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PROFESSIONAL DEVELOPMENT / AUDITING
Nurturing the human elementHow one firm is pursuing audit quality through a career progression framework and timely feedback.By Ken Tysiac
28 ! Journal of Accountancy
By the time Erin O ’Donnell arrived at the airport for a return flight home from a meeting in April, a reward had been sent to her email
inbox informing her that she had done a good job.O ’Donnell, a CPA and senior manager in PwC
LLP’s office in San Jose, Calif., had traveled to San Diego in support of a partner at the meeting. Afterward, the partner sent O’Donnell a reward as part of a PwC program that gives partners and managers small allotments of money available for “real-time recognition” of staffers.
O ’Donnell appreciated the quick recognition. “Having something immediate like that,
knowing that what I did had an impact that day and in that moment, really goes a long way for me,” she said.
Real-time feedback and a personnel development model known as a global career progression
journalofaccountancy.com
'Focusing on [the M illennia l]
generation to make sure we're
supporting them in the way they
need to be supported is im p o rta n t
to our business.'
Erin O 'D onnell, CPA, a senior manager at PwC
framework are part of PwC’s answer to the challenges of developing and retaining talented people in the accounting and auditing profession.
As firms continue to focus on improving audit quality, the talent crunch can be an obstacle. Staff retention was ranked as the No. 1 concern for firms in the two largest size categories (11-20 professionals and 21+ professionals) in the 2015 Private Companies Practice Section (PCPS) CPA Firm Top Issues survey.
Discussions about audit quality often lead to talk about following standards and procedures, obtaining and documenting necessary and appropriate audit evidence, the design of internal controls over financial reporting, and maintaining effective systems of quality control.
But at an even more basic level, having the right people to perform these and other tasks may be the most important element in the pursuit of audit quality. Developing leaders also is essential as firms focus on improving audit quality and delivering outstanding service.
“If you don’t have the right people and you don’t keep the right people, then the rest of it becomes very difficult,” said Len Combs, CPA, the U.S. chief auditor and leader of auditing services for PwC. “It is a people business.”
Incorporating information from PwC’s 2015 report, Our Focus on Audit Quality, Combs explained how PwC is addressing the people element of audit quality with a global career progression framework that is designed to help people develop the skills necessary to succeed at their tasks, including the performance of high-quality audits.
To be sure, the pursuit of quality at the firm ►
July 2016 j 29
PROFESSIONAL DEVELOPMENT / AUDITING
A b o u t the a u th o r
Ken Tysiac is a JofA editorial director. To comment on this article or to suggest an idea for another article, contact him at [email protected] or 919-402-2112.
is a multiphased effort that encompasses far more than a career progression framework. It includes initiatives addressing the firm’s culture, methodology and processes, technology, and monitoring procedures. But the framework for career progression provides the foundation for the development of the people who will carry out these initiatives, which makes it an essential part of the firm’s audit quality efforts.
O ’Donnell said the framework is designed to develop the whole person. She said that auditors today are expected to be much more than technicians. They are called upon to be leaders, coaches, and service providers. The framework sets benchmarks for these qualities, enabling professionals and their managers to monitor progress.
It allows O ’Donnell and the firm to focus on her aspirations and the strengths she provides as a whole person.
“I think it does help retain people, because you feel like the firm is focusing on you as an individual rather than you as another technician, Auditor No. 1,304,” she said. “It’s really focused on who is Erin O ’Donnell, what are her strengths, and what does she bring to the table?”
CORE PRINCIPLES FOR PROFESSIONALSThrough its global career progression framework, PwC tracks, communicates, and monitors its professionals’ development across five core principles. Combs explained how each relates to audit quality: ■ Business acum en. A fundamental, deep
understanding of a client’s business is a crucial competency for an auditor. Insights about practices and trends in a company’s specific industry or sector are essential for an effective audit.For example, an auditor of a financial services client needs to understand complex financial instruments and how they are valued in order to perform the audit.Global acum en. Auditors of global companies
can’t do their jobs effectively without a working familiarity with regulations and tax rulings in other jurisdictions. It is also important for them to have an appreciation and understanding of the cultural differences where the companies operate. They may be able to rely on the firm’s experts in other countries, but a certain baseline level of knowledge is essential.
* Exceptional technical capabilities. This is perhaps the most obvious of the core principles. W ithout an understanding of what’s often called the “blocking and tackling,” auditors are unable to do their job.
■ Leadership skills. It’s difficult to succeed and develop a career as an auditor without leadership skills. Many auditors begin supervising people within two or three years after starting their careers. At first, they lead interns and first-year associates. Later, they may lead a U.S. team or a global team. “You could be a very good technical auditor and know the auditing literature and the accounting literature inside and out,” Combs said. “But if you lack the ability to lead a team ... that technical capability only takes you so far.”
■ Expertise in cultivating professional relationships. Auditors need to be able to develop relationships with their peers and also with clients. The client relationships often require difficult conversations. “Being able to navigate those with our clients in an appropriate time frame is significantly enhanced around that professional relationship that you have, with your clients having the ability to really develop a relationship built on knowledge, trust, and all of those good attributes,” Combs said.For each staff level (associate, senior associate,
manager, etc.), PwC expects its people to exhibit certain behaviors that indicate their proficiency in each of the five competencies in the framework. On the project or engagement being evaluated, people are assessed as having demonstrated the competencies: ►
IN BRIEF
■ In a com petitive ta len t environment, PwC is using a global career progression fram ework and real-time feedback fo r staffers to promote professional developm ent and drive retention. The firm hopes that
improved audit qua lity w ill be one of the results o f this focus on people.
