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Darren Baker

By Darren Thomas Baker, author

What is the next approach to diversity management?

It was a rather grey, humid early summer morning in New York City when I met a friend for brunch close to Times Square. My friend is a very successful and passionate global diversity consultant who supports organisations in the design and implementation of inclusive leadership and behaviour change programmes. We obviously spoke much about diversity and the current challenges in the UK vis-à-vis the US. It seems such a foretelling conversation now in light of the widespread race riots towards the latter part of 2014, arguably the result of the continued socio-politico-economic exclusion of racial minorities in the US. Another contemporary tension concerns same-sex marriage in the US. In the UK, same sex marriage was legalised in March 2014 whereas many states in the US seem reluctant to grant this (Human Rights Campaign), with even reports of proposed oppressive and frightening legislation in some states advocating the re-introduction of LGBT pro-discrimination laws (Pink News, 2015). These examples and others highlight the tensions and paradoxes facing the effective management of diversity and equality for organisations across multiple geographies. Despite two to three decades of equality management in some regions of the world, why is it that we still hear of persistent glass ceilings, ‘sticky floors’, sexism, homophobia and racism to name but a few?

Organisational diversity practices are closely tied to legislative demands at the national and supra-national level. In the US, diversity management is linked to affirmative action, which emerged from the Civil Rights Movements of the 1960s. Affirmative action is considered a relatively radical approach to equality, as in the US it demands that employers take ‘every opportunity to employ individual applicants from specific minority groups’ (Executive Order 10925). The EU has, in contrast, adopted a more ‘liberal’ approach focused on removing the obstacles to a meritocratic culture. The response by organisations operating in the EU, therefore, has been to implement HR policies that set expectations on behaviours through, for example, ‘codes of conduct’ or reflecting these in their organisational values. However, HR policies and procedures largely fail, often miserably, to grapple with the underlying causes of discrimination in organisations, such as ensuring that competencies and processes for reward, promotion and effective decision-making are disentangled from gendered stereotypes (Collinson et al, 1990, Managing to discriminate). There has also been an over-emphasis on inclusion as an outcome rather than as an approach to the under-representation of minority groups in organisations. This is a serious problem as focusing on inclusion as an outcome rather than as an enabler to diversity can dilute group identities and individualise discrimination.

However, things are changing in the EU and there is now significant pressure brewing regarding imposing 40% quotas on non-executive boards for all member states (EC Press Release). There is compelling data to suggest that more radical approaches specifically the implementation of quotas and targets are more likely to guarantee the representation of minority groups within positions of power within organisations. In the case of the impact of gender quotas on boards in Norway, the study by Wang and Kelan (2013) shows not only an increase in the representation of women on boards but also a trickle-down effect throughout the organisational hierarchy. This supports organisations in the development of a robust diversity ‘succession pipeline’.

Transforming diversity management

Neither radical nor liberal approaches seem to deliver separately. So what’s in store for diversity management over the next few years? From these criticisms, a new ‘transformational approach’ to diversity management is emerging. The approach seeks to challenge both structural and cultural inequities within organisations. First, it transforms the business practice of an organisation, such as its procurement, decision-making, recruitment, training and career planning activities. Second, the approach drives cultural and behavioural changes particularly around implicit bias, inclusive leadership, conflict resolution and leveraging critical and diverse thinking. This is based on research that highlights how changing organisational structures can catalyse the effectiveness of cultural initiatives (Kalev et al., 2006).

I leave you with three questions to contemplate:

  • How far have you really come in the representation of minority groups throughout the organisational hierarchy?
  • Are you spending too much time on PR activities that look and sound good, but engender very little long-term change within the organisation?
  • How can you redefine your diversity and inclusion strategy so to create greater change within the organisation, ensuring legal, ethical and social expectations, and increase your financial return on diversity

For further reading, please see my forthcoming chapter:

Baker, D.T. and Kelan, E.K. (April 2015) The Policy and Practice of Diversity Management in the Workplace. In: Managing Diversity and Inclusion: An International Perspective. Sage Publications.

leaders

By Mark Cornell, market director – Western Europe and North America, ACCA

This week, we launch a new ad campaign called “Aspire to Lead

With posters in London Underground stations (Holborn and Euston for example) and online, we’re shouting loud about the value of accountancy and finance professionals to business.

