Why HR has become THE critical issue in a smaller practice

There has been a reoccurring theme running through a number of meetings we have attended in recent and months.

Practices are encountering difficulties in managing, developing, recruiting and retaining employees and also in providing a good working environment for their employees. Those we’ve been dealing with range in fees from an average £500k through to £2m.

The crux of the problem is that accounting firms of this size do not have a dedicated HR individual in place. On occasion, they choose to engage HR consultants to sort out employment problems. The ongoing day-to-day HR role of appraisals, performance evaluation, setting of remuneration, performance development etc is therefore not available.  

'Unfocused and cavalier'

We have also found practices are somewhat cavalier in terms of their recruitment policies.

Although they might be quite happy paying £20k to £30k to a recruitment agency, they are not necessarily using this relationship to best effect.

No clear and detailed role profile is given, no inclusive recruitment process agreed and, in a few cases, references not are not taken at all. For the smaller practice it is a matter of time, skillset and gut feel that replaces a truly focussed recruitment and candidate evaluation - which ultimately would save time and optimise performance. 

In some of our appraisals, where we are engaged to review senior manager level attitudes, challenges and aspirations with senior members of the partner group, we often find that the roles of individuals are unclear. Indeed, the delegated responsibilities are differently understood by the managers themselves and partners who are delegating.

The clarity of the role and responsibilities, which is found in most corporate businesses, is sometimes managed on a somewhat amateur basis, leading to significant management time being invested in resolving situations which should never arise.

At one end of the scale the critical indicators are met, including employee performance, enthusiasm and passion - which can be exciting, driven and rewarding for all parties. Or, you see a very loose relationship with some insecurity and little performance appraisal leading to, at best, a ‘just enough’ performance. No satisfaction is given to the employee or indeed their skillsets are not used to the maximum effect.

MTD forcing role 'rethink'

Making Tax Digital (MTD) is bringing us increasingly to the assessment of individuals. We see MTD as a catalyst for reassessing individuals’ roles and indeed dictating future employment profiles for new employees. Processes and staffing will have to be readdressed and in our view, this is not a situation that is going to sit naturally and easily with most practices. 

We have observed in bringing change to practices of this size, that many have wasted money with recruiters and seen their profit line underperform as a result of poor employee performance.   

In this age, employees do expect more. If they are well experienced, ambitious and results driven they see their current employment as just part of their overall career.

A career based heavily on ‘lifestyle’ or ‘commercial results’ still needs to generate a high satisfaction level and improved chance of promotion/role growth down the line.

Managing talent within a practice means giving the employee every opportunity to engage and further themselves, achieve and celebrate success.

The issue is an interesting add-on to the challenges facing accounting practices over the next few years.

Keith Underwood is a director at practice advisers Foulger Underwood

This is an edited and abridged version of an article that originally appeared in Accountancy Live

Click here to sign up to our news and updates