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  • Brexit and economic uncertainty – What do we know?

    by Roy Daintith | Jul 15, 2016

    Well it’s over; the referendum is done and the UK has voted to leave the EU. The outcome in terms of the political vacuum created by Brexit could not reasonably have been predicted by anyone.

    In the lead up to the vote, I anticipated that a decision to leave would trigger a short period of intense uncertainty and market volatility; this would be followed by a period of calm descending as the realisation dawned that the process of withdrawal and extraction would be more complex and drawn out than anticipated.

    Well, we’ve certainly got some uncertainty. In this article, I will try to piece together the current situation and what we might expect over the rest of the summer.

    Whither the decision makers?

    At the time of writing we have a new Prime Minister in Theresa May, a tense leadership contest within the Opposition and the resignation of the person who for years has championed leaving the EU, Nigel Farage.

    All this means that at a point of extreme uncertainty in the wake of what some are calling (and I agree) a seismic decision, we are bereft of political leadership.

    Is there real uncertainty? Absolutely; so far there seems to be no concrete plan for implementing Brexit, with conflicting noises from both sides of the English Channel.

    The economic data is conflicting too; for example we have this from The Telegraph:

    "S&P said the Eurozone recovery is now in full swing as fiscal austerity eases and QE gains traction, all helped by cheap oil. The growth of consumer credit has jumped from zero to 5.4pc over the last year, and car sales are up 18.4pc1."

    Conversely, in The Guardian recently reported:

    "Eurozone service sector growth hits 17-month low2."

    And they report an economist from MARKIT:

    "The eurozone economy failed to gain momentum in June, rounding off a disappointing second quarter. Faster manufacturing growth was countered by a slowdown in the service sector, leaving the overall pace of expansion of business activity unchanged since May3."

    This is not to pass comment on either source, but simply to illustrate how quickly data change can cast a different light on the same issue. Although other data does shows that claims of recovery in the Eurozone are well founded, the point remains - growth in the EU is positive but erratic. The impact of the UK leaving could stall that recovery.

    The UK needs some steering at the moment and yet there seems to be little in the form of strong, clear guidance from the political class. What is needed it seems is someone calm, cool and analytical: someone who possesses the ability to think clearly under pressure, strive for evidence and not seek headlines. Who might that be? Step forward Mark Carney, Governor of The Bank of England.

    Uncertainty delivers

    Mr Carney delivered a briefing in the wake of the vote, in which he spoke about three sources of uncertainty; geo-political uncertainty, economic uncertainty and economic policy uncertainty.4

    At this point, it might be useful to distinguish between risk and uncertainty. Risk is the balancing of probabilities to determine the outcome of an event. Uncertainty is risk magnified: a complete lack of information pertaining to both probability and outcome, or in more recent parlance ‘unknown unknowns’. This distinction helps as it seems individuals are happier dealing with risk than uncertainty.

    Are we in a period of economic uncertainty? Well it certainly feels like it (and as I write this a third UK fund manager has closed a UK property fund to redemptions). The data also seems to suggest so. The following chart is from the Bank of England and uses the VIX index among other indicators to measure uncertainty.

    Brexit aftermath UK economic uncertainty

    Uncertainty is a strange thing in economics; it is difficult to model and it tends not to be included in macroeconomic models. Does it matter? Almost certainly – the Bank of England states:

    "All this uncertainty has contributed to a form of economic post-traumatic stress disorder amongst households and businesses, as well as in financial markets – that is, a heightened sensitivity to downside tail risks."

    In other words, there may be an embedded effect following a prior shock such that investors remain sensitive to similar effects further down the line.

    How might this manifest itself? One of the issues for uncertainty is quantifying the impact on behaviour. For the Bank of England the impact can be described as:

    "Today, uncertainty has meant an inchoate sense of economic insecurity for many people despite generalised economic prosperity. Across the advanced economies, employment appears less secure, wages more subdued, and inequality more pronounced."

    There now seems to be growing acceptance that these kinds of effects, at least in part, account for some of the decision to vote leave. At the micro level, uncertainty over one’s future employment, uncontrolled variation in the level of that employment, a low or minimum wage and little prospect for increasing one’s hourly rate must weigh heavily on decision making.

    Further, the Bank of England adds:

    "And its precautionary effects can mean spending is deferred because there is often a real option value to waiting. Firms delay investment decisions. Investors seek safe returns. Households put off buying durables. The common thread is that any economic decision that requires finance, has a sunk cost, or an uncertain payoff, is affected." (Carney op.cit.)

    There is already evidence of uncertainty weighing on the economy before the referendum date: business investment decreased by 0.8% between Quarter 1 2015 and Quarter 1 2016, from £44.0 billion to £43.7 billion, revised down from the previously estimated 0.4% decrease.5

    There is further evidence of this economic uncertainty today with car registrations having slowed in June in the lead up to the referendum.6

    Markit reported that UK service sector growth in June was also low, matching the 38 month low set in April. This is reflected in business expectations too, as can be seen below.7

    Brexit aftermath PMI Services Business Expectaions Index

    So, there is evidence that the economy may have been slowing down before the referendum.

    Was the economy heading for a downturn anyway?

    The key question though is to what extent this was happening due to the referendum taking place, or was it simply part of the normal business cycle? It is too soon to say for certain and we need a fair few quarters of data before we can model the effects. However, we can say that the normal path of the business cycle is such that peak to peak (or trough to trough) is on average anywhere between 7 to 10 years.

    In macroeconomics we usually think of unemployment as a lagging indicator; that is, GDP can be recovering from a recession and increasing quarter-on-quarter while unemployment is still rising. With that in mind, look at the following diagram:

    Brexit aftermath unemployment rate

    Source: Bank of England

    It shows the level of unemployment over time in the UK and with the periods of recession in grey. The lagged effect is clear following the end of a recession. What is also clear but less often commented on is that recessions seem to begin when unemployment is at the lowest point.

    UK unemployment is currently 5% - essentially the same level as 2006/8 (i.e. 8 to 10 years ago) and vacancies are running at 749,000. Maybe the economy is set to turn anyway? The Brexit vote won’t have helped in that it may be the event which triggers a downturn. We will know soon enough.

    The markets are spooked.

    The markets seem to be pricing in the economic uncertainty, with the market risk premium (basically the difference between returns to riskier equities and returns to safer government bonds) looking elevated.

