage with the UK…and having the UK as a partner,” says one EU diplomat. “It’s simply been blocked by the noise of the TCA, the Protocol, and the fact that the Brits say they don’t want to have a formal agreement. I’m not hearing people saying, ‘over our dead bodies’, ‘the Brits have nothing to offer’, ‘Brexit means Brexit’. We were never hearing that.” For now, no such relationship is maturing. The EU invests a lot of energy in its economic and security relationship with the United States, but there is no outline of what a long-term partnership could look like with the UK. London has refused to articulate what it wants, and the EU lacks the tools (the “scaffolding”, as one diplomat puts it) to construct one.  What is the economic damage of Brexit? The COVID-19 pandemic has obscured the true economic impact of Brexit, and that means it is hard to predict.  1 January 2022 saw the full introduction of customs checks and controls on EU goods entering the UK, meaning a more realistic picture of trade friction will emerge, but it is not fully apparent yet. “As the UK starts phasing out all of its derogations and starts actually implementing checks, we will see how things bite and the impact that will have on trade flows,” says one EU official. “As the pandemic starts to lift and people start to travel again, that will be the moment that the penny really drops: just what is the damage here?” The UK has exempted goods from the Republic of Ireland from its new checking regime. This is good news and bad news: while it keeps trade – especially the agri-food trade – flowing, it has caused frustration for many companies that have invested heavily in preparing systems and training staff. Many Irish companies have been looking beyond the UK, not least because of the uncertainty about London’s intentions. Irish food, drink and horticultural exports to other markets have increased. Although exports to the UK are still significant (Bord Bia recently reported sales worth €4.4 billion or 33% of total export value), there was a 9% decline in volume between January to October 2021 compared to the previous period in 2020. This was partly due to stockpiling in late 2020; however, it also suggests that food exports to the UK will suffer. The big concern is the requirement for UK export health certificates on Irish beef, cheese, lamb and other valuable commodities, due from 1 July.  Irish companies importing goods from the UK have adapted after a challenging first quarter in 2021. “As companies got used to the new controls, particularly food companies, where they’re having to get their heads around [EU] health cert requirements, month-on-month it’s probably just got better and better,” says Carol Lynch, a partner in BDO Customs and International Trade Services department. The major development of 2021 was undoubtedly the decline of the UK landbridge as the preferred route into Europe (and vice versa) as direct, two-way sea crossings to Europe increased from a pre-Brexit level of 12 to 44 crossings last year. This growth reflects the real-world adaptation by companies. What is harder to predict is Brexit’s overall impact on the island of Ireland economy. The deadlock of the Northern Ireland Protocol means that exporters and importers, and foreign direct investment remain in a holding pattern while the politics remain unresolved. As is so often the case, Ireland is hostage to the internal dynamics of the Conservative Party – the same dynamics which gave rise to the referendum in the first place.  May UK elections and the Protocol Liz Truss has introduced a more cordial style to the relationship with the European Commission, in contrast to the antagonistic approach favoured by her predecessor Lord Frost. The EU delegation warmly appreciated her welcoming of the EU’s chief negotiator Maros Sefcovic to Chevening House in Kent for their first face-to-face meeting. Still, once the pleasantries were out of the way, both sides retreated to well-worn positions on the Protocol. The fact that Truss is a front-runner in any contest to succeed Boris Johnson as Conservative Party leader will undoubtedly restrict her room for manoeuvre. Suppose there is to be a leadership challenge after the May local elections. In that case, Truss will need the support of the hard Brexit European Research Group (ERG) to get into the second round, so she is unlikely to sign up to a deal on the Protocol which does not meet its sovereignty yardstick. For his part, Boris Johnson is launching a raft of right-wing initiatives, from reducing the number of migrant boats crossing the English Channel to freezing the BBC licence fee, to expressly appeal to the kind of Tory backbenchers who have been the most unyielding on the Protocol. This does not bode well for an agreement by the end of February, which the Irish government had recommended to avoid the issue colliding with the Northern Ireland Assembly elections scheduled for May. The UK government, leadership contest or not, will also be determined to ensure that the DUP maximises its vote. Will London play hardball and refuse to compromise on its maximalist Protocol position in order to give the DUP a rallying point? Or, will Truss decide that a quick deal on the Protocol can be dressed up as a win for Jeffrey Donaldson (the Foreign Secretary has not shied away from championing post-Brexit agreements even where the detail does not quite match the hyperbole)? Moving negotiations forward So far, the Protocol negotiations have remained stuck. The UK believes the EU October proposals to ease the burden of the Protocol don’t go nearly far enough, and the EU says they can’t go any further, and certainly not as far as the UK Command Paper.   The EU has dealt with the issue of how to ensure the free flow of medicines (both generic and innovative) to Northern Ireland by reforming its own legislation, so the focus now is on reducing customs and agri-food controls. London believes there should be no checks or controls on British goods clearly destined only for Northern Ireland end-users. In other words, it should be as easy to move goods from Birmingham to Belfast as it is from Cardiff to Glasgow. The UK does accept there should be checks on goods heading for the South via Northern Irish ports (in that sense, London has acknowledged the need for an Irish Sea border). Differentiating the two goods streams should be up to commercial British operators through a trusted trader scheme based on enhanced product line surveillance. The EU more or less accepts this approach in principle, to the extent that Brussels would permit green lanes at Northern Ireland’s ports for such consignments. However, working out the safeguards and reassurances is proving very difficult. Brussels insists a discretionary level of checks on British goods must still happen (even if traders say the goods are staying in Northern Ireland) because a risk-based approach requires it. There must also be strict labelling of individual items to indicate that they can only be consumed in Northern Ireland. In some instances, goods would have to be manufactured according to EU standards. While each consignment would have a smaller number of data lines under the Commission’s proposals, they would be backed up by detailed information – pre-notified electronically – to ensure traceability. Checks would, therefore, be reduced but not eliminated; the UK wants checks eliminated (at least for NI-only trade flows).  