We have real accountants in the ads – yes, real ones – who have agreed to be the stars of a campaign that illustrates accountancy is a great career choice. They – and we – believe that training to be an accountant gives you the skills, knowledge and strategic insights to climb the career ladder in many sectors, in many countries.

The “skills” word has come up in the news a lot recently – from Barclays CEO Anthony Jenkins in the Sunday Times, to Travelodge’s Chief Executive Peter Gowers, and Dame Pauline Neville Jones from Business in the Community talking about skills on BBC Radio 4’s Broadcasting House recently.

These business leaders expressed concern about whether schools were equipping young people with the ‘life skills’ they need for employability. They said there are still basic gaps in literacy and numeracy and so young people seemingly lack the essential “skills of everyday life”.  Gowers said he has to train apprentices and young staff on how to shake hands, and get eye contact. They were echoing Jenkins’ comments in the Sunday Times, where he said the UK is in danger of having a nation of awkward teens – unable to shake hands and get eye contact.

Helen Brand OBE, ACCA’s Chief Executive, wrote recently in City AM that the lack of soft skills can affect the bottom line, and that we need to see younger people as assets to business.

With the right training, development and mentoring – and perhaps a smattering of natural talent – young people can reach their aspirations to become confident leaders.

The leadership equation

Relevance is also part of this leadership equation. ACCA has always believed in providing a qualification that is relevant to today’s business market, providing accountants and finance leaders that the world needs.

This is why the ACCA Qualification not only covers the technical skills such as taxation and audit, but also management accounting and performance management. And there’s also a soft skills module which all ACCA members can now complete an optional professional skills module during their studies. This includes two modules – Communicating Effectively and also Working Relationships.

As a parent myself, perhaps we’re a bit too hard on youngsters – we’re expecting them to hit the working ground running; we tend to forget that these digital natives are ahead of the curve when it comes to exploiting technology, and this is a definite skills-set business needs.

I know from personal experience, starting as an apprenticeship with BT, just how important it is to not only learn the technical skills to do your job, but also to develop communication skills.

Starting at an apprenticeship level you have to prove you have the all-round ability to rise through the ranks and become a leader. Being a leader is about more than just knowing your job. It’s about being able to communicate effectively with everyone, regardless of their level. Being able to negotiate, being able to inspire confidence in those around you and motivate them.

Apprenticeships are a hugely important route in to the workforce and over the past decade we’ve seen a huge rise in the number of businesses offering apprentice-level training in finance. This has opened the profession up to talented individuals who may not be able to afford to go to university, or who are put off by the ever increasing amount of debt that today’s graduates are carrying. We believe that is a hugely positive thing. ACCA has always believed that becoming a finance professional is about ability and dedication, not ability to pay for a degree.

So for those aspiring to lead, what does the future hold? Previous research from ACCA and IMA called Future Pathways to Finance Leadership revealed that to get ahead, the CFO of the future needs to understand and handle risk, have strategic insights, be tech and data savvy, be prepared to be an excellent deal maker and possess excellent leadership skills, communication skills, strategic skills and change management skills. They need to be The Complete Package.

It’s clear our Aspire to Lead stars have these skills in abundance. They also prove that ACCA members are plying their knowledge and (soft) skills in every sector across most markets across the globe – from traditional accountancy practices, to the Big 4 to oil and gas to technology, to corporate and financial services and of course in the public sector.

I’d love to hear what you think about leadership and meeting aspirations. Leave your views in the comment section below this blog, and I hope you see our ads soon.

When it comes to spotting the warning signs of developing fiscal problems, the availability of quality information to support decision making is of utmost importance writes Chris Ridley, public sector policy manager at ACCA.

Most countries run with a public sector finance deficit and have done so for many decades, but when does it become unsustainable?

The recent shift towards an integrated global economy has driven the requirement for information to be available on a comparable basis. Gone is the time when national finances can operate in blissful ignorance of conditions overseas. This has resulted in a growing number of nations moving away from country-centric accounting standards towards a common set of international standards for budget and reporting purposes.