    The FTSE 250 (representing largely UK focused companies) has seen a 10% drop since 23rd June and following the fund redemption news of 4th July the exchange rate has fallen to £1/€1.17 - and Mark Carney has delivered a third press briefing on the publication for the latest Financial Stability Report.

    We are now in a period of uncertainty devoid of political leadership – cue Carney:

    "When uncertainty is high, policymakers should have three objectives. First, conduct a sober, objective assessment of the outlook and the risks to it. Second, develop and communicate a plan to reduce those risks and to seize new opportunities. And third, do no harm, by minimising any possible confusion about the commitment to core macroeconomic policy frameworks themselves."

    The Bank of England is doing its best to manage policy uncertainty and hopefully through into shaping people’s expectations regarding economic uncertainty.

     

    Roy Daintith, Senior Consultant of Macroeconomics, Leadership and Professional Development at Kaplan, believes that economics is fundamentally relevant to business performance and is passionate that decision makers should understand the bigger forces shaping and driving their industry.

     

    1 The Telegraph ‘S&P scoffs at 'Armageddon' warnings for Britain, July 4th 2016
    2 The Guardian ‘UK service sector hit by Brexit worries’, 5th July 2016
    3 Markit Economics Press Releases, Markit Eurozone Composite PMI® – final data, 5th July
    4 Bank of England; Uncertainty, the economy and policy, Mark Carney, 30 June 2016
    5 ONS; Business Investment: Quarter 1 (Jan to Mar) 2016 30 June 2016
    6 UK car sales fell ahead of EU vote, SMMT , The Guardian, 5 July 2016
    7 Markit economics; Markit/CIPS UK Services PMI® July 5th 2016

  • Leadership and Professional Development - is it different for women?

    by Gill Reynolds | Jul 11, 2016

    Even in 2015, women are still underrepresented at all levels within organisations and most significantly in senior leadership roles. Evidence from recent studies, most recently Lean In and McKinsey, points to two key reasons: organisation practices and culture, and women’s own beliefs, actions and behaviours around their career development.

    If women are to achieve their full potential in contributing to the economy, changes are urgently needed at both the corporate and individual levels. There is little doubt that having more women at the top improves financial performance (Ernst & Young, 2010) and is therefore something of a no brainer. Indeed most research studies show that CEOs believe this – more than 75% of them support gender diversity but are struggling to make it a reality in their organisations.

    Whilst organisations are well-intentioned in their desire to create a climate and environment in which their people thrive, evidence suggests that women are actively disadvantaged by many company policies, practices and culture. The hard question is what policies, practices and behaviours make the most difference to encouraging and enabling women to succeed at the most senior levels?

    Linked to this, we must also ask what more can women do to help themselves? From our work at Kaplan, it seems to us that women become easily entrapped from an early career stage in self-limiting beliefs, albeit informed by their real world experience of work. Or, they seem quite simply overwhelmed by the struggle and stress of being accepted as authentic women leaders. Equally potent is the noticeable fall off in ambition as women become more senior – is this exacerbated by what they perceive as the unattractiveness of the C-Suite environment dominated by male attitudes and behaviours? We believe there are steps women can explicitly be encouraged to take that will build their confidence and open up more opportunities for them.

    Helping women make better choices
    Promotion to senior roles requires the vast majority of candidates to have experience of line management roles with profit and loss responsibility in core operational areas of the business. By VP level, research (Lean In and McKinsey, 2015) shows that more than half of women have switched to staff roles, eg in HR, legal and finance, unlike the majority of men. Do women need better advice and guidance about the implications of these choices and more encouragement about their potential as effective senior leaders in the core of the business?

    Women have often been encouraged to seek support through women’s only networks. Research shows that these tend to offer mainly social support, however, and not the instrumental support that provides access to resources and decision makers and links to senior executives. It turns out, interestingly, that men are better at building instrumental networks. Would women benefit from more explicit help in building broader networks of people who are influential in their own right and who also provide access to senior sponsors?

    Organisations could also be much clearer and open about the less easily defined criteria for promotion to the most senior roles. Executive presence, for example, is a subjective evaluation made of an individual and at risk of being interpreted as ‘people who behave like us’. Perhaps senior teams need to understand much more about their own biases and (un)willingness to embrace diversity in all its forms.

    Helping women to develop themselves
    It is often difficult for women to envisage themselves as part of a senior executive team – the ways of working and behaving seem so distant from their own. Caught in the trap of underplaying or not recognising their strengths, women need to be encouraged to develop a confident understanding of who they are as leaders, alongside their personal influence and engagement style, and to find their own ways of challenging, being tough and exercising their vision and leadership. It seems to us that women have particular needs in terms of developing their personal presence and impact and navigating the cultural expectations around gender and behaviour.

    We have become more confident in our view that women only development programmes play a vital part in enabling and encouraging women to greater self-belief, greater confidence in their abilities and greater impact on their organisations. They are not the only solution but they offer the chance for women to explore openly and honestly the particular challenges they face in developing their professional lives, alongside their out of work responsibilities, and to find a way for their lives to be enjoyable and fulfilling.

    If this challenge were easy to meet, it would have been done by now. The factors influencing women’s career progression are many and with complex interactions. Kaplan Leadership and Professional Development are currently developing a women leaders in business programme – for further details or to arrange a meeting please get in touch with us.

    This article was written by Gill Reynolds and Jessica Raby who are both Senior Leadership Consultants of the Kaplan Licensed Faculty.

    To learn more about Kaplan Leadership and Professional Development please contact us at businesstraining@kaplan.co.uk or 0203 468 0907.

  • Intrapreneurship - what’s the secret sauce?

    by Roddy Millar, Developing Leaders Quarterly | Jul 01, 2016

    When Gifford Pinchot III first coined the term ‘intrapreneur’ in a 1978 academic paper, it was the era of big business and big taxes. Economies were much slower moving than they are today, and while small businesses existed in large numbers, entrepreneurs were not the vital, energetic presence they are today. As such, businesses looking to creating ‘innovation’ in mature organizations had few role models to emulate.

    Learning to take Risks Again

    Today the risk taking, well-funded entrepreneurial ventures of Silicon Valley and its myriad satellites in cities around the world are testament to the vitality of the start-up environment. Entrepreneurs are no longer peered at with suspicion as eccentric, fringe players, but rather seen as the very essence of a vibrant economy. Nevertheless, economies are still predominantly driven by the large and very large enterprises. Excluding the high-profile outliers, the best paid employment is in large organizations; and large businesses, whilst representing only 1% of UK companies, deliver over 50% of the country’s GDP.

