Accounting has a new capacity problem.
The chronic skills shortage afflicting the accounting sector is not news to those working in the industry. However, new industry-wide reforms have surfaced fresh concerns around capacity planning and the resources that will be required to support the changes to come.
ISQM 1, due to come into force in December 2022, will require a significant pull on resources as firms prepare and implement changes to meet the new international quality standards. Looking ahead to 2023, the introduction of the Audit, Reporting and Governance Authority (ARGA) in the UK also raises critical capacity issues, with the scope for additional resources described as ‘enormous.’ With firms already struggling to attract and retain valuable skills, and the prospect of capacity being crunched further, many have questioned how firms and the people within them will cope.
With present capacity already a critical concern for accountancy firms, the new quality standards threaten to consume more skills than can be spared. If we also consider that three quarters of accountancy firms already report being understaffed, capacity planning strategy will be key to the success and survival of many firms.
Retention and the capacity planning problem
The market-wide capacity problem is not only bad news for clients and profitability, it also has a knock-on effect on people’s working lives. In accounting, capacity and retention issues are often linked in a vicious cycle, with a failing in one fueling a weakness in the other.
As more pressure is loaded on existing teams, something’s got to give, and what gives is often the stress levels and well-being of those taking the extra strain. The higher the churn of valuable people and skills, the heavier the pressure on existing resources becomes over time. This cycle impacts resource planning and engagement continuity, which has a knock-on effect on profitability, quality, and client satisfaction.
So what strategies might help firms break free of this cycle?
The value of AI-powered solutions for capacity planning
Ultimately, the skillsets of the accountants are changing with the times, as they adopt machine learning and intelligent automation into their practices and everyday jobs, but how they are being utilised isn’t.
In today’s ultra-competitive marketplace, eliminating all forms of waste is vital to remain competitive, but many accounting firms are still relying on older methods of deploying their resources. These less efficient methods are suboptimal, especially when skills and resources are scarce.
There are glimmers of hope, however. For some forward-thinking accounting practices, a firm-wide adoption of data-driven decision-making is infusing their culture, making them more profitable, fair, and productive. By embracing AI-powered resource scheduling tools specifically built for optimising capacity planning, firms are able to maximise the value of their existing skills and resources.
So how does it work?
Centralised capacity planning
AI-powered capacity planning software gives the option to expand beyond local resource assignment and drives efficiencies by looking at skills and availability at a nationwide and global level. This visibility allows for the creation of more effective, bigger-picture capacity planning strategies.
Optimal demand forecasting and skill utilisation
AI-powered capacity forecasting highlights wider capacity issues over and above people-specific clashes and compares demand to the overall capacity, regardless of the individual assigned to do the work. With in-depth capacity and skills utilisation reporting, resource managers have the insight they need to fully utilise existing skills and better understand capacity risks alongside current and future demand.
Fair and effective resource allocation
A data-driven approach to capacity planning also reduces job selection bias and allows work to be distributed more effectively and fairly across the firm. Ensuring the best match of resource allocation based on skills and availability for the task every time can also positively impact retention by supporting diversity and career advancement.
While AI alone may not crack the capacity planning problem in accounting, recognising the value that AI-powered capacity planning solutions can bring to retain and maximise existing resources is the next strategic step.
Discover how Dayshape can optimise your workforce through AI-powered capacity planning, allow your firm to better tackle change, and retain valuable talent.