The retail industry in Northern Ireland insists that for smaller and medium-sized operators involved in Irish Sea trade, complying with all three requirements – labelling, conformity, pre-notification – would be too expensive or would not be worth the hassle. Frost’s insistence that the European Court of Justice no longer has a role on the Protocol did not lend itself to an atmosphere in which a deal looked doable. The question is whether or not Liz Truss can break the deadlock.   The Irish Government believes an improved atmosphere cannot but help and that a deal based on the Commission’s October proposals and packaged as a victory by Truss might be possible. But the margins will be tight. “The Commission isn’t an independent actor in this,” says one EU diplomat. “The package that’s on the table was agreed with the 27 member states, and it was agreed with considerable difficulty inside the European Commission. The member states somewhat reluctantly signed off on it, and it was made clear that we were at the limit of legal and political acceptability. “The Commission has come a tremendously long way. And yet, the British are right in saying that last year the Commission was ruling out a lot of this stuff. So, with the right packaging and the right presentation, Truss could present it as a big victory.” That suggests a lot of careful diplomacy and expectation management. Yet, the process, already under time pressure, is playing out amid the helter-skelter turmoil of Westminster. London has not abandoned the threat of triggering Article 16, although with each new survey showing Northern Ireland businesses and manufacturers acclimatising to the Protocol (or even thriving), it is a weapon that looks riskier and riskier. By January 2022, the Central Statistics Office confirmed what many had predicted: exports from Northern Ireland into the South had surged by 64% in the first 11 months of 2021, while exports in the other direction rose by 48%. The EU’s instinct at previous upheavals in the Brexit process has been to hold firm and let the Westminster histrionics play themselves out. But politics in Northern Ireland do not enjoy the same luxury. Tony Connelly is the Europe Editor at RTÉ.

Brian Keegan, Director of Advocacy and Voice at Chartered Accountants Ireland, talks to Gabriel Makhlouf, Governor of the Central Bank of Ireland, about the changing regulatory landscape, the challenges facing businesses after a tumultuous two years, and the need for greater financial literacy. We think of the Central Bank as a regulatory body, but it is a very large entity. Can you talk to us about your management style and your personal approach to managing a large, highly-qualified staff? The Central Bank plays a very important role across the financial system, particularly when dealing with people who work in risk and control functions. This is essential in ensuring that the financial system ultimately works in the best interests of consumers and the wider economy. We have strong, established relationships with auditors based on solid foundations with open communications and this is a crucial relationship for us. I joined the Inland Revenue in New Zealand when I finished studying and I am a public servant, essentially, by profession. I trained as a tax inspector and I had a lot of dealings with accountants in the UK before I moved on to different things. As a leader, there are a number of things that are really important to me. It is really important that the organisation is clear about its mission and vision, and that senior management makes that happen. People in leadership roles need to help the organisation to be clear on its mission and vision. This helps to promote focus and priority-setting. I would like to think that the mission and vision of the Central Bank are clear. We are responsible for monetary and financial stability; making sure that the financial system works in the interests of consumers and the wider economy. We want to be trusted by the public. This is the dominant theme that I have been engaging with staff about since I took up my role. When the Central Bank was established in 1942, the legislation establishing the bank stated that the predominant aim of the Central Bank was the welfare of the people. This is an important statement which I still use.  Are you satisfied that you are achieving this? Yes, I am. I certainly think we can do better. For the people who come to work at the Central Bank every day, I think that sense of public service is really important. I think what we probably do not do well enough is to explain to people how our various policies ultimately promote the welfare of the people as a whole. As an example, our mortgage measures have a very specific purpose which has to do with financial stability, with indebtedness and with over leveraging, among other things. Underpinning all of that, from our perspective, is promoting the welfare of the whole country. That is very important to me. As I have said previously, we need to be accountable to the public in an engaging and transparent way with key performance indicators. I put a big premium on diversity of thought and an organisation like the Central Bank must reflect this. I also think it is important for leaders to be ambitious for their organisations and I am ambitious for the Central Bank. Leaders need to focus on the stewardship of their organisations. We need to spend as much time thinking about how to ensure the organisation will be fit for purpose for our successors, as well as for us. That puts a premium on leaders to look ahead, to understand their context and also to understand what their context will be in the medium-term, not just over the next year. We need to be able to accept that change is constant and happening in our external environment faster than it has ever before. Organisations like the Central Bank are all about people and the recruitment, development of staff is crucial for any organisation. Following on from that point, can you talk about the challenges managing an organisation in a pandemic? One of the legacies of the pandemic is how we are going to manage hybrid working. I think this is an underappreciated challenge and I think, personally, that remote working is unsustainable over the medium-term.  At the Central Bank, most of us have worked from home for almost two years. A small number of us have been coming in every day because we had no option. For the first three months of the pandemic, this worked extremely smoothly.  As time has gone on, people have changed jobs. People have left the Central Bank and new people have joined us. These new recruits have not physically been in the bank or met their colleagues. They have not had the experience of learning by observing. You learn a lot by observing what other people are doing and by asking impromptu questions. Over the medium-term, organisations such as ours require a strong culture and the ability to bring fresh people in. Our strength is in our collective effectiveness. We are going to have to work out how we can get away from remote working, but we are not going to go back to where we were. We are going to move to hybrid working. This will lead to new challenges and we are going to have to try to discover how to deal with these challenges. There will be people who will prefer to stay at home, but I know there are many other people who want to come into the office. Diversity and inclusion tend to be about gender and colour, disability and sexuality, but I can see a new diversity challenge in dealing with people who don’t want to come into the office and dealing with people who do.  