    However large businesses tend to be mature businesses, and mature businesses are slow-growing and need to continuously search for new revenue opportunities to replace and reinvigorate the existing ones. The ‘ambidexterity’ of maintaining profitable current operations whilst exploring new ones is a well-observed challenge for business, and the need to be good at this is increasingly required as the pace of change quickens.

    The challenge of starting a new business within an existing one is considerable. It requires a set of skills that is not always associated with large businesses, but is also distinct from that of the entrepreneur too. So what are the key characteristics of the ‘intrapreneur’?

    Managing the Tension

    Andy Perkins, Director of Kaplan Leadership and Development, is a keen observer of ‘intrapreneurs’, and not just because he is leading an innovative, new venture within the Kaplan corporation himself. He also sees that the competencies of successful intrapreneurs are highly valued in many client businesses.

    At the root of all intrapreneurial ventures is a tension, framed around attitude to risk. New ventures are inherently risky. They require the management team to move quickly, expanding employee numbers and investing in plant and machinery at a pace mature businesses are not always comfortable with.

    Critically they will be doing this in areas they are unfamiliar with, often in areas that are wholly unexplored or exploited by anyone before. This is the pioneering role of the intrapreneur.

    Whilst the entrepreneur is given permission to take these risks by experienced venture capitalists or other investors that understand the ‘fail fast’ nature of new start-ups, the intrapreneur will have to do the same, but with funds allocated from a central budget and controlled by a Board that are not always comfortable or experienced with the higher stakes a start-up plays for.

    This brings an inevitable tension, whereby the Board on the one hand gives its blessing for the intrapreneurial leader to play outside the normally accepted company culture and rules, but at the same time are measuring progress by the larger organization’s existing benchmarks: quarterly earnings, two and three year sales and revenue forecasts, performance reviews. These are metrics that new businesses can rarely provide: there are no earnings and forecasts are often guesses as there is no existing business to extrapolate numbers from.

    Culture can eat Intrapreneurism

    Ultimately, as Perkins notes, the defining competency to enable the intrapreneurial leader to perform is ‘trust’.

    The intrapreneur needs to have the complete trust of the Board. There will inevitably be tensions and disagreements when things do not go as planned or expected in the new venture, and the intrapreneurial leader will need a store of trust with the company’s bosses to see them through these moments.

    Integral to this is a profound understanding of the larger company’s culture; not so that this can be replicated in the new venture, but so that the intrapreneur will be acutely aware of times when the new venture is pushing against the culture, and they can explain and pre-empt any objections. By showing an understanding of where these tensions occur, trust can be maintained and fostered. Perkins believes that bringing in an outsider to build the new venture is not compatible with this approach, as the outsider will be less sensitive to the cultural norms that will be challenged as the new business develops.

    With energetic innovation within mature organizations ever more necessary, Boards need to be able to identify ‘safe hands’ within their existing business that can also drive new ventures forward creatively. Perkins has a warning for those who seek to manage intrapreneurs:

    They also need to understand how much space to give, in which these ventures can develop, make mistakes, and adapt without too much pressure from above, which can squash the energy and creativity that is required to navigate through the early stages of a business’s growth.

    These abilities are born of experience, judgement and behaviour rather than technical or functional skills, but nonetheless they need to be learnt and practiced to allow true ‘ambidexterity’ to flourish.

  • Benchmark your learning and development strategy

    by Sharon Cooper | Jun 13, 2016

    Based on research from learning and development managers in the UK, this white paper explores learning best practice before, during and after training and is designed to help improve your learning and development strategy and provide support and guidance on this key area.

    Download and you’ll find simple-to-implement ideas to help you improve and benchmark your learning and development strategy against those of your peers.

    What’s included:

    • Packed with practical tips and ideas to help you
    • How to measure the impact and ROI of training and development in the workplace
    • Discover new learning techniques and technologies for your organisation
    • Advice on how to improve learner and line manager engagement
    • Recommendations to help you self-audit learning
  • IFRS 16 leases – a matter of fair presentation?

    by Bruce Cowie | Jun 01, 2016

    Waiting for Godot

    Almost since the issue of IAS 17 in 1982, we have been waiting for the next step in dealing with the reporting of leases. Indeed, I had begun to feel that Vladimir and Estragon in Samuel Beckett’s famous play had more chance of seeing Godot finally turn up than we had of seeing a revised leasing standard requiring lessees to recognise all significant lease assets and obligations on balance sheet.

    It was almost a shock when, more than 33 years later, the IASB finally issued IFRS 16. Ultimately the standard was very much as expected, with lessees required to recognise all significant leases on balance sheet via a lease liability and a right-of-use asset.

    I will not bore you with the mechanics here, as that has already been done many, many times. Rather, my aim is to question whether the exercise has any point to it.

    Does anybody care?

    I would be a very rich man if I had £100 for every time someone has said to me "there is no point in putting all leases on balance sheet - analysts make their own adjustments anyway. All it will do is create unnecessary effort and cost". Quite apart from the fact that such comments most regularly come from entities whose balance sheets will be most affected by the recognition of all lease assets and liabilities, this raises two key questions:

    • Will recognition really affect the view given to readers of financial statements?
    • Do we really want financial statements to show a fair presentation?

    Impact on readers

    It is certainly true that sophisticated readers currently seek out the disclosure of operating lease obligations and make their own adjustments. However, does this apply to everyone? There is an old adage - "If you want to hide a tree: put it in a forest", and often I can’t help thinking that this motto is applied with respect to lease obligations. For example, Vodafone’s 31st March 2015 Statement of Financial Position includes £25.9 bn of non-current liabilities - 61 pages later, note 29 discloses non-cancellable operating lease commitments of £6.58 bn.

    There is also the point that a substantial number of entities are making efforts to restructure their financing arrangements for assets to avoid the impacts of IFRS 16. It is fair to question why this effort is being made.

    Fair presentation - the IKEA problem

    The real problem to me in respect of lease accounting comes when we consider fair presentation in financial statements. The assets and liabilities which arise for lessees under IFRS 16 plainly meet the definitions of assets and liabilities, and few can argue that a fair presentation is not substantially enhanced by their recognition.

    "But you do not need to recognise them: disclosure is enough. Readers can make their own adjustments anyway" comes the cry. The problem here is that if you merely disclosure lease obligations you are effectively giving readers flat packed financial statements - they do not actually give a fair presentation until you have put them together.

