HR Management in the Accounting Practice

The secret lies in weaving this discipline of management into the everyday running of our practices.

The need for HR management :

    People are the key ingredient of a professional practice. This is true whether the firm employs 10, 100 or 1000 people.

    Most accounting practices struggle to employ and retain people. The gap between demand and supply is the most obvious reason why finding enough people (leave aside good talent) is so difficult. The problem is accentuated because different sectors (with very different paying capacities and glamour quotients) now compete for the same talent pool.

    Retaining people is an equally big challenge because new employment opportunities (at significantly higher salaries and other perquisites and attractions) are opening up every day.

    The result is that at most times we are short-staffed. Because of attrition we are unable to build and maintain a stable team with steadily improving skill sets. This results in upward delegation, putting the proprietor/partner and senior staff under constant execution and delivery pressure. There is the constant stress of missed deadlines and mistakes in delivery. This leaves us with little time and mind-space to grow and qualitatively improve our practice . . . and of course achieve the elusive work-life balance.

What we want :

    As employers, we all want people who have the right attitude and appropriate and adequate skill sets to work for us. We would like to have a work environment in which our people enjoy working. We want our people to be committed to the Firm. And of course, we are concerned about salary cost since it is the biggest item on our profit and loss account.

    And what employees (and articled clerks) want is professional development through learning and exposure, recognition for their work, a healthy work environment and of course, fair remuneration.

    On the face of it, there is close congruence between the employer’s and employee’s needs which should guide our behaviour and actions to meeting these needs.

Reality check :

    However, the truth is that most of us are so busy with day-to-day execution issues that we don’t pay any conscious attention to the people aspect of our practice. Its not that we don’t care or we don’t want to do it. We do. But our efforts in this direction are often passive, unfocussed, unstructured and sporadic.

The essential elements of HRM :

    The basic objectives of HR management are :

•         Hiring the right people
•         Retaining them
•         Growing them

    The following are the key processes of HRM that would help meet these objectives :

        Recruitment and selection :

Writing clear job descriptions for each position : This is the foundation of good selection and performance management since it brings clarity to what exactly to expect from each position in the organisation. A good job description looks at all aspects of the job. In an accounting practice, the aspects could be clients, service delivery, people and growth and profitability. The specific expectations under each aspect can then be spelt out for each level of staff.

Identifying competencies required for each job/position : Using the job description we can identify the skills and competencies that would be required in order to meet the expectations of that role. Examples of skills and competencies are : expert knowledge of accounting — Accounting Standards and presentation of financial statements (in Schedule VI format), ability to supervise teams, and good report writing ability.

Systematic selection process : At the best of times, selecting people is a tricky business. Not only should the person we select be technically competent, s/he should also be a good fit for the practice in terms of attitude and temperament. Hiring mistakes are costly. An incompetent person puts delivery at risk, an undisciplined person sets a bad example to other staff, an aggressive and rude person can put client relationship at serious risk, and so on. Hence, having a systematic approach to hiring is critical to reduce the risk of a bad choice. A simple three-step process could be :

Initial screening based on CVs and job descriptions : Screening CVs in the context of your expectations help to filter out those that are obviously not a good fit for the position, either in terms of education or in terms of experience and exposure or perhaps even attitude.

 Written tests for assessing technical ability : A good way to shortlist candidates is to put them through suitable tests that establish at least the baseline competency required for the job. After all, it would be a waste of time to interview everyone who applies for the job or whose CV is prima facie suitable.

Interview: This is the most important tool in selection, since it is an opportunity to assess the candidate face to face. Simply put, a good interview is one in which you find out whatever you need to know of the candidate in terms of the position in the shortest possible time. The thing to guard against is focus sing too much on technical knowledge at the expense of other attributes that are Decessary for the job. Needless to say, to get the most out of an interview, even the interviewer must plan and prepare carefully!

Performance management:

Training & Development: Development of people cannot be left to chance. It is also not the responsibility only of the employee. The organisation has (at least) an equal interest in ensuring that its people grow. This growth is in terms of technical competence, management ability and emotional maturity. While some skills and competencies can be taught (and learnt), others are acquired through experience. Again, there are technical skills and ‘soft’ skills. Whom to teach what? And who will teach? How? While these are no doubt tricky questions with no easy answers, the following approach may help to show the way:

• Identify the skill gap for each person in your team. Job descriptions and competencies for each job can be a good point of reference to determine skill gaps.

• Based on the skill gaps you have identified, determine the training that would need to be provided. Also choose carefully the format you will use. For example, while ‘classroom’ training is the easiest to deliver, there is a risk that it tends to be theoretical and if not delivered well, is ineffective. On the other hand, workshops and focussed case studies are much more effective, but they need careful preparation and skilful facilitation. Coaching and men toring are useful where you need to focus on the individual development of certain members of your team .