What is your perception of the global economy after Brexit and the expectation that a lot of business will move to places like Dublin from the UK? Has this proven to be the case and has Dublin benefited from the so-called ‘Brexit bounce’? Brexit has led to a lot of financial services coming to Ireland in terms of the arrival of new entities and the expansion of entities that are already here. It has to be pointed out that Brexit is not over and the process of financial services adjusting to whatever constitutes the ‘new normal’, is ongoing.  Brexit has had an effect on increasing financial services in Dublin and it might have a continuing effect in the future but this also applies to Paris and Amsterdam. I expect that financial services in the EU will grow more than we would have expected before the Brexit referendum in the UK. This does not mean that London and the UK will not continue to be important financial centres, but I think you will see growth elsewhere in the EU. From a financial services standpoint, the UK’s exit from the EU has been relatively smooth and well-managed from all sides but there are still issues that will have to be debated at political level.  What is the Central Bank’s view of the departure of some banks, including KBC Bank and Ulster Bank, from the Irish market? Is there a need to fill that gap in the market and have you a strategy to address this issue? That is a very interesting question. After the global financial crisis, credit availability for Irish SMEs during the recovery phase post-2013 improved dramatically. There were a lot of policy initiatives that were very helpful and, compared to a lot of the rest of the world, the Irish government’s focus in this area was pretty strong.  We had the establishment of the Strategic Banking Corporation of Ireland (SBCI), the introduction of the Future Growth Loan Scheme, the setting up of the Credit Review Office, and the Loan Guarantee Scheme. All of these things were very important for Irish business.  One of the interesting things our research has shown is that in the years preceding the pandemic and during the pandemic itself, the drag on credit flows to SMEs seemed to be driven predominantly by a weak demand for financing from SMEs rather than by a weak credit supply on behalf of lenders. In a European context, Irish SMEs had among the lowest application rates for credit. From the point of view of the Irish economy, the most important thing is that there is credit available for businesses to use when they need it and that is why it is interesting that Irish SMEs are slight outliers in terms of their demand. The departure from the market of KBC Bank and Ulster Bank poses risks for borrowers. Ulster Bank itself was the third largest player in terms of lending to SMEs. Fewer players in the market means higher prices, lower volumes and less service choice. No doubt, the Competition And Consumer Protection Commission will be paying close attention to these developments. What we are seeing is that digital operators in fintech and non-bank intermediaries are expanding their lending to business. Our own statistics team has found that the share of lending to Irish SMEs from the non-bank sector is already above one third in some sectors.  Access to alternative sources of finance will become easier, cheaper and faster. Core financing from Irish banks will continue to be absolutely key to Irish business, but it will be interesting to see what impact the competition that is now emerging will have on the wider market. The challenges for the big corporate legacy banks are not dissimilar to what large institutions in other economic sectors are facing. They become big, they become cumbersome and they are suddenly faced by competition from entities that are more agile. I suspect that the Government’s Retail Banking Review will look at some of these issues. Will these developments pose new challenges for the Central Bank? We published our new strategy in December 2021. A lot of our focus in the past has been about fixing the problems of the financial crisis. With the new strategy, we are  going to pivot and increasingly focus on the challenges we will face in the future. One of these challenges is regulating and supervising the rapidly changing financial services landscape. That is going to be a very significant focus for us. We are already seeing issues that give me cause for concern. Crypto is an unregulated market and there are real risks to businesses and consumers in this area. The regulatory world is gearing up to take action, but it is something that we in the Central Bank are going to keep a very close eye on. Technology is accelerating the need to address the issue of financial literacy. I have always been a proponent of the education system having a component that helps young people to understand how finance works. What I have seen in crypto is the ease of putting your money into some of these ventures. There is an increasing risk, in my opinion, that young people using their mobile phones to access crypto are going to get into trouble. Would it be fair to say that there is a greater awareness in New Zealand of the role of the government institutions than there is in Ireland? That may be true, but it would depend on what part of New Zealand you visit. If you go to Wellington, the capital of New Zealand, the working life of the city is dominated by government. When you meet people in the streets of Wellington, you will find that they are working in government or their partners are working in government. This is not necessarily the case in Auckland or in other parts of the country. Certainly, the Treasury, which I led in New Zealand, had a very strong brand. This stemmed from the fact the Treasury in the mid-1980s and early 1990s played a very large part in the overall reforms that New Zealand went through. I think there is a much bigger commercial sector in Dublin than in Wellington, whereas in Wellington the public sector dominates.  Can we talk about the challenges of money laundering? Are we doing enough to counter this problem and what can we do to counteract the problem? It is an issue that we need to address, and the EU has decided to set up a new agency to tackle money laundering. I think we also have to ask questions about how seriously the community views white collar crime. We need regulators, financial professionals and politicians to align themselves to dealing with money laundering. In my view, the whole issue of the conduct of financial services, particularly in banking, has to be addressed. As a community, we need to say that money laundering is unacceptable and we need to do something about it. Thank you for taking the time to speak to us today, Governor. Thank you.