    This is just like a wardrobe purchased from IKEA - it is not actually a wardrobe until you have put it together! The problem is compounded as many disclosures will actually result in the equivalent of a wardrobe bought from other, less reliable suppliers - there is a crucial part missing, they do not fit, there are no assembly instructions or most alarmingly there are 6 screws to spare!

    In summary

    The merit of IFRS 16 depends on what we want from our financial statements.

    If we really believe in fair presentation, then IFRS 16 represents a massive step forward in corporate financial reporting as long as it is applied properly. For this to be the case, it is not enough just to recognise the asset and liability on balance sheet. Proper disclosures and a clear statement of the relevant accounting policy is needed if the wardrobe is not to wobble alarmingly or to collapse when actually used.

    If on the other hand, fair presentation is something to be tossed aside in the quest for simplification and cost-cutting, then IFRS 16 represents one of the biggest follies ever perpetrated by the IASB.

    You decide! However, if you hold the latter point of view, then that brings into question the entire existence of IFRS and the IASB, not to mention the main plank of the audit opinion.

    For more information regarding IFRS 16, please visit our Leadership and Professional Development page.

    Bruce Cowie, Head of Financial Reporting, Kaplan Leadership and Professional Development

  • The future of Performance Appraisal: less formality and more agility?

    by Ingle Dawson | May 31, 2016

    Nine out of 10 companies continue to use traditional performance management methods: goal setting, mid-year check-in and an individual rating based appraisal. So, when Adobe Systems abandoned their appraisal system in 2012, it was seen as a bold and risky experiment. Yet, in the last 12 months, Deloitte and Accenture have joined a growing list of organisations that have chosen a similar path.

    Over breakfast on the 28th October 2015 at the Private Room of the Ivy we were delighted to host 30 senior HR, Talent and Learning Professionals from a wide range of organisations to explore some of the implications for performance management in a 'post appraisal' world.

    While we agreed that reports of the death of the traditional appraisal were greatly exaggerated, there are several issues that arguably ought to concern anyone interested in retaining and getting the best out of their talent.

    A professional identity around leading and managing

    It is clear that many managers see the appraisal as simply a tool or a format, rather than means to engage and lead through others. Those quality conversations that distinguish the 'good' and 'bad' managers spring from a personal and professional identity around leadership, and the role and responsibilities it holds. Too many managers are technical experts who feel they need to 'lead' occasionally, rather than leaders who happen to be technical experts. The most successful organisations and the most engaged staff enjoy the latter.

    A systemic approach to appraisal

    Too many individuals work in silos and units far removed from the organisational outcomes, to which their appraisal is vaguely connected. Managers must be able to provide a clear 'line of sight' from the individual to the organisation's outcomes and its measures of performance. But more than this, they need to identify those processes and practices that help, as well as those that hinder performance, to develop their organisation alongside their people. This is especially the case where the nature of work has changed – more agile, flexible working arrangements. This aspect of Management Development is severely neglected; management programmes are tuned to a workplace and culture that is rapidly disappearing.

    Feedback: They want it now and they want to be good!

    For those under the age of 30, a good day is measured in likes and retweets, immediate and positive feedback dominates. So feedback on performance at work that is perhaps once a quarter, and removed from its context, is perhaps inevitably seen rather differently. But what if you could assess performance in context easily and quickly, and provide instant accurate feedback? Such an 'appraisee-centric' tool would be a worthy complement to the traditional appraisal methods.

    Appraising what our organisation values and valuing what we appraise

    It's clear that one size does not fit all – what works for a tech start up simply doesn't fit an investment bank. But what is common is a need to identify what it is that our organisation values – their output, behaviour, thinking and relationships they have with others – and focusing our efforts around those consistently.

    Suggested further reading:

    Reinventing Performance Management (Deloitte's radical re-design)

    Transforming performance management PDF (4.68MB)

    Why performance appraisals don't improve performance

     

    Ingle Dawson, Senior Leadership Consultant, is an award-winning consultant and expert in change management and leadership. He thrives on making a real connection between 'people' and 'commercial' issues to generate clear business benefits, and is passionate that development programmes are delivered in a stimulating, participative and enjoyable manner in order to make sure the changes stick.

  • Kaplan Business Challenge a success in Abu Dhabi

    by Sharon Cooper | May 26, 2016

    Kaplan Leadership and Professional Development launched their business simulation - the Kaplan Business Challenge - to over forty business professionals at an event in Abu Dhabi on Tuesday 24th May. The event kicked off with introductions by Martin West, business development executive for LPD in the Middle East, followed by Giovanna Ramazzina, Head of Kaplan LPD International, who spoke about the need to tie in behavioural development alongside technical programmes to increase effectiveness of the learning experience.

    Giovanna also gave an introduction to LPD’s programmes and the benefits of investing in development that is contextualised, emergent, challenging and underpinned by rigorous science.

    Sarah Cordwell, Head of Client Relationships, demonstrated the key aspects of the Kaplan Business Challenge. Attendees divided into six teams, adopted team names and worked on team objectives. Attendees were offered an insight into the delegate experience, such as understanding the far-reaching financial impact of decisions taken and the importance of delivering value to stakeholders, as well as the range of behaviours and team dynamics resulting from working in a pressurised environment that aims to turn a failing business around.

    Kaplan LPD, in partnership with Genesis Institute, is keen to work with Middle Eastern Businesses to deliver KBC programmes within the region. Anyone who is interested in knowing more about how the KBC can be used to develop teams from graduates to senior leaders, should get in touch with Martin West on 971 5 6874 6596 or email martin.west@kaplan.co.uk.

  • Financial Challenges in a VUCA world

    by Roy Daintith | Apr 25, 2016

    Given the economic challenges of today it is obvious that our businesses need to be more agile. This is not something that can happen overnight and in many cases will demand a cultural shift. I believe we now live in precarious times and we can’t rule out another crash. This will be marked by acute Volatility, Uncertainty, Complexity and Ambiguity within the financial markets.

    This demands greater technical and behavioural insight. A report by Deloitte, Global Human Capital Trends 2016 found that of 7000 executives surveyed, 92 percent believed that leadership was a critical priority1. Furthermore 56 percent stated that their companies were not ready to meet the leadership challenges presented by today’s market economy2.

    What to do?

    We need to build adaptive leaders and teams that will bend and not break. To me VUCA is the new norm. Outlined below are the key points from my webinar Stick or Shift. For each point there are huge leadership implications.

