Article published on IFAC Gateway | Modern Professional Bodies – Being Fit for the Future
For many years, Professional Accountancy Organisations (PAOs) have led their members through change by developing and promoting strong professional and ethical standards, acting as a resource to stakeholders, and contributing to the public good. However, PAOs are increasingly caught in between the old and the new paradigms. The pressure to remain relevant has increased as the public remains sceptical of the role of experts and institutions.
There is a need to strike a balance between the short-term needs of members and the need to anticipate the future. Are PAOs in a place where they can be relevant to the multiple stakeholders that they serve? For the next 10 years? For the next 50 years? How do PAOs evolve in order to be “fit for the future”?
CAPA was keen to hear from an organisation based in the UK, aptly titled The Modern Professional Body. The persons involved emanate from the accountancy world, though their work transcends many professions.
Some 30 years ago, just as I was being appointed a partner at Arthur Andersen, I was involved in auditing an international corporate involved in the concrete industry. Around the same time, my firm was building a best practice database, itself a huge innovation at the time, and a key message was to look outside your own situation to see how you might improve. I was therefore taken by one example to look at how the Ferrari Formula 1 Team changes tyres and refuels during pitstops when considering how to most efficiently turn around concrete trucks refilling at the depot. The idea of thinking ‘outside the square’ in this way has always appealed to me since. This may explain my interest in The Modern Professional Body, as it is an organisation focused on acknowledging where the accountancy profession has come from, the need to remain alert to the present and future, and the innovative thinking necessary to succeed.
A few years ago, CAPA developed a Maturity ModelTM for the development of PAOs. Sixteen (16) key success areas were identified and PAOs were asked to consider how well they performed in each. Areas that are the subject of IFAC’s Statements of Membership Obligations were included, including roles in adoption and implementation of international standards, as well as quality assurance and investigation, and discipline systems and processes. However, the Maturity ModelTM went beyond that, into other matters pertinent to PAO sustainability, relevance, professionalism and delivery of member services.
Subsequently, CAPA developed and continues to develop practical guidance to assist PAOs in assessing and strengthening their arrangements and activities in these key success areas. The PAO Development Guidance Series can be accessed here.
In the time since the Maturity ModelTM was developed, the landscape for the profession has continued to change, driven particularly by changing expectations, new generational thinking, and massive technological change, including digitalisation. CAPA was therefore keen not only to stay abreast of these changes, but to get ahead of them. Whilst such change is not expected to impact the fundamentals of the Maturity ModelTM, the attributes underpinning a strong, sustainable PAO continue to be enhanced and evolve.
This brings me to our Members Meeting in May 2022, at which PAOs in Asia Pacific heard from The Modern Professional Body about the seven (7) challenges facing professional bodies, each of which are relevant to PAOs. Addressing these will go a long way towards ensuring PAOs are future fit in a post-pandemic and digital world, and beyond. PAO leadership should be prepared to turn the mirror on themselves and ask the hard questions in these areas.
- Vision and mission – First and foremost, these must be quickly and easily explained. They need to be outcomes focused, not just output focused, and must be championed by leadership. They should be ambitious but realistic. Does your mission meet these tests? When done well, vision and mission greatly influence and motivate members, volunteers, and staff.
- Governance and organisation design – When there’s a good governance system or framework in place, one that is fit for purpose, it facilitates a collaborative work environment between stakeholders to enable delivery on strategy in a way that’s focused and relevant. In contrast, a bloated or complicated framework can be a drag on progress. This was never more evident than during the onset of the pandemic, when COVID-19 forced many organisations toward agile decision making. Any unnecessary and bureaucratic governance structures or processes that were hampering progress became evident. Organisations needed to learn from this, and many did. Did that include your PAO? Is your governance framework fit for purpose?
- Strategy – Does your PAO have a clear strategy? Or does it have a long, complicated list of tactics that is very operations and process driven? Is your strategy focused on value creation? A good strategy will deliver the PAO’s articulated mission in demonstrable ways to stakeholders. A strategy cannot be ‘set and forget’—a few strategic pillars should establish the direction of travel for the PAO, with shorter iterative processes where they can constantly appraise the situation. This enables the PAO to respond to changes quickly. Establishing strong relationships with active members where conversations around strategies are ongoing is also a necessity. This will help members feel confident enough in the PAO’s leadership to accept a degree of uncertainty as part of the reality of running a modern professional body.
- Capacity and capability – It is often mentioned that people are an organisation’s greatest asset. However, it is also often seen that these same people are taken for granted. PAOs need to be mindful of the team working for them. It requires a different management style than in a business. Many people working for PAOs are earning less than if they work in the private sector. It is important to pay attention to things that can differentiate this, i.e., training and development, digital skills, hybrid or flexible working arrangements. Many people expect to work from home at least part of the time now.
- Relevance, status, brand – According to the former CEO of Coca Cola, Muhtar Kent, “A brand is a promise. A good brand is a promise kept.” A brand helps to articulate the value a PAO creates and acts as a catalyst for the delivery of that value. Strong brands result in strong stakeholder support. It is important to note that a clear distinction exists between brands that address the expected basic values, and brands that really stand out in a compelling manner. A brand should provide clarity around the specific things that a PAO does in its market and that really bring distinct value to its members, economy, society, and public interest. The brand should also bring people along on that journey. Does your brand achieve these?
- Financing a sustainable future – Many PAOs rely on an annual subscription model. However, younger members do not always relate to this. They are consumers of value. PAOs may need to be ready to change to a model based wholly or partly on purchasing services and products from a menu of options for services. And perhaps some of those services can be provided in ways that reduce costs or increase revenues, such as developing partnerships with CPD providers and adding to the overall suite of CPD programs. In a post COVID-19 world, PAOs can also explore releasing working capital by way of embracing flexible working arrangements and carefully assessing their property needs and arrangements. When did your PAO last consider its funding (revenue) and business model?
- Delivering member value – A different way of looking at how to deliver value to members would be to imagine if a PAO is listed on a stock exchange. Would your PAO attract investment and deliver dividends? Some professional bodies are good at articulating the unique benefits of membership beyond holding its qualification. It is about keeping the brand or badge of the organisation shiny and attractive to employers and future members, as well as current members. Environmental, social and governance matters are increasingly influencing the value of organisations. This applies equally to PAOs, who in many respects are well placed to focus on these matters not only for themselves, but the role they play in impacting other businesses and organisations across all sectors. This is a classic ‘public interest’ matter.
If as a PAO you are not considering and addressing these challenges, the chances are you may be ‘sweating the wrong issues. The prize for getting this right is a strong, sustainable organisation, fit for the future—it has to be worth the effort.
This article was first published on the IFAC Knowledge Gateway on 27 July 2022.
To access the article on Gateway, please refer here.