Following public consultation, IAASA has today (21 December) issued: International Standard on Quality Management (‘ISQM’) (Ireland) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements; International Standard on Quality Management (Ireland) 2, Engagement Quality Reviews; and International Standard on Auditing (‘ISA’) (Ireland) 220 (Revised December 2021), Quality Management for an Audit of Financial Statements. They will replace International Standard on Quality Control (Ireland) 1 (Revised November 2020) and ISA (Ireland) 220 (Revised November 2020). These standards introduce a new quality management approach that is focused on proactively identifying and responding to risks to quality. The new approach requires a firm to customise the design, implementation and operation of its system of quality management based on the nature and circumstances of the firm and the engagements it performs. It also requires firms to transition to an integrated approach that reflects upon the system of quality management as a whole, rather than individual elements. The benefits of this new approach include: A system that is tailored to the nature and circumstances of the firm and the engagements it performs; A proactive response by the firm to changing circumstances and proactively managing or mitigating risks, and promoting continual improvement and responsiveness; Increased emphasis on monitoring the system as a whole and timely and effective remediation; and Improved integration of the components of the system of quality management. The new standards are effective as of 15 December 2022 and apply as follows: ISQM (Ireland)1 must be designed and implemented by 15 December 2022. The evaluation of the system of quality management required by paragraphs 53-54 must be performed within one year following 15 December 2022 ISQM (Ireland) 2 Effective for audits of financial statements for periods beginning on or after 15 December 2022 and other assurance or related services engagements beginning on or after 15 December 2022 ISA (Ireland) 220 Effective for audits of financial statements for periods beginning on or after 15 December 2022 The standards are on IAASA's website. 

Adam Leahy explains four ways in which young Chartered Accountants can future-proof their careers. Firms have been able to outsource and even automate an increasing number of accounting-related activities over the past decade. When I completed my training contract in 2010, the workload for the newly qualified accountant consisted mainly of these activities. Today, if a candidate wants to enter and prosper in the larger industry firms, they must bring more to the table. So, what does it take for a young Chartered Accountant to stand out today? 1. Technical knowledge Technical knowledge has been, and will always be, the cornerstone for an accountant. Understanding the standards, how to apply them, and how changes will affect how a company reports will always be needed. 2. Problem-solving, critical, and strategic thinking When an accountant can use reason and logic to solve complex problems that positively impact the future of the organisation, they show the ability to think long-term and outside the vacuum of their immediate role. The common requirement of the future-proofed accountant is sustainable value creation for the business. The larger firms are moving at such a fast pace that if an accountant performs no more today than the same tasks they performed 12 months ago, that accountant is going backwards. A future-proofed accountant needs to move forward consistently. To do that, they need to create value. 3. Systems thinking As we rely on increasingly advanced tools for processing and reporting information, it is not sufficient for an accountant to simply understand which buttons to press. Instead, accountants must understand how these systems work. What are the benefits now, and what are the current limitations? How can these systems be used or enhanced to drive greater efficiency, higher standards of compliance or more useful business insights? 4. Influencing and communication skills It’s refreshing to see more leadership teams ditch the notion of “that’s the way we’ve always done it” to justify their course of action. Instead, successful leadership teams seek ideas from all levels. Suppose a good idea is brought forward by a junior accountant who hasn’t been there long enough to get swept up in ‘group-think’. In that case, the ability of that accountant to confidently voice the idea and influence upwards could be the reason the idea is adopted. And happily, the junior accountant may also be rewarded or promoted in time. Adam Leahy is  Co-Founder of The Finance Tech Forum and Senior Finance Manager  at Microsoft Ireland. You can read this article and others in Career Guide 2021/2022. 

Author and executive advisor Niamh O’Keeffe shares her top seven tips to help you make a solid first impression in a new role or company. The ‘first 100 days’ is a very helpful device for defining the beginning phase of your new role. It carves out three to four months as a period of transition, which is useful for giving yourself a chance to land in, listen and learn. It is also the time to set out your strategy and make a positive first impression with your new team, boss, and key stakeholders. Whether you are new to the role or new to the company, your first 100 days is a new leadership beginning and an opportunity to establish yourself and set the tone for how you plan to lead during the rest of your role tenure. So don’t just arrive and get busy with the day-to-day detail. Instead, think more strategically about what you want to achieve and, with that in mind, set out your key priorities for the first 100 days and stick to them. 1. Think big and start with the end in mind Set an ambitious role vision for what you want to achieve within three to five years. How will this role matter to your career? What will success look like? What kind of leadership legacy do you want to leave behind? Think about what truly matters to you as a business leader and what you could do in this role to make a difference to your team, organisation, industry, and the world. Your vision is about long-term thinking; it provides context and helps you prioritise what you need to achieve in the next 12 months and, subsequently, the actions to focus on in your first 100 days. 2. Stay focused on your strategic priorities A new role in a new company can feel overwhelming, but don’t just get busy doing the doing. Jumping on the day-to-day treadmill of firefighting is too short-term in approach. With your long-term leadership vision in mind, set out your key strategic priorities for the first 12 months and then align a plan of key desired outcomes to be achieved by the end of your first 100 days. Setting out your key priorities early on and regularly monitoring progress makes you less likely to get derailed by less important day-to-day activities and less important tasks. 3. Don’t invite the in-laws to stay! Your first 100 days of transition to a new role or new company is not business as usual. No matter how experienced you are, stepping up into a new role is still a heightened stress event. You need to be fit-for-purpose, and you will need to manage your energy levels accordingly for the challenges and intensity of the new learning curve. Adrenalin will compensate for any lack of reserves but don’t exacerbate the pressure on you by having the house redecorated or the in-laws over for a visit. Instead, keep a cool, clear head and maintain a calm personal life to support your work efforts. 