    Volatility

    Volatility across financial markets and between economies has been heightened since the early 1990s. The IMF recently examined correlation between various market indices and identified two distinct periods of correlation of returns: prior to 2008, 0.45 and post 2008, 0.73. As a consequence the increasing ease of trading across various jurisdictions and the heightened correlations has created the conditions for shock across financial markets. This interdependence, in part, lies behind the higher volatility facing financial markets.

    This effect is mirrored by the performance of the real economy. Trade linkages have mushroomed with the rapid growth in emerging market economies. China is a classic example: the EU now accounts for almost 20% of China’s exports and over 40% of the UK’s. A sluggish recovery in the Eurozone will impact the export performance of both China and the UK. Volatile external forces in a company’s target markets will negatively impact a business and affect its earnings stream. These forces are not directly controllable.

    Uncertainty

    Predicting market behaviour is becoming increasingly difficult. What odds would I have been given in 2006 on Lehman’s going bust or Merrill Lynch being taken over? Equally who would have contemplated that a software company focused on video streaming and only founded in 2005 would be bought for $1.6billion in 2006? These events were not really forecastable and demonstrate how easily we can be overtaken by a course of events. This uncertainty is prevalent in the economy today. There is no concrete idea as to when interest rates will rise or fall. This is macroeconomic uncertainty.

    Complexity

    Financial markets are not only increasingly fragmented but compared to 20 years ago there has been a significant increase in the range of financial instruments available. To put this in perspective, a paper by the Bank of England states that for an investor to be fully informed about a structured bond called a Collateralised Debt Obligation or CDO2 , the investor would have needed to have read over a billion pages4! 2 This is an extreme example but consider the number of trading relationships the UK has with other countries across numerous product and service sectors. The daily global turnover in the foreign exchange market is in excess of $5 trillion per day and London’s share of this is over 40%5. From this consider the ramifications of the UK leaving the EU.

    Ambiguity

    This is writ large at the moment in terms of negative interest rates. It doesn’t mean retail or commercial banks are going to be charging their customers to keep cash at the bank. It means the commercial bank will be charged for keeping cash at their respective Central Bank. The impact of this policy is ambiguous. There is the potential for pressure to be placed on a commercial bank’s margins and as a consequence increase the rate charged on loans; an action which in turn would reduce borrowing by consumers and businesses. It may also increase borrowing and boost aggregate demand thus achieving its primary objective - but that increased borrowing may also make the balance sheet of households and firms more susceptible to an external shock.

    In the coming weeks I will be delivering tailored briefings on the challenges facing the Middle East, North American and European Markets. This will include a presentation on the implications of Brexit.

    We are facing challenges which are potentially more acute than 2006. These require both a technical and behavioural focus. If you want to know more on how to get your team ready contact Roy Daintith.

    1. David Brown et al, Global Human Capital Trends, Deloitte University Press, 2016.
    2. Ibid
    3. IMF Global Financial Stability Report, Oct 2015, fig.1.17 p. 37.
    4. Andrew Haldane, Bank of England Rethinking the Financial Network, April 2009, Table 2, p. 37.
    5. Bank for International Settlements, Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets, 30 March 2016.

    Learn more about Kaplan Leadership and Professional Development

    Roy Daintith, Senior Consultant of Macroeconomics, Leadership and Professional Development at Kaplan, believes that economics is fundamentally relevant to business performance and is passionate that decision makers should understand the bigger forces shaping and driving their industry.

  • How much does financial illiteracy cost?

    by Ian Stewart | Mar 18, 2016

    Someone recently reminded me of an old business story, the one about Lee Iacocca asking potential recruits what Chrysler and Ford did. The answer, of course, wasn’t make motor cars: it was make money.

    I’ve heard that story countless of times. It’s probably apocryphal, but its longevity is partly explained, I think, by the boldness of Iacocca’s mission.

    Money. Is that really what it is all about?

    It turns out most of us don’t like talking about money. In fact, most people don’t even like thinking about it – and this has enormous implications for us personally and professionally.

    In a Health and Retirement Study conducted to understand patterns in financial literacy, the University of Michigan asked participants to answer three questions:

    1. If the chance of getting a disease is 10%, how many people out of a 1000 would be expected to get the disease?
    2. If five people all have winning lottery numbers in the lottery and the prize is $2 million how much would each of them get if the prize was divided equally?
    3. Let us say you have $200 in a savings account. The account earns 10% interest p.a. How much would you have in the account at the end of year two?

    These are not difficult questions but the results of the survey are pretty staggering. While 84% of the respondents answered the first question correctly, and about half did so with the second, only 18% got the third right. This demonstrates the large gap between mathematical competence and financial literacy.  What is ever more important, are the consequences of such findings. Households where financial literacy was high (both spouses answered all three questions correctly) were more than eight times wealthier than low financially literate ones (with no correct answers).

    The implication for any business, I believe, is very clear. Some of our people make very well-informed decisions with company’s money, while some make very poor decisions with it. Just imagine the impact this has on the bottom line. Indeed, given that the employee is spending ‘someone else’s’ money, the problem could be even more acute.

    Financial literacy matters; so why are so many people financially illiterate? Clearly numerical ability is one reason, but there are other, more human reasons why so many people make such poor decisions around money – starting with our relationship with it.

    A Seething Mass of Contradictions

    Our relationship with money is structured by a series of contradictions: values, beliefs and desires that pull us in different directions. Unresolved, these contradictions shape our behaviours – often not in good ways. Here are three of them.

    Contradiction #1: What I need isn’t what I should want

    Isn’t money what we all want more of?

    ‘No’, some cry. Because money – or at least the barefaced pursuit of money – is somehow wrong.

    Here lies contradiction #1: we work to be paid, we create to sell our wares, we invest for our future, and yet to be seen to be pursuing the very thing that allows us to do any of these things is morally questionable. You can be proud of what you did with money, but you need to show the world – and probably yourself – that it was just the means to the end.

    Contradiction #2: You make me feel so happy; you make me feel so sad

    If money really was just a means to an end, we’d treat it like any other tool, like a cup or a spade. Some people might claim that is exactly how they feel about money, but if so, they are highly unusual. For the rest of us, money has as a powerful effect on our lives. Experiments show that if you put a large sum of money in front of people, the mere sight of that cash is exciting: our pulses quicken, our blood pressure rises. But it is a sensation that can become addictive – think of the thrill of getting a bonus, or a pay rise, or sealing a great deal. Money is a pleasure that never fulfils us as we soon get used to the extra cash and start itching for the next rise.