• Deliver the training and TEST the participants. Needless to say, delivery of the training is the heart of the matter. This necessarily has to be effective and efficient. Short sessions of 60 to 90 minutes tend to be more effective than all-day sessions. The trainer’s preparation is critical for ensuring effectiveness. Also, the more participative the session, better is the retention of knowledge. It is very important to test the participants’ knowledge absorption by conducting a test (maybe multiple choice answers) or quiz. Of course, the ultimate test of effectiveness is how well the person actually applies his/her learnings at work!

Appraisals and feedback:

Feedback is a very powerful tool for people development and performance enhancement. While it is human nature to give feedback (usually in the form of criticism and often in public) when things go wrong, such feedback is counter productive in the long term. Also, contrary to normal practice, feedback should also be given when things go right! Feedback works best when it is given close to the event and is objectively given. While positive feedback should be given in public, negative feedback (as a general rule) should be given behind closed doors.

Even if the feedback is provided on an ongoing basis, formal performance appraisals should be conducted at least once a year. It is an opportunity to pause and objectively assess each person’s performance in all its aspects. Here again, using the job description and competencies helps to bring objectivity. In order to make the process transparent, it is useful to get each person to first do a self appraisal and then for the reporting senior to do an independent assessment which is then discussed with the staff member in a one-on-one meeting. Formal appraisals help to identify people with growth potential, training needs for strong as well as underperformers and provide an objective input for deciding on increments and promotions.

However, the one thing that we need to guard against is the ‘halo’ effect that influences the appraisal. ( The ‘halo’ effect means being un-duly influenced by recent events rather than taking the full year’s performance into consideration).

Compensation  and rewards:

Fixed remuneration i.e., monthly salary: Given that this has a direct bearing on the practice’s profitability, most of us are instinctively good at it. However, one may like to be conscious of the following:

• Since hiring takes place throughout the year, distortions creep into the salary structure. These need to be addressed during the annual increments.

• Guard against the ‘halo’ effect described above.

• Our insecurity in respect of staff on whom we are excessively dependent and its impact on their remuneration.

• Giving in to requests (demands) for higher pay by some employees. While this may, in the short term, retain the person, in the long term it will be seen as unfair by those who are not as aggressive.

Variable remuneration i.e., performance-linked bonus: Most firms pay an annual bonus to their staff. However, it is not very common to link the bonus to performance. Consequently, the bonus becomes an expectation of the staff and therefore loses its influence as a motivation for better performance. If the bonus payment can be clearly linked to performance, it can indeed become a powerful driver for those with real ability. However, a very important condition for implementing such a scheme is that there be clearly defined performance expectations and performance measurements in place. In view of the issues involved in implementing a variable pay scheme, it is not recommended for very small practices and at the early stages of HR management.

Promotion: Done for the right reasons and in the right manner, promotions are a very visible recognition of a person’s abilities and send a powerful message to all staff. On the other hand, done for the wrong reasons or without an objective assessment of the person’s abilities, it sends out an even more powerful negative message ! Hence the points to keep in mind are:

•     Have clear reasons why the person is being promoted. Assess objectively the person’s capability to handle the new role. Else, you will neither get the role performed satisfactorily, nor will you be able to retain the person – s/he will soon be frustrated and leave.

•     Communicate the promotion within the organisation (an email announcing the promotion is one way of doing it) giving in brief the background of the person, his/her key achievements in the earlier role and what the new role and responsibilities will be.

•     Do ensure that the promotion actually results in a bigger role and is not just a change of designation.

Recognition (e.g., awards for exsra-ordinarq performance, special achievement, etc.) : Done for the right reasons and in the right manner, this can be a very powerful motivator for employees. It is not the monetary value of the award that is important, but rather the public acknowledgement of the achievement. Also, objectivity and consistency are key, else the recognition is seen to be hollow and insincere.

 HR administration:

HR administration is the grease on which staff matters run. If not carried out efficiently and in a timely manner, they can result in staff dissatisfaction that can have serious repercussions for the practice. The basic elements are:

•  Payment of salaries: Timely and correct payment

•     Leave management: Clear leave policy, applied consistently, records updated promptly and balances struck regularly

•     Maintaining  employment.  records of staff

•     Statutory  compliances (PF, ESI, profession tax, etc.)

    Leadership:

For people to perform, it is essential that they have a good feeling about themselves and their organisation and they have a sense of purpose i.e., they feel that they are doing something worthwhile. This is the softest and most intangible element of HR management because it deals with people’s feelings, their emotions. It is also the most difficult but most important element. It needs to be created at the top – at the level of the proprietor or partners of the practice. Only if you yourself feel good about yourself, your practice and your organisation, will you be able to create the ‘feel good factor’ in your organisation. Every person has a different style for dealing with people. Hence there is no one-size-fits-all formula for motivational leadership. It is not important how you do it. But that you do, is. These are some general pointers:

Communicate with your people, share plans to the extent they affect the team. Give them visibil-ity so they know where they are going. This is very important for creating a sense of purpose, one of the key ingredients of ‘feel good’.