4. Don’t be a hero, it’s not all about you! On arrival, remember that you are a new leader, or member, of a team. You are not an individual operator, nor superman, nor a lone expert genius. Building or contributing to a high-performing team will be critical to your overall success. Take time in your first 100 days to bond with your colleagues and figure out how to work well together. Be straightforward, friendly, optimistic. Ask for help when you need it. And if you are new to this company, don’t annoy people by constantly talking about how great your last company was! 5. Pay attention to culture, power, and politics In any new culture, always try to figure out who and what matters. Consider how decision-making works. Don’t make assumptions or be naïve enough to simply take things at face value. Get advice from seasoned colleagues at the company to better understand how the company’s culture works, both above and below the surface. For example, what people say versus what they really mean. Learn to read and decode the organisation’s clues to understand the politics of the new organisation so that you can participate more productively. 6. Be your own best PR agent Don’t expect your work to speak for you. You need to bring people with you on the journey of your first 100 days and communicate your successes to stakeholders along the way. When the first 100 days is complete, share a record of your main achievements. You could make a formal ‘End of First 100 Days’ presentation to your boss or other key stakeholders. Think of it like showcasing the return on investment on the cost of hiring you and brief people on what is yet to come. 7. Ask for feedback, not reassurance After a month or so, seek formal feedback on your performance. If your boss, peers, and key stakeholders say, “You’re doing great, just keep going”, it may feel encouraging – but please realise that this is not actually feedback. Push for a more constructive response. You will need to know if you are making any unwitting cultural gaffes. You need feedback sooner rather than later on anything that may prevent you from making the right impact or building more productive relationships. Final words As this is a new experience, you inevitably won’t get everything right. That’s okay too. Do your best, learn lessons, and move forward. I wish you every success on your leadership journey. Niamh O’Keeffe is the author of Your First 100 Days: How to Make Maximum Impact in your New Role. Niamh also advises corporate CEOs and senior leaders in London and New York. You can read this article and others in Career Guide 2021/2022. 

The onboarding process is more than just an office tour and an overview of the employee handbook, writes Dr Mary Collins. The first interactions beyond the interview and selection process can have a lasting impact on how a new hire perceives the organisation. A positive onboarding experience can really set one up for a successful career in their new office. What is onboarding? Onboarding is the process through which new employees are oriented to acquire the necessary knowledge, skills and behaviours in order to become effective members of the organisation and in a manner that aids overall retention. The goal of onboarding programmes is to help employees quickly become acclimatised to their new workplace and bring them ‘on board’ with regard to company culture, understanding of job function and overall comfort level. It is more than providing basic information for new hires to do their jobs – it is about engaging new hires with the culture of the organisation and supporting them in finding their purpose in their new roles.  Making connections In an increasingly hybrid world of work, we need to work harder to communicate clearly and make strong connections. Wherever possible, arrange to meet people face-to-face or, if this is not possible, vary the communication channels. A regular phone call can often work as an easy way for people to share and connect rather than just relying on zoom or other visual platforms. For new employees, onboarding is the ideal time to reach out to key stakeholders in a new organisation, arrange short coffee catch-ups with relevant people to build your understanding of the culture, strategic priorities and importantly to start building a strong network for your future career.  Relational vs transactional onboarding A recent trend is ‘relational’ onboarding, which complements the more traditional ‘transactional’ onboarding. Transactional onboarding is more focused on policies and procedures and getting people skilled-up in relevant regulatory requirements, for example. Relational onboarding is more about connecting people in the organisation, building their network internally and externally.  Part of this ‘relational’ focus is gathering feedback from new employees for continuous improvement of the onboarding experience. There tends to be a one-flow system of communication in most organisations. An employee onboarding process should be an iterative learning process that improves over time with experience and feedback. Soliciting feedback at important transition points means you can gauge if you are meeting or exceeding expectations and helps build a meaningful, engaging onboarding process.  Common Pitfalls to Avoid in Onboarding While a good onboarding process can create an engaged and connected workforce, there are some pitfalls organisations should be aware of: Treating it as a one-day event. Onboarding starts when you are contacted to communicate success at interview and continues for at least three months after the new employee joins the organisation. Assuming that onboarding is ‘training’. Effective onboarding is about successfully assimilating the new employee into the culture of the organisation and connecting them with others who can help them adjust to their new role. Believing that new hires cannot add value from the first day. If the pre-onboarding period is managed well, new hires can contribute value from their very first day. This is important, especially for professionals who are used to being high performers in their previous roles. Clear communication around performance expectations from the outset will ensure that the new hires know this. First 100 days The first three months are critical when you start a new role. By the end of this period, employees should have a good sense of the expectations of the role, the company culture and how they are ‘fitting in’ and performing. It may be a time when questions emerge related to the role and performance objectives. It may also be a time when new hires have suggestions to improve the overall performance of the business based on what has been observed.  Training and development needs may emerge around this time, as it is usually the half-way point in a six-month probation period. It is worth having a conversation about what support is required and how it will be provided.  First 100 days checklist Important questions will be asked during the first 100 days of employment. How are you finding your new job? What are you enjoying most about working here? How does the role compare with what you were expecting? Has the learning and development/training you have received to date been helpful? What, if anything, would you add or change? How are you finding the experience of working with your colleagues? Do you have any suggestions for improving the onboarding process? Is anything not working for you? Is anything about your role, the team or company still unclear? How can management help your transition at this point? How do you find the work-life balance? Dr Mary Collins is Senior Executive Development Specialist at the RCSI Institute of Leadership. You can read this article and others in Career Guide 2021/2022. 