International Financial Reporting Standards (IFRS) are already widely used and an equivalent set of International Public Sector Accounting Standards (IPSAS) have been developed alongside them. While being similar in many respects, they reflect the unique requirements of the public sector. For example, the focus on public service provision rather than profit making, and the levying of tax and other charges by government to meet the financial commitments created. This is important as the public sector commonly accounts for around one-third of the Gross Domestic Product (GDP) in the majority of developed countries.

A significant number of countries continue to manage their public sector finances on a cash basis, although an increasing number have adopted full accrual accounting. This has the advantage of looking beyond a simple income and expenditure analysis towards the complete financial position, including the assets and liabilities held. Where this information is consolidated, for example as a set of Whole of Government Accounts (WGA), this provides strategic information on the sustainability of the national fiscal arrangements.

ACCA remains supportive of IPSASs and continues to encourage a move towards the adoption of full accrual rather than cash-only IPSASs given the additional financial information provided. With the move towards IPSAS in many countries, ACCA launched the Certificate in International Public Sector Accounting Standards (Cert IPSAS) at the end of 2014. ACCA’s Cert IPSAS is a flexible, top-up qualification for finance professionals working in / with the public sector. As a globally accessible online course and assessment it meets the needs of individuals and organisations wishing to develop essential working knowledge of IPSAS in an efficient and cost effective way.

Only by improving the information held on public finances and then acting on the issues raised can public services be maintained and improved for the future. Otherwise, as recent events have highlighted, countries could find themselves with severe financial difficulties that might take a generation to resolve.

When it comes to financing sustainable public services, more often than not, there are no quick fixes.

2015: Year of the Robot?

accapr —  12 January 2015 — 1 Comment

DP_Headshot1

By David Poole, CEO of Symphony Ventures 

Automation of business processes through Robotic Process Automation and Artificial Intelligence is the subject of a great deal of speculation. Is the accounting profession on a collision course with these game-changing technologies? Is the future bleak or bright for today’s Accountant?

In the recent ACCA white paper, Digital Darwinism: Thriving In The Face Of Technology ChangeFaye Chua and her contributors make some very insightful predictions about the emerging role of technology in accountancy. The chapter on Artificial Intelligence (AI) and Robotics offers an interesting view into the potential role process automation can play in improving systems, reducing costs, and increasing accuracy. As an accountant by training, I am fascinated by what the future holds for this industry.

While far from envisioning a world where mechanical robots can credibly take over the complex and intuitive role of the accounting professional, I believe software robots, or Robotic Process Automation (RPA), are indeed capable of handling labour-intensive tasks in a highly efficient manner. These software robots don’t sit at a desk, but toil quietly behind the scenes, easing the burden of routine monthly tasks including data collection, reconciliations, complex journal entries, compliance testing and master data management (to name but a few). Once ‘taught’, they faithfully follow the processes accurately and reliably until told to stop. They don’t mind working 24/7 or skipping lunch breaks. They never quit, and a fleet of them can upskill as fast as you can say ‘copy/paste’. Millions of bits of data can be processed, analysed, and computed more quickly and efficiently by a handful of digital accountants than by dozens (even hundreds) of junior assistants.

An inevitable trend

The fact that robots can access multiple systems at once and make complex calculations means that as long as a process can be documented and the data is digital, the software can do the work.  The accounting world is well served by very good ERP and finance software which has automated many accounting tasks and created enormous value over the past 20 years. However, there are still a very large number of accounting staff and, some might say, more now than prior to the advent of ERP systems. It’s these human roles that are the target of robotic assistants.

So, how, you might ask, do you take advantage of this trend rather than being thrashed by it? It’s an important question, because automation in accounting is inevitable, and having a plan is critical.

Planning for Automation in Accounting

Your goal in the early days should be to gain a comfort level with automation and introduce it in ways that encourage adoption (rather than resistance).  One such area is for Digital Labour automation to take over the most onerous of tasks so that accountants can focus on the high-value work that best takes advantage of their background and knowledge. This will also create more fulfilling roles for junior staff as they can focus on analysis rather than process. Conservative estimates have such automation infiltrating most accounting offices within the next five years.

