39 (134) 2019
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Human Resources

The human factor

by Lesley Meall, journalist
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Accountants will need to reassess their relationship with technology as the areas where automation meets emotional intelligence increase.

What does it mean to be human? What makes you who you are? Is it your body? Your emotions? Your soul? Your brain? All your experiences? Your body’s biology, sensations and actions? As a human, you are all of this and more. You think and feel. You are capable of complex cognitive and intellectual feats and high levels of motivation and self-awareness. You are astonishing. But in a world where artificial intelligence (AI) is taking over tasks that require memorisation and logic, how will your human intelligence retain its advantage? What’s your superpower going to be?

The answer could be your emotional intelligence (see box 1). “This is an area that ACCA has been exploring,” says Narayanan Vaidyanathan, head of business insight at ACCA. “We know, that to thrive now and into the future, professional accountants need an optimal and evolving combination of professional competencies or quotients.” These quotients are each a collection of technical knowledge, skills and abilities, combined with interpersonal behaviours and qualities (see box 3). ACCA has identified seven such quotients, including one for emotional intelligence (EQ).

“When we talk about EQ we do not mean something amorphous, we mean something very specific,” explains Mr Vaidyanathan. For professional accountants, ACCA characterises EQ as: “the ability to identify your own emotions and those of others, harness and apply them to tasks, and regulate and manage them”. New ACCA research considers what the current state of EQ looks like around the profession and what the EQ implications of technology developments may be. It focuses on areas where EQ and technology overlap now and in the future.

ACCA has researched six areas of impact: change readiness, cognition and learning, ethics and beliefs, human-machine interaction, increased diversity and shifting power. The implications were then considered for five emotional competencies that are key to the EQ of professional accountants: growth mindset, self-knowledge, perspective taking, empathy and influence. “The purpose of this work is not to dive into the psychology of EQ but to contextualise it for the accounting profession,” says Mr Vaidyanathan – to prepare accountants for a very different future.

“It is vital that the profession embraces technology so that we, and the next generation of accountants, are agents of change, helping to shape the technology agenda, not simply following it,” says Rachel Grimes, CFO of technology with Westpac and president of the International Federation of Accountants. “Cloud-based computing, hosted applications, big data, and the rise of machine learning are already transforming the way we work. As the quantity and sources of data increase, the need for human accountants to understand context, interpret nuance and apply professional judgment also grows.”

A brief history of emotional intelligence

Among psychologists, historical definitions of intelligence have tended to emphasise cognitive aspects, such as memory and problem-solving. However, during the 20th century psychologists such as Professor Edward Lee Thorndike and Professor Howard Gardner helped to expand accepted notions of intelligence by distinguishing between multiple types of intelligence, and in 1990, Professors Peter Salovey and John Mayer coined the term ‘emotional intelligence’ (EQ).

Salovey and Mayer described it as “a form of social intelligence that involves the ability to monitor one’s own and others’ feelings and emotions, discriminate among them and use this information to guide one’s thinking and action”. In 1995, based on their work, Daniel Goleman, a psychologist and journalist, wrote his book Emotional Intelligence, which sold in its millions, promoting the concept that EQ is more important to success in our personal and professional lives than IQ.

Managing change

Accountants are increasingly expected to have the soft skills and emotional competencies to manage the accelerating speed of change and adapt to its transformational nature. “In the high-performing organisations we work with, accountants are expected to incorporate innovation and change into their day-to-day roles and responsibilities, by working on the business not just in the business,” says Brendan Sheehan, ACCA council member and CEO of finance transformation consultancy White Squires.

Joseph Owolabi, director, corporate advisory, Deloitte Australia, and ACCA Council member, notes how EQ is also thrown into sharp focus by the diversity that technology can facilitate: “More remote working and collaboration means less face-to-face contact in meetings.” Ways of developing and exerting leadership, influencing, motivating, mentoring team members, and developing and demonstrating empathy are all affected. “The world is a global village – often you need to get on a conference call. But you are expected to be able to decipher moods, predisposition and motivation by verbal clues, hesitation, rhythm and other emotional pulse indicators. Ethics and integrity – fundamental to our role as accountants – are largely driven by application of judgment, which in turn is strengthened by high levels of emotional quotient,” he says.