Anne Phillipson explains how you can work your notice period like the pro that you are. How you exit your company when you have decided to move on to pastures new says an awful lot about who you are. The final weeks (and, in some cases, months) you have in an organisation is the lasting legacy you will leave behind, and so it’s important to make a graceful exit. Your notice period The period between handing in your notice and your final day is a chance to ensure that you have done everything you can to tie up loose ends and complete any outstanding projects, so your colleagues left behind don’t have to wonder where things stand, and clients aren’t wondering why you haven’t returned their calls. Your notice period is also the final opportunity to create the lasting impression your employer has of you, which they will use as the basis for any future references. It could also decide whether the door remains open for your return should you decide that the new opportunity isn’t the right move after all.  So, if you want to do everything you can to work your notice period and leave on the best possible terms, here are a few pointers on how to do that well. Don’t take your foot off the gas. Continue to be as productive as you always have. Work hard and be diligent for the entire notice period. Let people know you are leaving (agree timing with your line manager) and don’t bad mouth the company, colleagues, or boss. Focus on the positive reasons for leaving rather than anything you were dissatisfied with in your current role. (You can save that for your exit interview!) Agree with your line manager how to handle any outstanding leave – will you take your time off as part of your notice period, or will you get paid for your days as part of your final paycheque? Agreeing this early will help you plan your final weeks. Don’t feel responsible for other people’s reactions to your leaving. Your colleagues may be upset, disappointed, or even try to discourage you. That’s more about them than you. Take the fact that they really don’t want to lose you as a valued member of the team as a sign of affection, but don’t allow them to cast doubt on your decision. Make a list of the projects you have been working on, with notes on its current status, who to call with questions, and any other insights you have which may not appear in a typical file. Make it easy for others to carry on when you are no longer on the team.  Agree with your line manager who will pick up your work, and then schedule time with those colleagues to have a proper hand-over. Don’t leave those meetings until the last week. Ideally, your replacement(s) will have some time to get stuck in while you are still around to answer questions. Sometimes they don’t know what they don’t know until they actually get started, so allow time for that process. If your replacement is in place before you leave, do your best to train them well.  Express gratitude to all the people who have helped you in the organisation. Say thanks by taking them out for a coffee or lunch to let them know how much you appreciate everything they did for you. Even a thoughtful note can mean a lot. Every organisation has those kind people who look out for others, so don’t miss this opportunity to let them know their efforts were appreciated. My following these suggestions, you should be in a strong position to leave with your head held high and knowing that you have done everything within your power to leave on the best possible terms.  The exit interview Most organisations will also request an exit interview with Human Resources as one of the final meetings before you go. This is an opportunity to express your reasons for leaving. The information gathered in exit interviews provides valuable information for the organisation. Trends from exit interviews may inform retention strategies, so use this as an opportunity to be honest but respectful in explaining why you decided to look outside the organisation for your next opportunity. Quite often, when people leave, it’s more than just pay and benefits that tempted them away. Whatever the reasons are, it’s HR’s responsibility to report back on the trends they are seeing across a range of exit interviews so that senior management can act on the information.  Keep in touch Finally, you may wish to send a goodbye note to the team or even the entire company on your last day. This is an opportunity to update colleagues on your new contact details. The relationships we build at work are an important part of who we are – we often spend more time with colleagues than we do with our friends and families – so it’s not surprising that many of those relationships transcend the work connection and colleagues become lasting friends. Anne Phillipson is Director of People & Change Consulting at Grant Thornton. You can read this article and others in Career Guide 2021/2022. 