The robots can either work as assistants to teams of accountants, making them far more efficient, or can take over entire tasks and work independently in the background. For instance, it’s possible for robots to manage bank reconciliations in real-time and then escalate complex issues as they arise to a human colleague. And, as some have foreseen, the robot may then learn how to solve that problem independently next time it arises.

Areas of Opportunity

Once a comfort level has been achieved, one need not look far to find ripe areas of opportunity for automation. Firstly, look for areas where interfaces with business systems are either nonexistent or only partially implemented. This is robot nirvana. Robots are very efficient at completing integrations extremely quickly, cheaply, and often more reliably than building interfaces to legacy systems. For example, collecting, summarising, and posting sales data, order data, commitment data and so on.

Secondly, there is an ever increasing demand for analytics and reporting to add value to the business.  Robots can rapidly access data from multiple accounting and business systems and present results and insights to a human colleague. For the time being, robots are not as capable at interpreting the results of the analysis in the context of a specific business or industry. However, it’s only a matter of time before even the most nuanced and complex cerebral tasks are being automated as well – thanks to Artificial Intelligence software development being one of the hottest and fastest growing areas of R&D.

The Numbers

As accountants, it’s important that the numbers add up – that this is not just a management fad. Well, they do. All of the tasks described above can today be achieved at a fraction of the cost of employing humans. A single software robot can cost a small percentage of an FTE and yet perform the tasks of multiple humans, work longer hours, and do so with far more consistent results. They can also do so in a format that is highly compliant and auditable. Obviously the set up and implementation of a digital workforce is not straightforward and requires professional help and advice. Typically, however, even with the upfront investment and time taken to implement such automation, it is not uncommon to see a break-even within one year and a 3-4x payback on the initial investment over a period of three years.

With such a clear business case, the march of the robots is inevitable. The question is not ‘if’, but ‘when’ will you need to take a long hard look at the potential of Robotic Process Automation and Artificial Intelligence in your finance function? Many organisations are creating specific automation budgets for 2015 to start to develop their knowledge and capabilities around these new technologies.  The potential across the organisation, not just in finance, will be material in the coming years. Automation projects truly are transformational, but without the huge systems and wholesale restructuring that went along with ERP-grade transformations of the past.

The robots are indeed coming. The value they bring is real, and the competitive advantage they enable is significant. So make 2015 the year of the robot, and begin investing in the future of your profession and your firm.

The Collaboration (C) – Suite

accapr —  18 December 2014 — 1 Comment

Jamie Lyon NEW PHOTO

By Jamie Lyon, head of corporate sector, ACCA

Collaboration, collaboration, collaboration should be the new mantra for corporate evangelists. Speaking at our Asia CFO summit last week, I had the temerity to suggest that finance had to up its game in working cross-functionally, and that future business growth was dependant on greater collaboration between the CFO function and the rest of the executive team. In a customer focused and digital knowledge economy, collaboration is king to evolving the business model, realigning operational processes and mining (in particular) the enterprises’ intellectual capital to create value. Consider one of today’s most prized enterprise assets – data. Today, there are countless examples of savvy enterprises who continue to invest in breakthrough technologies to leverage the power of the data at their disposal. Yet we also know that many enterprises still aspire to a single source of data truth. Functional responsibilities continue to blur in the great data debate, and the unspoken question at the C Suite table remains this: who takes ownership or leads the enterprise wide agenda in this critical asset class?

I am duty bound to say the CFO function has an outstanding case to take the leadership role here. The CFO is the steward of corporate value, the keeper of the purse strings, and it is they who must primarily drive required enterprise ROI. But in today’s connected environment, understanding and leveraging the value of enterprise IP is critically dependant on reaching out and building alliances with the CMO, the CIO, the CHRO and other new emerging C suite roles; the assets and processes that create corporate wealth today typically have little respect for functional boundaries. The data example provides an outstanding opportunity for CFOs to move the dial on peer collaboration. Collaboration of this kind will bring much greater clarity and agreement across the executive table on the processes that will create value in the future, it will mean a much more effective capital allocation strategy for the business, and it should help the CFO lead a clearer line of sight tracking, measuring and reporting on the enterprise activities that matter most.

Collaboration, collaboration, collaboration. A new year’s resolution for every CFO.