    For most people money is rarely associated with positive feelings. In the UK, for example, the emotion most commonly associated with money is anxiety. And if money is a source of distress, how likely are we to spend much time thinking about it?

    Contradiction #3: Pay me what I’m worth, but don’t measure my value in money

    A former colleague of mine once came up to me at an office party and asked me if I knew what another colleague of ours got paid. I said I didn’t. She said she did and she was furious about it. ‘Why?’ I asked, expecting her to say he was getting paid more than her. ‘He’s getting the same as me’, she replied.

    Many companies have rules against talking about salaries and for good reasons: while many employees negotiate their own contracts and in doing so arrive at an agreement they are comfortable with, evidence shows that the mere knowledge of a co-worker earning more (or even the same) for doing a similar role is associated with reduced job satisfaction.

    This takes us to contradiction #3: what a colleague gets paid can only affect you if you see money as the way in which your value is measured, but what sort of person would you be if you could be bought?

    We need to talk about cash

    You may argue that none of these ‘contradictions’ is insurmountable – and you’d be right. Humanity has found ways of managing how money affects us – over time we have forged our own personal relationship with it. For many this may well be a healthy relationship of equals, where we take pride in managing our finances. For others, though, it is a much less positive one, where often financial matters are ignored.

    A well-known financial regulatory body in 2006 ran a baseline survey of financial capability that through focus groups and questionnaires examined consumers’ capability in broad categories around ‘managing money’, ‘planning ahead’, ‘making choices’ and ‘getting help’. This research revealed that around a third of consumers had no apparent weaknesses, while two thirds exhibited significant weaknesses in one or more of these areas. The general levels of financial literacy are very low indeed.

    This is helpful to unearth the magnitude of the problem, but how can we forensically assess individuals or groups around their level of financial literacy in a way that is useful to an organisation?

    We knew we wanted to move away from tests because a test only assesses our ability to recall knowledge. We were not interested only in what people knew about finance, but in what decisions they were likely to take when presented with the sort of financial scenarios they deal with at work (i.e. practically all of them!).

    Through considerable research, on-the-job investigation and refinement we created a financial literacy diagnostic tool: a digital questionnaire that is tailored to the sorts of decisions that are made every day in a business around its money. Importantly, the diagnostic asks people not just to make a decision but also to say how confident they are that they got it right. This assessment of both competence (do I know the answer?) and confidence (do I think I know the answer?) is critical.

    What have we found so far? There are people who are very confident about the decision they make although their level of competency falls far short of their confidence. There are also people who know the right answer but don’t exhibit the confidence required to put it into action.

    This comes together as a financial literacy heat-map that identifies which individuals are likely to be a risk to an organisation and which represent untapped potential, allowing early and targeted development for the people who need it most.

    So whether you buy into Iacocca’s red-blooded capitalism or take a broader view of the purpose of business and society, nurturing good commercial decision-making by optimising financial literacy reduces risk and better positions any enterprise to succeed.

  • Talent Management white paper

    by Sharon Cooper | Mar 09, 2016

    Your essential guide to retaining and developing talent

    Our new Talent Management white paper is designed to help develop, improve and benchmark your talent development strategy.

    The white paper is based upon research from Learning and Development Managers and draws expertise from our practical experience and involvement in delivering talent programmes, allowing you to spark conversations with key decision makers in your business, and above all gain some practical suggestions to consider when looking to develop and retain your own talent.

    What does the white paper cover?

    • Expert tips to define your Talent Management programme
    • Realise the potential of Talent Management programmes to encourage a shared understanding of the business to break down departmental barriers
    • Harnessing sustainable skills development to ensure your long term growth strategy
    • Expert advice to overcome the perceived challenges to developing a Talent Management programme
    • Driving momentum in the work place to retain your staff

    Download the whitepaper to help improve your talent development strategy.

  • What really matters when recruiting graduates?

    by Sharon Cooper | Mar 09, 2016

    Based on recent survey answered by 198 business leaders and learning & development managers across a wide range of industries in the UK, this business report highlights some of the key issues and challenges that organisations face when recruiting graduates and the impact on overall business strategy.

    The report outlines:

    • Key trends in graduate recruitment
    • The main challenges and opportunities when recruiting graduates
    • The skills and competencies that employers look for in graduates during the recruitment process
    • The key competences sought in graduates after two years in the job and the role they play in developing graduate talent

    Download the full report to gain insight into graduate recruitment.

    This survey was conducted as part of Kaplan's practical insights programme thought leadership programme.

    Free Graduate Recruitment Business report

    Explore the current key trends & perceptions when recruiting graduates.

  • The appraisal is dead, long live the appraisal

    by Ingle Dawson | Mar 03, 2016

    The death of the appraisal has been long foretold. Indeed, in the May-June 1957 issue of the Harvard Business Review, Douglas McGregor critiqued the, by then, standard practice of performance appraisal and suggested an appraisee led approach to the entire process.

    Later on in this piece we reflect on the latest, most marked and radical developments. For the moment at least, the conventional wisdom prevails that you should assess recent performance and focus on future objectives and opportunities. This in turn is a one of the key tools of performance management, the bringing together of all the activities that contribute to the effective management of individuals and teams.

    In late 2014, Kaplan carried out a survey among 170 companies on their staff appraisal programmes. The findings were somewhat contradictory, in that over 89% of respondents said they find the appraisal process “very valuable”, but almost 37% of respondents agreed that appraisals are seen to be mere “tick box exercises”. A strong 84% said they felt appraisals have a positive effect on individual performance, and 84% agreed that appraisals allow companies to manage staff better. Yet despite respondents claiming that appraisals make managing staff easier, over 17% said they do not share business objectives with employees, and one in five companies said they do not set staff development goals. Without disclosure of business objectives and without development goals in place, staff are likely to be more difficult to manage.

    According to the UK’s Chartered Institute of Personnel and Development (CIPD), performance management is about “helping people to understand how they contribute to the strategic goals of an organisation and ensuring that the right skills and effort are focused on the things that really matter.”1

    Staff appraisals are still widely perceived to underpin the performance management process. In a CIPD survey, 83% of respondents agreed that performance appraisals – along with regular reviews, feedback and assessment of development needs – are critical components of performance management, contributing to the process by which employees:

    • Know and understand what is expected of them
    • Have the skills and ability to deliver on these expectations
    • Are supported by an organisation to develop the capacity to meet these expectations
    • Are given feedback on their performance
    • Have the opportunity to discuss and contribute to individual and team aims and objectives 2

    In 2012, a separate CIPD report claimed that “whether formal or informal, performance discussions help you to get the most from your workers”.3 Indeed, the staff appraisal process provides a vital mechanism for optimising output and ensuring business plans can be delivered at all levels.