Gina London shares her tips for negotiating a comprehensive and competitive benefits package. You did it. After how many rounds of interviews and follow-up meetings, you have finally been offered the job. Congratulations! Now all your research, role-play sessions and diligent preparation work is over, it’s time to settle into the role. Wait a minute. What about your salary and benefits package? Have you negotiated that? No? Then there is still much work to be done. If you’re one of those people who thinks you should just take whatever is offered, I have good news for you. In today’s hybrid, employee-centric marketplace, employers expect candidates to discuss their salaries and benefits. 1. Introduce negotiations when you’re offered the job If you feel uncomfortable reading this first tip, you’re not alone. While the research I refer to above states that 70% of employers expect to engage in negotiations with their would-be employees, the same research revealed that just over half (55%) of candidates brave the waters to negotiate their packages. But as someone who coaches and trains business professionals all over the world, let me give you some inspiration as to why you should join the few who decide to take that plunge. When you negotiate your salary, you are demonstrating to your manager that you are confident and comfortable discussing your value and worth. This kind of communication is likely what helped you land the job in the first place, so keep building on this foundation of strength. Your courage to initiate what many consider a difficult conversation is what will set you apart, establish you as a leader and position you for promotion. Consider, too, the other side of the coin. What happens if you simply accept, without any discussion, whatever salary or benefits package is set before you? You may be considered a follower rather than a leader. Even worse, depending on what you receive, you may be accepting a salary far below the market or your needs. Imagine, for instance, that you accept a wage 10% beneath your desired salary. If you’re later provided an average cost of living increase of 4% annually, it will take you more than two years to attain your original desired starting point. For those reasons and more, the positives of negotiating outweigh the negatives. So, let’s explore how to be as successful as possible during this process, even if you don’t move the monetary dial as high as you envision. 2. Understand your value The COVID-19 pandemic has clearly impacted the workforce. The International Labor Organisation (ILO) shows that unemployment remains at record-setting levels. This means you are valuable as an employer investment. You have more leverage than you may realise. Don’t forget to factor in your years of experience, level of education, leadership, and other related skills as part of that leverage. While the pandemic is still affecting the world’s economy, it doesn’t mean you need to steer clear of discussing your value in the ecosystem of your new company. The events that shaped our lives during the pandemic, and now beyond, have promoted both employers and employees to examine their career opportunities, culture, values, and lives. What is important to you? You likely want to be in a company that makes a difference. Employers, too, are looking for people who can positively influence their teams. That is a value in itself. Seek to define that. 3. Do your research While you’re putting a value on your own worth, conduct some research on the value of your potential new employer. Can you determine how badly they were affected during lockdown? Many companies lost revenue. If so, how are they doing today? Other companies continued to chart financial growth during the pandemic. They hired new team members, granted promotions, paid increases, and even provided year-end bonuses. Try to inform your research with as many sources as possible. Also, consider asking some of these questions as part of your interview. This will set you up nicely for your package negotiation. 4. Prepare and practice your negotiation conversation I work with my clients to understand that even their most seemingly informal, off-hand conversations become a part of their brand. Therefore, please understand that if you ultimately accept your new offer, your negotiation conversation will become a part of your employer’s perception of you. Your conversations are not neutral. They are positive or negative. Knowing this, seek to make this conversation a positive one. Start off with gratitude. Once you’ve been offered the job, thank your manager, HR professional and whoever else was part of the process. If you are asked what your anticipated salary would be, don’t limit yourself to a single number. State a range with a spread of about €10,000. Make sure your bottom range number is something you can realistically live with. Don’t low-ball yourself here. 5. Summarise your qualifications Remember how I suggested you understand your value? Well, here is where you need to not only understand this, but also be able to articulate it. Write out your points of distinction and rehearse these lines out loud. The more you can be clear and confident here, the stronger your case will be. 6. Make suggestions beyond money As companies move into the unchartered waters of hybrid working and other new workforce of the future models, here is your opportunity to suggest a range of benefits and ideas beyond the salary range you have already proposed. Consider discussing a possible signing bonus to compensate for accepting a lower salary than what you suggested. Can you nail down a work from home schedule? Annual leave days? Are there any other perks that your employer can come up with? Ask them for their own creative ideas. This is not a competition you have to win in one go. Rather, I encourage you to approach this conversation as a means of establishing yourself as an engaged and active employee who is a confident and courageous leader – not only for your teams, but also for yourself. If you keep your composure, you will plant positive conversation and leadership seeds that will grow over time – regardless of whether you land the salary and benefits package of your wildest dreams. Gina London is CEO of Language of Leadership, LLC. She guides global companies and executives to better connect and engage with their employees, their boards and themselves. Her Fortune 500 clients include Salesforce, Oracle, Google and more. Gina is an Emmy award-winning former CNN anchor and correspondent. You can read this article and others in Career Guide 2021/2022. 

After nearly two years, it can still be difficult to conduct meetings online, especially when they are as important as a job interview. There are a few key actions you can take to mitigate any disasters, writes Tina Kinirons. 1. Dress as for a face-to-face interview  The usual recommendation for interviews is to dress in formal or business attire. This still applies for online interviews. Yes, the interviewers can only see your head and upper body – but it’s still important that you dress for the job you aspire to. Make sure you are comfortable and confident in what you are wearing. 2. Keep your background uncluttered  Try to keep the background that is visible on the screen to your interviewers as neutral and uncluttered as possible ensuring there are no distractions for your interviewers. It’s worth checking what’s visible on your screen when you are sitting in the place you plan to do your interview. You should avoid a virtual background, as they can look a bit fake and can usually be detected by the human eye. Find a quiet place that has a neutral background instead. 3. Make sure you are well lit  Cameras need good lighting to show you properly on screen. That might mean turning on your lights, opening or closing blinds, or bringing an extra light into the room. You should be prepared for a sunny or dark day. Test your lighting beforehand to make sure you are clearly visible on-screen. 4. Make sure you can be heard Many of the microphones integrated into devices don’t have good enough sound quality for an interview. Test it out to check that you can be heard clearly. A set of headphones can make a big difference to how well the interviewers can hear you, so buy or borrow a set. 5. Be aware of your camera The equivalent to looking an interviewer in the eye is to look at the camera instead of the person on the screen. It’s important to keep looking at the camera and at the interviewers, as you can pick up on body language cues from them in the same way you would in a face-to-face interview. Adjust your camera by putting your laptop on a few books or adjust your seat to get the camera in line with your eyes and include your shoulders and a bit of your upper body in the frame. 6. Ensure there are no distractions Think about where you will conduct your interview and how you can make sure there are no distractions and no noise. Consider putting a sign on the door (of the room and house) stating you need quiet, and find a spot that doesn’t see any foot traffic while you’re at your interview. 7. Have a good internet connection Test Zoom, Teams, WebEx or whatever platform you will use for the interview in the morning before the scheduled time. Is your internet connection usually stable from where you will conduct the interview? If it’s not very reliable or fast enough, move. The interviewers need to be able to hear and see you clearly. 8. Practise talking online if inexperienced Try out the online environment you will use for your interview. Get comfortable talking online if you are not already using an online platform for meetings. You need to be focused on the interview questions and your answers, not worrying about the technology and your use of it.   9. Fail to prepare, prepare to fail Planning and practicing apply to all interviews, whether online or not. Plan out your interview examples and decide what best demonstrates which competency. Remind yourself of the details of your examples from your previous work and practice describing them out loud. Don’t let the first time you hear yourself speak your answers out loud be at your interview. 10. Be early  Same advice as for face-to-face interviews – get there early to avoid any last-minute panics. Logging in before the scheduled time will ensure you can connect to the meeting, there is no issue with your internet connection, and that you have the lighting right. Tina Kinirons is a business psychologist and interview coach.  You can read this article and others in Career Guide 2021/2022. 