As the areas where technology meets EQ increase, so does their significance for professional accountants and the need for them to reassess their relationship with technology itself. Lynn Morrison, ACCA panel member, is expecting a paradigm shift: “Relationships between humans and technology are changing fundamentally. We will need to challenge the way we think of work and understand the pros and cons of this changing relationship. We will have to learn how to build and manage our relationship with technology and manage the impact both personally and professionally.”

Quotients for success

ACCA introduced its professional quotients for success in 2016, based on the extensive global research undertaken for its ground-breaking report Professional accountants – the future: Drivers of change and future skills. Looking ahead to 2025, it recognised that the accountant of the future will need an optimal and changing combination of professional competencies; a blend of technical knowledge, skills and abilities combined with interpersonal behaviours and qualities.

These are grouped into seven constituent areas: technical and ethical; experience; intelligence; digital awareness; creativity; vision; and emotional intelligence (EQ). ACCA has deepened its research into these areas and their interdependencies. Its latest global research, which involved 4,500 accountants, focuses on the key area of EQ for the professional accountant, which ACCA defines as: ‘the ability to identify your own emotions and those of others, harness and apply them to tasks, and regulate and manage them’.

In Emotional quotient in a digital age, ACCA’s research looks at the growing significance for the professional accountant of EQ in the digital age. It considers various technology developments and trends that may impact on a number of areas (cognition and learning, change readiness, ethics and beliefs, human-machine interaction, increased diversity and shifting power) and their implications for a number of emotional competencies (adaptability, empathy, identity, influence and self-knowledge).

Understanding these interactions is vital for professional accountants in the fast-changing digital work environment, because the benefits of developing your EQ include:
-    the ability to adapt to change
-    improved leadership skills
-    being more effective in your professional role.

ACCA has developed a number of interactive online tests, with diagnostic tools, that help accountants to assess their own EQ and the other professional competencies and quotients the professional accountant will need. These can be found, along with ACCA’s research on the future of accountancy on the ACCA website.

A new symbiosis

There will still be a symbiotic relationship between accountants and technology but it will not follow the pattern established in the past. Scribes used clay tablets to record commercial transactions in the ancient Near East; early printing presses enabled Luca Pacioli to promote his 16th century treatise on double-entry bookkeeping; accountants powered the microcomputer revolution in the 1980s with their enthusiastic uptake of electronic spreadsheets. The future promises a stronger and more intimate symbiosis between the profession and technology.

Accountants have seen technology as a tool to help us work more efficiently, to perform better and to automate boring tasks in the past. With further technological advancements in areas of robotic process automation (RPA), AI and blockchain, we can predict some tasks will be completely replaced by technology in the future.

Accountants need to be more resilient in this transition process, have an open growth mindset to continuously reskilling ourselves, in particular those humanity skills, and focus on more important judgmental and strategic areas. This is part of the process of building a different kind of relationship with technology,’ says Morrison. She sees a future where human processing units and computer processing units will be working together, learning from each other and achieving more through their close collaboration than either could achieve alone. The skillsets of collaboration and technology are already overlapping increasingly, as highlighted in a recent CA ANZ report The Future of Talent: Opportunities Unlimited.

Futurist and researcher Mark Pesce suggests one approach could be to open up finance teams and accountancy firms to collaborate better among themselves and with colleagues – and with technology itself: ‘Every time we have a basic question we reach into our pocket, take out a smartphone and get the answer from Google, Wikipedia or Siri. So we are already creatures who are a combination of human intelligence and machine learning.’

