This is about Culture change or rather the failure of it. Patisserie Valerie is just a convenient red herring. Romanovitch wants a more inclusive long term relationship based approach to clients whereas the 15 Partners still subscribe to maximise short term profits at any cost position. What is unsaid is that the majority of the other partners were sufficiently ambivalent and she lacked sufficient internal support to stay. It will be interesting to see how quickly GT reverts to profit share only for partners to see how far the pendulum has swung.
What AI and all this automation ignore is the Human condition. I'm old enough to remember a plethora of programmes in the late 70's and 80's discussing how we were going to cope with all this free time we would have because of automation ( really no kidding). Since then computer power has increased by a factor of 18,000, yet here we all are bemoaning the absence of growth in productivity over the last 10 years.
What simply happens is we change the way we work and in many cases, this makes us less productive than more. You only have to see the under 35's preoccupation with social media and how that disrupts work patterns or those unintended consequences of automation. Emails being a classic example of how its disruptive influence make people less productive despite its prime intention of making people more productive. Or indeed this website which has encouraged at least 30 people to stop what they're doing ( productive work) to respond to your post, (unproductive work), something not possible 15 years ago because the technology wasn't up to it.
So I'm sure AI will bring in many benefits, but lets remember we are talking about changes in peoples attitudes and that is a very slow and difficult process.
There is a simple truth here the answer is in your own hands. As a business, you can and should set your own culture. The vast majority don't even consider this. Thus your culture is borrowed from those with the strongest personality (often not the owner) rather than what is the best for the business, or from external sources.
The result is invariably lower employee engagement, productivity, and a high attrition rate, and a long queue for the toilets at 4:50pm
Understand your value proposition to your clients.
Focus on the clients' problems to your process. So saying you'll do my year end accounts, whilst necessary, is about as exciting to me as cardboard. However saying don't worry we'll manage your relationship with the tax authorities which means we'll produce your year end accounts in a timely fashion and deal with the various HMRC departments on your behalf, is much more compelling.
If you're not sure what a value proposition is, see it as answering this question:
"If I am your ideal prospect, why should I buy accounting services from you rather than from your competition?"
OK so sacking clients is a bit extreme, it was really a device to highlight the underlying problem of capacity.
At some time in the not too distant future accountants are going to have to make hard choices either to invest in capacity to meet the additional demand or simply say I can't or won't and cut their clients accordingly.
After all, if the additional resources aren't available your choices are very limited
What seems to be missing from this discussion is where on earth is the accountancy profession going to get the additional resources needed to do the extra work?
Even if we accept the lower estimate that's probably 35% more work on a typical fee of £650 ish for sole trader accounts. Presumably, also the HMRC is ignorant of the basic law supply and demand; that in times of shortage prices go up.
So if accountants cant support this additional work I would guess they'll have to fire the bottom 30-40% of their clients, what then becomes of the disenfranchised clients.
1)‘Agile’ approach. That is a technology systems philosophy. The issue here is roll out, only the stupid put a tsunami of users at the beginning of the project of this size, when everyone is learning the realities of implementing such a far-reaching system. Piloting a few big ones would knock the bugs out of the system before SME's get their hands on it. Oh and didnt I hear the HMRC say
"error is something that is a “behaviour of small businesses”." Really and you want to use error-prone users to pilot a system? How are you going to figure out if its a system or user error, your playing with too many variables at the same time.
2) Getting users to implement MtD is an organisational issue for them NOT a systems issue. Giving systems houses API's is all very well but about as relevant to SME's as judging a fish's capabilities by how well it can climb trees.
3) The relationship and information exchange between an SME & HMRC through MtD is nothing like the relationship between a consumer buying goods and services.
4) There is an implicit assumption that SME's are highly computer and technology literate. WRONG. That may be the case in 25 years but for now, there are a sufficient number of people committed to using cheques rather than electronic payments to suggest a lot of users will really struggle and have to rely more heavily on their advisers than they do currently, rather than less as the HMRC expect.
I submit most SME's will find the extra expense of employing an accountant for quarterly returns that are correct of significant concern
The accounting industry likewise is going to struggle to meet the surge in activity resulting from MtD, which may mean that many accountants in order to survive disengage from the bottom 30% of their client base resulting in a large number of disenfranchised customers.
So once again a Secretary of State is trying to make a political point but merely demonstrates he doesn't understand business or is it simply he's not an accountant.