Be in touch with your people. Sense their level of motivation. The ability to understand body language is a big asset. Sensitivity and a genuine concern for people are imperative. Employee engagement activities like lunches/dinners, celebrating birthdays and festivals, picnics, etc. are an excellent way to not only give your people a break and an opportunity to de-stress but also to be one with them and to know them in an informal setting.

Celebrate successes. It is what we strive for. So when it comes, it needs to be recognised and welcomed. Else we will take it for granted and eventually lose the joy of achievement.

Show strength and courage in difficult times. Tough times are inevitable. It is in such times that staff actually look to their leaders for direction.

Hence the ‘tone at the top’ will really determine whether the team will rally behind you and put in that extra effort or whether they will look for their self interest and eventually drift away.
 
Give feedback. The powerful message it gives is this: ‘I have been noticed. What I do matters. Someone is interested enough in me and my work to tell me when I go well and when I don’t’. Without feedback, we feel neglected and unwanted.

The challenges  and why we don’t  do it:

1. It’s a big breakfrom the past: In the past (till about 15 years ago), the demand-supply gap for articled clerks and qualified staff ensured that staff was more or less readily available. By and large, clients’ expectations did not go beyond the very basic and the nature of work was such that the proprietors/partners did not have to rely very heavily on their staff for ‘brainware’ – they essentially needed their staff to do the ‘grunt’ work. So hiring, retention and building skills was not much of a constraint and was consequently did not get any serious attention.

2. We don’t have the mindset for this: Perhaps this is a legacy from the past – the point made above – and is the biggest stumbling block. Most of us are too focussed on the technical aspects of our core areas of work and think of HR functions as esoteric, fancy and ‘soft’.

3. I don’t have the time for this: This is a variation of the above.

4. My practice is too small for this: Certainly, this is a seemingly valid argument. Small practices are typically run with fairly informal structures and processes. The personal style of the proprietors/ partners has a dominating influence in the manner in which the practice is run. They are able to stay on top of things and drive the practice by the seat of its pants. In these practices, management ‘happens’ and is not something you need to do consciously,leave alone recognise its distinct facets. We tend to think of ‘formal’ management as relevant to companies and businesses, not to professional practices.

5. I am not trained for this or I don’t know what to do and how to do it: Our professional training (as articled clerks and the CA syllabus) does not give us any exposure to or training in management skills. Almost all our general management skills are self-taught and acquired from experience and reading. And HR management hardly ever comes on to our management radars.

6. I cant afford  it:  We  have  a feeling  that  ‘this probably costs a lot of money’ and in any case ‘is nice to have, but is not really essential for my practice’.

Busting the challenges:

The economic, social and professional environment has changed dramatically. Survival and success in the profession therefore demands that we look at managing our practices in a more business-like manner, managing all aspects of the practice (of which the technical or delivery aspect is only one) competently.

Given the benefits that good HR management can bring, spending time on this is an investment and not a cost. Initially, it does need extra effort (as any change does) but once set up properly, it is by and large ‘maintenance-free’.

How formal your HR management is will essentially be determined by the size of the practice and your own management style. What is important however, is to have the ‘HR mindset’ and to keep HR management firmly in the radar of practice management.

HR management (like all management) is essentially common sense and does not necessarily require formal training. Certainly, knowledge of basic HR functions would be a big help but is not a pre-requisite to get started.

Very importantly, none of this costs large sums of money. Like we said earlier, it will require an investment – of your time, mind space and common sense.

Ok, now  where do we go from  here?

Once we recognise the reality of the ‘people challenge’ and have dealt with our reasons for ‘Not Doing It’, we are ready to face the task at hand.

Getting started is a four-step process. Here are some questions to get you started:

1. Do I feel the need for HRM  in my practice?  This will test your  need  and its intensity.

2. Do I really want to implement HRM ? This will be your statement of resolution.

3. Why do I want to implement HRM ? This will test your clarity of purpose and also help to identify the ‘pay-offs’ that you expect.

4. Which elements of HRM should I implement? This will depend on the specific needs of your organisation. Your answer to 3 above will give you pointers to identify this. The section ‘Essential Elements of HRM’ above will also help to set this agenda.

5. How do I do it ? Once your reasons for implementing HRM are clear and you have set the agenda, it will then boil down to the actual implementation. The following tips may be useful:

a) Keep it simple. Don’t make a grand design. Don’t aim for the most ideal HRM practices. Do what you believe is right for you and your organisation.

b) Prioritise. Take small steps. Don’t take on too much at one time. Take what matters most first and implement it. Let it start working. Then move on to the next items.

c) Be disciplined. Once you have taken the plunge, stick to the task. Your efforts will take some time to show results, but they will. Have patience … and faith!

End Note:

Adopt HR management practices. They are simple. They are common-sense. Don’t think your practice is too small for it. Don’t be intimidated by the jargon. What is important is that YJU genuinely care for your people and that you have sincerity of purpose and discipline.

You are bound to reap the obvious benefits discussed earlier in this article. But more than that, you will experience the joy of watching people develop and grow, not by accident, but systematically and by design!