In identifying accounting firm trends, it’s helpful to take a look at reports from reputable organizations that have studied where markets are heading in the years to come. The World Economic Forum (WEF) just recently put out its 2018 “Future of Jobs Report” and the report helps gives insight into the trends facing the workforce in the upcoming 5 years to come. Why is this important for accounting firms? Because it will clue you in to who you need to start recruiting, how to retain your team, the direction the market is heading in and the corresponding accounting firm trends to look out for when it comes to your firm. The report is 147 pages (with a link at the end of this article), but fret not, below I will outline 4 trend takeaways that affect the future of your accounting firm.
Trend Takeaway 1 – Automation needs to be central to your accounting firm strategy
Right off the bat, the report states that, “as technological breakthroughs rapidly shift the frontier between the work tasks performed by humans and those performed by machines and algorithms, global labour markets are undergoing major transformations.” It’s hard to go through one page of the report without them talking about the rapid changes in technology affecting companies and workers around the world.
There is no doubt that this technology is automating more and more of the things that accountants have traditionally been doing manually. In fact, the report states that, “in 2018, an average of 71% of total task hours across the 12 industries covered in the report are performed by humans, compared to 29% by machines. By 2022 this average is expected to have shifted to 58% task hours performed by humans and 42% by machines”, with 62% of an organization’s information and data processing (which is what many accounting firms currently do) to be handled by machines, compared to 46% today.”
What this shows is that the days of having manual data entry and inefficient processes run rampant in your firm are numbered. As time goes on, more and more of the “traditional accounting work” is being replaced by automation through technology. In terms of accounting firm trends, if this is not already included as a central part of your strategy at your firm, then it’s something that you have to get on, immediately.
Trend Takeaway 2 – Emphasis will need to be placed on professional development in technology and soft skills
As technology will continue to automate more and more of what we as professionals do, skills in other areas will need to be developed among the workforce, namely skills that have to do with proficiency in new technology, analytical thinking, innovative thinking and negotiation, among numerous other soft skills.
Why are technology proficiency skills important for workers? Because workers will moving from those being the ones executing the work themselves to those being the ones who are the managers of the technology that will execute the work. We see this today with the rise of cloud accounting. Take a look at today’s bookkeepers. They do 0 manual data entry. They are essentially a hybrid between bookkeeper and technology managers where they let the technology handle the work and verify what’s being done by the technology is accurate. In fact, the report lists “systems analysis and evaluation” as a trending skill leading into 2022, which is exactly what our bookkeepers at Xen Accounting are taught. Learn the systems, learn the processes and use technology to automate all those inefficiencies.
And why are soft skills so imperative for professional development for workers in the upcoming years? Because this is going to be the very last thing that can be automated by a machine. A machine cannot be “human”. It cannot negotiate, it cannot be creative and it cannot innovate, at least not for the foreseeable future, and maybe not ever.
There’s a nice little table on page 12 of the report which shows the skills that are important today and which skills are trending leading into the next 5 years and which ones are on the decline.
The implication of all this is that your accounting firm needs to have training not only dedicated to technical skills, but also for proficiency in technology and soft skills in order to stay current with the latest accounting firm trends.
Trend Takeaway 3 – The shift towards the gig economy means that lots of workplace flexibility needs to be provided
Already, the trend is is towards being able to provide your team with remote work possibilities, in that, you can work from wherever you want. In addition to this, the expectation is that those working should not need to follow a strict 9 to 5 schedule either, where individuals can build their own schedule and work the hours they feel are necessary in order to finish their tasks.
This trend is likely to intensify in the years to come, especially as the world moves towards the gig economy and the uberization of the work, where work is done and delivered on-demand, all thanks to technology.
In its key findings section, the report outlines that, “businesses are set to expand their use of contractors doing task-specialized work, with many respondents highlighting their intention to engage workers in a more flexible manner, utilizing remote staffing beyond physical offices and decentralization of operations.”
The report goes on to question where things may head in the future looking towards 2022:
“As employers are deconstructing traditional job roles and re-bundling work tasks in response to new technologies, how can they minimize the risks and best leverage new partnerships
with resources such as online freelancers and talent platforms? And how can they best ensure such task re-bundling does not inadvertently lead to new forms of job polarization through ‘task segregation’, whereby specific groups of workers are disproportionately allocated the most or least rewarding work tasks?”
The report does not have the answers for how employers will handle the shift towards the gig economy, but clearly, it is addressing the shift that will occur in the workplace, where jobs are broken down into tasks and these tasks are doled out, perhaps via some sort of platform similar to Uber.
What the above means is that if you aren’t already moving your firm to a model that can easily integrate remote workers into your practice, you are behind the 8-ball. This trend will not only gain in popularity, but in the years to come, will even move past it, as the shift to the gig economy continues to gain in popularity. You can’t talk about accounting firm trends and not also talk about workplace flexibility, and in fact, millennials are already demanding this if you want to attract and retain them.
Trend Takeaway 4 – Accounting firms will need to start hiring for roles that have not been typical
WEF, in collaboration with Linkedin, gathered data from 2013 – 2017 to analyze hiring trends among a range of industries. On P. 19 & P. 20 of the report, WEF describes the basis of their findings along with charts to outline the roles that have been trending negatively and positively. Among financial services & professional services, technology-focused roles, such as software engineers have trended positively, meaning that, more and more of these types of individuals are being sought after while accountants, have actually been trending negatively based on hiring statistics. One conclusion that could be drawn is that those hiring in the financial services and professional services industries are placing higher emphasis on those with skills in technology rather than on those with skills in more technical accounting areas.
In fact, the report goes as far as to put accountants, auditors, bookkeepers and payroll clerks in the redundant roles column in the same company with cashiers, postal service clerks & assembly factory workers. What about stable and new roles that are expected to reign supreme in the years to come? Data scientists, process automation specialists, software developers, new technology specialists, AI & big data specialists, and so on. This shift is quite amazing.
Many accounting firms these days, big and small, are starting to employ software engineers in their firm to focus on automation, big data and AI. In fact, many of the cloud-accounting firms that I know of, which are not big firms, have a dedicated resource internally to assist with workflow automation. Five years ago, you would never have seen a dedicated tech resource at a firm of 15 people, today, that’s becoming the norm and will is no doubt part of the accounting firm trends.
Additionally, there is starting to be mention of data engineers joining accounting firms as of late, to starting using data in ways to help provide deeper advisory services to their clients. Sholto Macpherson talks about this in a recent November 2018 article where he talks about firms hiring and retraining accountants to become data engineers (and follow his blog as well if you don’t already, it’s a good one).
What this means is that your firm can no longer just think about hiring bookkeeping and accountants if you expect to remain competitive in the years to come. Software engineers, data engineers, AI scientists and blockchain specialists will all likely be important roles in the coming 5 years, working closely alongside your accounting and tax team.
Accounting Firm Trends Conclusion
The WEF Future of Jobs Report (which can be downloaded here) does a spot-on job at outlining the trends that hit impact the workforce in the upcoming 5 years. From this we are able to deduce the accounting firm trends that will correspondingly apply. While some of these accounting firm trends may seem light years away and while you may think that some may be a bit extreme, the important thing to note is that it is gradual shift. In fact, if I look at my own experience running a cloud accounting firm, I can certainly see all of these 4 trends taking effect. It is therefore critical that a path is charted to move your firm in a direction that starts implementing strategies that will help keep your firm relevant as technology continues to reshape the accounting firm as we know it.