Artificial intelligence is commonly used by organisations to find their interview shortlist. Miriam Magner Flynn explains how you can optimise your CV so it gets noticed by both the software and hiring manager. When applying online for a role, your CV will probably be passed through an applicant tracker system (ATS) powered by artificial intelligence (AI), which will screen suitability and help determine whether you make the interview shortlist. Even if you ‘cleverly’ manipulate your CV to ‘beat the tracker’ and make it to the shortlist, at the end of the day, you will be faced by a human. They will dig deeper into your competencies, achievements, and experience. Therefore, it’s important to optimise your CV to make the shortlist rather than attempt to ‘beat the tracker’, irritating the recruiter and setting you up for disappointment. The three key considerations when optimising your CV are format, word match and impact. Let’s look at each. Format When it comes to formatting, keep it simple. Tables and graphics confuse some trackers and cause sections of your CV to be overlooked. Have a crisp, professional layout that is easy to read, maximises space and is not cluttered. The optimum length of a CV (a common question asked of our coaches) is one or two pages. Many ATS use signal-to-noise ratio, which means that pertinent information (signal) is weighted against irrelevant information (noise). So, less text can increase your resume’s relevance.  Word match It sounds obvious, but take the time to match the exact language of the job description when you are listing your skills, education and experience in your CV. Be sure to include a combination of your technical, industry and people skills, as well. For example: Technical skills include competencies such as project management, data analysis and report writing. If essential to the role, include your proficiencies with specific systems and tools. Industry skills are specific to the function performed within the given industry. For example, in financial services, your function might include taxation. You should list your area of expertise, such as corporation tax, payroll, VAT etc. If yours is a specialised role, like derivatives, list the assets you deal with such as bonds, commodities, currencies, stocks, etc. People skills cover interpersonal and relationship skills. Be specific. Don’t rely on the generic ‘communication’ skills. Instead, break it down. Consider your true strengths. Match your strengths to those listed as important in the job specification. This also covers relationship building, stakeholder engagement and managing/leading people. If you manage people, do you cover the full gamut of recruiting, hiring, onboarding, developing, mentoring, coaching, reviewing performance, disciplining, downsizing?  Most ATS use frequency as a factor – the more often a skill or keyword appears, the more important it is deemed – and that is reflected in the match rate. However, don’t overdo it. Think of the human that will read it later. It can be helpful to create a ‘master’ CV which outlines your proudest achievements and includes all your key skills. When applying for a role, simply ‘tweak’ your master CV to match the language of the job specification. Finally, ATS will check for occurrences of the job title of which you are applying. If you haven’t held that job title previously (chances are you haven’t – this may well be why you’re applying!), don’t pretend you have. Similarly, don’t include skills on your CV that you are not sufficiently competent in purely to ‘beat the tracker’. Address any gaps in your cover letter or executive summary. These will be passed through the ATS, as well. This is where you can refer to the exact job title, repeat the key skills that make you a great fit for the role, mention skills you may lack, and explain how you intend to address the shortfall. In this way, the job title and your less competent skills are counted in the word match. You will not only be seen as honest, but you will have presented your willingness to develop. Impact AI, as the ‘I’ suggests, is a lot more intelligent than a simple word count. It tracks impact or ‘measured’ results. Listing your skills highlights what you can do. Listing your achievements, including the scale of your responsibility and quantifying your results, highlights the impact you’ve made. For example, if you lead a team, how many people? If you recommended a process improvement, what was the effect? If you influenced a change in strategy, what was the consequence? If there is a tangible result, be proud, own it and include it. To optimise your CV, focus on quantifying (using numbers) and qualifying (using keywords like ‘increased’, ‘reduced’, and ‘saved’) your achievements rather than listing your duties and responsibilities. Top tips Create a ‘master’ CV that outlines your proudest achievements and includes all of your key skills. When applying for a role, simply tweak your master CV to match the language of the job specification. Consider professional help from an expert who can help you shine. At Career Decisions, for example, all career transition coaching programmes include access to the PowerMyCareer career portal. This portal includes tools to analyse your CV, score alignment for specific job postings, and help you optimise your keywords for search engine visibility. Miriam Magner Flynn is Managing Director of Career Decisions, an award-winning coaching firm that specialises in career transition coaching, also known as outplacement. Miriam is a leadership, career and change strategy expert who has led some of Ireland’s largest career transition and executive coaching programmes. You can read this article and others in Career Guide 2021/2022.