    So what can you do to ensure that you derive maximum value from your company’s appraisal programme?

    Honour the process and the purpose

    • Agree individual development goals during appraisals
    • Share broader strategic objectives with employees
    • Ensure direct reports and line managers spend equal time preparing for appraisals
    • Ensure senior level sponsorship and role modeling
    • Support and train both appraisers and appraises in the skills and insights needed for successful appraisal conversations
    • Hold reviews on a regular and one-to-one basis to reinforce the importance and of the exercise and its place in performance and progression
    • Link appraisal results to progression opportunities

    New insights and trends

    Having stated at the beginning of this piece that the demise of the appraisal has been long predicted, some organisations, including major ones are looking seriously at the effectiveness of long established processes.

    The thief of time

    Global professional service firm Deloitte are redesigning their performance management system for their 65,000 employees worldwide.
    Part of the motivation for this change is the realisation that the whole process – holding meetings, completing forms, creating ratings – consumed nearly 2 million hours a year, and that many of those hours were spent discussing outcomes rather than in face-face- conversations.
    One of the key parts to this radical redesign is the reframing of three key performance management objectives – to recognise, see, and fuel performance.

    Recognise is the unambiguous desire to recognise performance through variable compensation.

    See is the objective assessment of performance, where there are two principle changes: reducing 360 and upward feedback and focusing on the immediate team leader; asking them a different type of question – what they’d do with their team members, not what they think of them.

    Finally, the focus is moving from “management” of performance to improving performance, articulated as fuel performance.

    Ratings and the bell curve

    Deloitte are also reviewing their use of ratings. The starting point is not whether the system is fair or achieves stated objectives, but the fact that there is a single number

    My own experience is that where the use of a normal distribution (‘bell curve’) approach in organisations is perceived to lead to ratings “quotas”, it is a major cause of cynicism about the process. As these approaches are most likely in large organisations, this may partially explain the lower level of engagement in companies with over 1,000 employees in our survey. Frequently, both understanding of the bell curve and implementation is poor at producing a forced normalisation.

    Microsoft and Adobe Systems have decided to end all ratings. Infosys which employs 150,000 people is also rethinking the use of this statistical model to rate employees. KPMG in India (where they employ 8,000 people) began a pilot on the 1st April 2015 which could herald the end of this approach also.

    Reasons cited for the trend away from the bell curve, include spending too much focus on individual performance (rather than team effort), unwanted internal competition, and a propensity to discourage employees from sharing resources and information with peers. Many internet era companies see the curve as less relevant to meet demands of the knowledge workers and ‘human capitol’ businesses.

    The end of the affair

    We have sought to understand the degree to which a wide range of UK companies are engaged with the appraisal process. Our experience is that training both line managers and appraisees in the skills of performance conversations can lead to significantly greater engagement and benefits to all – managers, direct reports, and the organisation in terms of engagement and retention. Nonetheless, as we have already described many organisations are looking again at time-honoured approaches to appraisal processes and performance management more generally.

    Throughout our work in helping organisations with the effectiveness of appraisal conversations, we have always emphasised that the element of the appraisal meeting that looks at past performance should be a consolidation of known insights itself (because regular conversations have happened through the period). As mentioned above, Microsoft and Adobe Systems have ended all ratings and put in place a system that focuses on teamwork, collaboration, timely feedback, giving more flexibility to managers to hand out rewards as they see fit.

    In ‘The End of the Performance Review – A New Approach to Appraising Employee Performance’, Dr Tim Baker goes further. His Five Conversations Framework is effectively a replacement for the traditional performance review system. It comprises five, 10-minute conversations between managers and their staff over six months.

    More radical still are the ideas contained in ‘Holacracy: The Revolutionary Management System That Abolishes Hierarchy’ by Brian J Robertson. Essentially, it’s a way of running organisations that removes power from a management hierarchy and distributes it across clear roles to be executed autonomously, and without micromanagement. Individuals no longer have job descriptions, they have multiple roles, often on different teams, and those role descriptions are updated by the team actually doing the work. There is a traditional hierarchy with a series of interconnected, but autonomous, teams (referred to as ‘circles’).

    There are no “People Managers” in the conventional sense, but Lead Links in each ‘circle’ will have performance conversations around effectiveness in role. There is a significant expectation of and opportunity for individuals to take control of their own development and progression.

    At the time of writing, the largest organisation in the world using this approach is Zappos – a US based shoe retailer employing 1,500 people and renowned, excellent customer service and high levels of staff engagement. In transitioning fully into this approach, it appears that around 15% of employees may choose to leave because this level of empowerment and fluidity will not work for them.
    We are also now hearing that Acccenture has announced that it is radically changing its performance management process, disbanding a once a year appraisal process (and ending rankings altogether). In its place they will move towards a continuous feedback culture.

    Final thoughts and unchanging truths

    Three things will remain as constant as they have ever been:

    1. Appraisal processes and performance management systems should be designed to support the culture the organisation is seeking to achieve
    2. Colleagues will continue to have performance and development conversations
    3. They will need advice, training and practice in order to do them well

    As always, we invite you to share your experiences and thoughts on the subject.

     

    References
    1 CIPD: Performance Management in Action – current trends and practice, 2009
    2 CIPD: Performance Management in Action – current trends and practice, 2009
    3 CIPD: Performance and Retirement Practices – get it right, 2012
    The value of staff appraisals: Employers Views – Kaplan business insight report
    “Holacracy: The Revolutionary Management System That Abolishes Hierarchy” by Brian J Robertson.
    Harvard Business Review
    CIPD
    “Reinventing Performance Management” by Marcus Buckingham and Ashley Goodall, Harvard Business Review, April 2015
    “The End of the Performance Review – A New Approach to Appraising Employee Performance” by Dr Tim Baker

    Ingle Dawson, Senior Leadership Consultant, is an award-winning consultant and expert in change management and leadership. He thrives on making a real connection between ‘people’ and ‘commercial’ issues to generate clear business benefits, and is passionate that development programmes are delivered in a stimulating, participative and enjoyable manner in order to make sure the changes stick.