My answers
This is about Culture change or rather the failure of it. Patisserie Valerie is just a convenient red herring. Romanovitch wants a more inclusive long term relationship based approach to clients whereas the 15 Partners still subscribe to maximise short term profits at any cost position. What is unsaid is that the majority of the other partners were sufficiently ambivalent and she lacked sufficient internal support to stay. It will be interesting to see how quickly GT reverts to profit share only for partners to see how far the pendulum has swung.
Hi Matt,
What AI and all this automation ignore is the Human condition. I'm old enough to remember a plethora of programmes in the late 70's and 80's discussing how we were going to cope with all this free time we would have because of automation ( really no kidding). Since then computer power has increased by a factor of 18,000, yet here we all are bemoaning the absence of growth in productivity over the last 10 years.
What simply happens is we change the way we work and in many cases, this makes us less productive than more. You only have to see the under 35's preoccupation with social media and how that disrupts work patterns or those unintended consequences of automation. Emails being a classic example of how its disruptive influence make people less productive despite its prime intention of making people more productive. Or indeed this website which has encouraged at least 30 people to stop what they're doing ( productive work) to respond to your post, (unproductive work), something not possible 15 years ago because the technology wasn't up to it.
So I'm sure AI will bring in many benefits, but lets remember we are talking about changes in peoples attitudes and that is a very slow and difficult process.
There is a simple truth here the answer is in your own hands. As a business, you can and should set your own culture. The vast majority don't even consider this. Thus your culture is borrowed from those with the strongest personality (often not the owner) rather than what is the best for the business, or from external sources.
The result is invariably lower employee engagement, productivity, and a high attrition rate, and a long queue for the toilets at 4:50pm
So as useful as a chocolate teapot then.........
Understand your value proposition to your clients.
Focus on the clients' problems to your process. So saying you'll do my year end accounts, whilst necessary, is about as exciting to me as cardboard. However saying don't worry we'll manage your relationship with the tax authorities which means we'll produce your year end accounts in a timely fashion and deal with the various HMRC departments on your behalf, is much more compelling.
If you're not sure what a value proposition is, see it as answering this question:
"If I am your ideal prospect, why should I buy accounting services from you rather than from your competition?"
OK so sacking clients is a bit extreme, it was really a device to highlight the underlying problem of capacity.
At some time in the not too distant future accountants are going to have to make hard choices either to invest in capacity to meet the additional demand or simply say I can't or won't and cut their clients accordingly.
After all, if the additional resources aren't available your choices are very limited
What seems to be missing from this discussion is where on earth is the accountancy profession going to get the additional resources needed to do the extra work?
Even if we accept the lower estimate that's probably 35% more work on a typical fee of £650 ish for sole trader accounts. Presumably, also the HMRC is ignorant of the basic law supply and demand; that in times of shortage prices go up.
So if accountants cant support this additional work I would guess they'll have to fire the bottom 30-40% of their clients, what then becomes of the disenfranchised clients.
There's some interesting Logic in this article
1)‘Agile’ approach. That is a technology systems philosophy. The issue here is roll out, only the stupid put a tsunami of users at the beginning of the project of this size, when everyone is learning the realities of implementing such a far-reaching system. Piloting a few big ones would knock the bugs out of the system before SME's get their hands on it. Oh and didnt I hear the HMRC say
"error is something that is a “behaviour of small businesses”." Really and you want to use error-prone users to pilot a system? How are you going to figure out if its a system or user error, your playing with too many variables at the same time.
2) Getting users to implement MtD is an organisational issue for them NOT a systems issue. Giving systems houses API's is all very well but about as relevant to SME's as judging a fish's capabilities by how well it can climb trees.
3) The relationship and information exchange between an SME & HMRC through MtD is nothing like the relationship between a consumer buying goods and services.
4) There is an implicit assumption that SME's are highly computer and technology literate. WRONG. That may be the case in 25 years but for now, there are a sufficient number of people committed to using cheques rather than electronic payments to suggest a lot of users will really struggle and have to rely more heavily on their advisers than they do currently, rather than less as the HMRC expect.
I submit most SME's will find the extra expense of employing an accountant for quarterly returns that are correct of significant concern
The accounting industry likewise is going to struggle to meet the surge in activity resulting from MtD, which may mean that many accountants in order to survive disengage from the bottom 30% of their client base resulting in a large number of disenfranchised customers.
Sadly, your so called expert is to marketing, what Dame Edith Evans is to non-ferrous welding.
Whats New?
So once again a Secretary of State is trying to make a political point but merely demonstrates he doesn't understand business or is it simply he's not an accountant.