Learning from the past

Looking back can help us to see into the future. In the 19th century the arrival of the telephone meant less reliance on face-to-face communication and because people no longer had that full package of information what was heard over the phone became much more important to decision-making. Now technology is taking this to the next level, this is affecting how we communicate and make decisions and the emotional competencies we need to do this successfully.

Rapid evolution of the mobile phone and other devices, in combination with anywhere anytime access to cloud resources and social media (and its echo chambers), can make us feel more closely connected to each other. However, it also means that many people talk less to family, friends and colleagues, and we will need to find ways to develop the new emotional competencies that will be needed if we want to sustain the sort of human interactions that glue people together.

In the future, what accountants and software tools can learn from each other will increase and members of the profession will no longer be limited by their personal knowledge or the length of their career. The pyramid structure that has traditionally characterised accountancy firms and finance departments will no longer be necessary. However, as Matthew Campbell, technology audit director, KPMG, says: “Knowing how to interact with and leverage the knowledge of hundreds if not thousands of individuals through cognitive technology will drive a different skillset in finance professionals.”

The profession’s use of artificial intelligence (AI) technologies and techniques is not yet widespread, but it is already informing and enhancing decision-making by professional accountants in companies and practices across numerous specialist areas. Developments around financial statement audit may exemplify the future direction of travel for the profession by showing: how existing technologies are changing established practices; how emerging technology trends may undermine business models and institutional power structures; and how factors such as these increase the importance of EQ.

The Canadian fintech MindBridge has created an advanced analytics tool powered by AI that offers a complete solution for audit planning, testing and reporting needs. The MindBridge Ai Auditor can analyse 100% of a general ledger, do completeness tests on the data and rank transactions on the basis of risk. Use of machine-learning techniques enable it to acquire knowledge based on experience and education: utilising the risk weightings that its human users have applied, for example, helps it to get better at identifying the riskiest transactions and to enhance processes such as sampling.

EQ will influence accountants’ attitudes on the notion of working collaboratively with technology. Narayanan Vaidyanathan says: “To interact effectively with another entity, whether it’s a human or a machine, self-knowledge is crucial, because your interactions with others cannot succeed if you don’t understand your own behaviours.” Auditors and other professional accountants will also need emotional competencies that allow them to adapt to technology-enabled transformations much faster than they have ever needed to in the past.

After much talk about how blockchain and distributed ledger technology might transform audit, one developer, Auditchain, is well on the way to creating a public blockchain-based “decentralised continuous audit reporting protocol ecosystem for enterprise assurance, reporting and disclosure”. It could be a mistake to underestimate its potential, because the ‘decentralised consensus-based attestation for reward’ approach it uses has already been successfully exploited by one of the great disruptors – Airbnb.

There is a sizeable overlap between emotion and technology in the age of ‘distributed trust’, where people are comfortable opening their homes to strangers (Airbnb), lending small amounts of money to businesses in the developing world (VisionFund) and sourcing local help with household jobs (TaskRabbit), after being reassured by the online codification of their reputation. These business models have profound business and social implications and challenge the long-established power structures of governments, nations, institutions and organisations, with consequences for EQ in terms of influence.

Some professional accountants may need to develop new social competencies and technology skills if they are to inspire, encourage and direct compellingly in peer-to-peer environments. The wider implications of this shift are eloquently explained by Rachel Botsman, lecturer at Oxford University’s Saïd Business School and expert on trust and the collaborative economy, in her books and talks.

In Who Can You Trust? How Technology Brought Us Together – and Why It Could Drive Us Apart, Ms Botsman places the world on the cusp of massive social change, driven by technologies that are rewriting the rules of human relationships: “We might have lost faith in institutions and leaders, but a new world order is emerging,” she says. If accountants are to adapt to this shift they will need to understand how trust is built, managed, lost and repaired in the age of distributed trust and increasingly smart machines, and carefully assess the implications for EQ – or develop another superpower.

Find out more

Reproduced from Accountancy Futures, an ACCA publication.

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