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  • It’s all in the game

    by Dr Ian Stewart | Mar 02, 2016

    It was a big successful organisation. One in which everything ran like clockwork – everyone knew their job and when an instruction was issued from the top, it made its way through the various layers of leadership to action at the front line. It was effective. It dominated its environment sweeping aside all competition. That was until the day it faced a different sort of rival – ones that were agile, fast moving and innovative. This new rival didn’t wait for orders from the top; those at the front line took responsibility themselves, seized the initiative and created a decisive and winning advantage.

    You’d be forgiven for thinking that this sounds like a tale of our times – high street stores fighting online retailers for customers or newspapers battling bloggers to be first with the news. In fact, it was the Prussian army of the 1806 at the battle of Jena. And their rival? The army of Napoleon I. The key lesson for the Prussians, and as it turns out, for many big organisations since, was simple: decision making authority had to be devolved to the lowest position possible.

    This meant that their soldiers had to be trained, empowered and schooled in the environment they were expected to make those decisions. And so the Prussian Military School created the ‘War Game’ – a means to simulate the speed, complexity and ambiguity of the environment their people would operate in practice what it took to succeed. This is the essence of the ‘serious game’ – using role play, simulation to provide a challenging environment that stretches and develops decision makers.

    Serious about playing

    Today, major corporations around the world are using serious games — the more common term today is gamification — to develop the talent and skills of their employees in areas as diverse as customer service, innovation, and lean manufacturing. Hilton uses a game called Ultimate Team Play to teach customer service skills, for example. IBM developed INNOV8, a simulation game in which players design or modify business models to satisfy customers or optimize supply chains (among other goals). Our simulation – The Kaplan Business Challenge – has been used in over 25 countries to train our client’s staff from graduates up to board members.

    Did you know?

    Simulations and games are more effective at transferring learning to students than case studies.

    Simulation games are particularly powerful developmental tools. They create the unfamiliar and challenging environment that is essential in triggering personal and professional development. The research supports this. A study by the Federation of American Scientists showed that participants remembered 10% of what they read, 20% of what they heard, 30% of what they were taught if visuals were also included, and 50% of what they were taught if they also saw someone performing the tasks. However, they remembered 90% of what they learned if they did the task themselves — even in simulated conditions.

    Gamification: competitive game, collaborative learning

    The goal of gamification is to leverage the informality and fun of games to break the psychological and cognitive boundaries that, often unwittingly, restrict the potential of traditional brainstorming or reflection. In a presentation at the second annual Gamification in HR Summit in Vienna, Anthony Scarpino, Senior Director of Talent Acquisition at Sodexo, highlighted five components of good gaming solutions

    • Challenge: empowers participants to solve problems and think creatively, thus completing the mission
    • Fun: satisfies the need for novelty
    • Social: requires collaboration toward team goals
    • Meaning: engages employees through goals with meaning
    • Achievement: creates a virtuous challenge, win, euphoria loop in the minds of participants

    The Summit highlighted research by Gartner, Inc., which concluded that 70% of Global 2000 organizations will have at least one gamified application by the end of 2015, and 40% of Global 1000 organizations “will use gamification as the primary mechanism to transform business operations.” Whether gamification is as central to operational transformation as touted by Gartner, there is no doubt that it has revolutionized organizational learning and strategic thinking. Apparently when faced with intractable problems or challenges, there is, in fact, no better time for fun and games.

    Making decisions in a volatile and complex marketplace

    Business life has always featured the unpredictable, the surprising, and the unexpected. But it is also dealing with a new level of complexity – a complexity that affects the products we design, the jobs we do every day, and the organisations we manage. Elements of business and social life that used to be separate are now interconnected and interdependent, making them, by definition, more complex.

    Complex markets are far more difficult to manage than merely complicated ones. It’s harder to make sense of things. It’s harder to predict what will happen – the past behaviour of a complex system may not predict its future behaviour.

    The new version of the Kaplan Business Challenge (KBC) gamifies the complexity of a crowded, competitive marketplace – participants develop interests, create businesses, interact and create new businesses, shape or be shaped by their environment. Organizations need to be able to flex, and change, adapt, and respond to the environment – the new KBC model presents this challenge to its player. And – like Napoleon’s foot soldiers – these players have to take responsibility, appreciate the wider ramifications of their actions, mindful of impact of their actions on their colleagues, their partners and on their rivals.

    Dr Ian Stewart, Head of Leadership and Organisational Practice, has over 25 years’ experience of leadership development in the public and private sector. Prior to joining Kaplan, Ian ran the Behavioural Science department at the Royal Military Academy, Sandhurst.

  • The Future of Accountancy

    by Kieron McDonnell | Dec 21, 2017

    We recently attended the Future of Accountancy conference at London’s Southbank University, joining key figures from the world of accounting education to discuss what the future may have in store for our industry. Against a backdrop of fast paced change, not only is it important that these conversations are taking place but that we, as a tuition provider, are present to consider how we will need to react in the years to come.

    Although all sort of topics were covered across the day - from Brexit to blockchain - key themes that came up consistently were the needs of employers, the shifting ambitions and aspirations of the next generation, and the dynamic nature of the environment in which all stakeholders currently find themselves in. Of course, these will also impact the professional bodies and tuition providers such as Kaplan.

    Challenging questions were asked as to what the future might bring, such as:

    • Will we still need financial statements in their current form, or could shareholders and governments not simply access accounting records directly?
    • Do we need changes in corporate reporting to help shareholders better understand how value is generated and sustained?
    • What is the value of trust in a business relationship? Is it not trust that wins contracts, generating cashflows leading to a more sustainable business?

    Of course, professional bodies are not immune to change, as we’ve seen recently with the merger between CIMA and AICPA to create the Chartered Global Management Accountant (CGMA) or the way in which all of the bodies have had to respond quickly to the developments of the Level 7 Professional Accountant Apprenticeships.

    Against a backdrop of increasing change and new challenges, professional bodies have to create an exam framework that will test the finance professionals of the future in subjects that will still be relevant 10 years from now, ensuring those who pass will be able to thrive in an uncertain world.

    We weren’t able to touch upon how training providers such as Kaplan will be able to better teach these new subjects on the day, but we are seeing changes here as well.

    It’s very encouraging to see a greater recognition of the importance of collaboration between the professional body, employer and tuition providers. Our expertise in the area of knowledge transfer and behavioural changes will be an essential component in creating better accountants of the future.

    We can’t predict exactly what the future will have in store, but as a tuition provider we can join the conversations as we look to the future with imagination and scepticism, asking what changes might happen and how will we respond to them to ensure that we continue to train accountants for the challenges they will meet in the years ahead.

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