■ Through the career progression framework, PwC professionals track the ir progress on five qualities— business acumen, global acumen, exceptional technical capabilities, leadership skills, and expertise in
cu ltivating professional relationships.■ Real-time feedback helps
professionals improve im m ediately and is designed to dem onstrate tha t the firm cares about individuals' aspirations, developm ent, and career progress.
30 i Journal o f Accountancy July 2016
PROFESSIONAL DEVELOPMENT / AU D IT IN G
Erin O 'D onnell, CPA, says PwC's em phasis on developing people
is one reason she's passionate ab ou t th e firm .
■ Below level;■ At level;■ Partially at the next level; or■ Substantially at the next level.
Expectations are communicated to all of thefirm’s people so they understand the behaviors they need to display at their current level as well as the behaviors they would need to exhibit to demonstrate that they are ready to move up to the next level.
These qualities are monitored on several levels. First, PwC supervisors deal with their direct reports in what is called “real-time development.” This involves discussions of what people are doing well, what they need to work on in the short term, and what their long-term objectives for building competencies are.
The firm also uses a more formal mechanism in which people receive written feedback that’s more forward-looking and discusses what people need to
3 2 ! Jou rna l o f A c c o u n ta n c y
work on and what their potential is to move up to the next level.
In another formal program, supervisors and partners periodically gather to discuss a team’s performance down to the individual level. The leadership focuses on what things teams are doing well and also discusses which areas need development. Longer term, the leaders discuss areas where the firm needs to provide opportunities for people to continue advancing in their professional development.
After those formal sessions, the feedback is provided directly to the individuals who are being evaluated.
“It really helps focus on your future rather than focusing on the past,” O ’Donnell said. “That’s one of the key elements of the framework; to say, our feedback is going to focus on where you’re going in the future.... It helps identify future leaders earlier in their career.”
FOCUSING ON REALTIM E
Over the past couple of years, PwC has devoted substantial focus to real-time development and feedback. This feedback is specific with respect to the behaviors observed, and it zeroes in on a targeted area, such as one project or a certain aspect of one audit.
The firm is finding this immediate evaluation to be a powerful tool for development. The coach of a football team doesn’t wait a week or two months or six months to tell the quarterback that his throwing motion needs to be adjusted. Firm managers are providing immediate feedback in a similar way.
“I think that dialogue and that ability to provide specific examples and provide really specific coaching in regard to someone’s needs diminishes between ... the actual observations and the feedback that occurs,” Combs said. “The longer that takes, the less meaningful and the less powerful that feedback becomes.”
The more formal feedback mechanism, called “snapshots,” occurs more frequently. These forms can be filled out in about 15 minutes and include a spot for managers to describe “differentiators,” which highlight something the staff member has done that goes above and beyond the call of duty.
Feedback is not just a top-down mechanism. Partners help the members of their teams—and one another—discover their career aspirations and tailor personal development opportunities to help individuals reach those goals. As part of that development, individuals may participate in various
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practices within the firm and may work in offices around the world.
The baseline competencies are emphasized throughout the process. The technical capabilities and business acumen are proficiencies that are a necessity for auditors. Leadership skills and the ability to cultivate professional relationships are the core of the people skills necessary for successful auditing, and global acumen has become increasingly important in an interconnected world.
“Broadly speaking around all the services that we deliver, we felt that those aspects of competencies had a common thread and were underlying the most important things we do,” Combs said.
LOOKING TOWARD THE FUTUREO ’Donnell, a fourth-year senior manager, has been with PwC since she graduated from the University of San Diego. Her goal is to become a partner after performing in a variety of roles in 11 years with the firm.
She has served clients of various sizes and worked as a chief auditor in San Diego. She has worked at PwC’s office in Florham Park, N.J., in the firm’s methodology group, focusing on the new revenue recognition standard and consulting with engagement teams. Now she is in San Jose, serving clients and working on a firm initiative focusing on the audit of the future.
Through the course of these
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assignments, O ’Donnell has developed business acumen, technical skills, leadership, and strong personal relationships. As a first-year associate, she started a community service committee in the San Diego office that has grown into a big effort.
O ’Donnell said global acumen is the quality that people struggle with the most to get the highest rating but added that an international assignment isn’t necessary to develop that global understanding. One simple thing she has done to expand her global acumen is interacting with people in the San Jose office who come from around the world.
She said PwC’s emphasis on developing its people is one of the reasons she is passionate about the firm. If the firm can channel that kind of passion and retain its best people, the global career development framework may help improve audit quality.
“Overall, the framework is heading in the direction of the future, with the social media generation and the really personalized way of looking at our lives,” she said. “PwC is really matching up the framework with the Millennials, or the next generation. If you look at the firm, there are more people at the bottom levels than the top levels.... Focusing on that generation to make sure we’re supporting them in the way they need to be supported is important to our business.” ■
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