Understanding ambition. Attracting the new generation of financial talent

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1 Understanding ambition Attracting the new generation of financial talent NO ORDINARY BUSINESS MINDS icaew.com/ambition

2 Contents 1 Introducing ambition 2 Executive summary 4 Millennials: what drives them? 5 Understanding ambition Insights from ICAEW millennials 8 Ambition is 11 Attracting ambition Reaching the next generation of business leaders 14 Recommendations for employers Getting the most from ICAEW millennial talent 16 Conclusion About the research On behalf of ICAEW, in July 2015, Future Thinking conducted a telephone survey of ICAEW millennial students and members born in or after 1984 and working across the UK. These are referred to throughout the report as ICAEW millennials. Overall, there were 502 respondents, of which 55% were members and 45% were students. Members in practice firms and those in industry were both well represented in the survey, as were male and female respondents. The findings of this survey are compared to other reports on the millennial generation and these are referred to as millennials throughout the report. About the authors The authors of this report, Caroline Chaffer and Jill Webb, are Senior Lecturers at the University of York. Their research centres on the development of non-technical skills in accountants and accounting trainees. Caroline Chaffer Caroline qualified as a chartered accountant with PwC. She spent 15 years working in both practice and the financial services industry before deciding on a career change moving into accounting education in Jill Webb Jill was in professional practice with KPMG before she started a career in higher education. She has spent many years teaching financial accounting to undergraduate, postgraduate and professional students. N.B. The views expressed in this report are the authors own and do not represent the views of the University of York.

3 Introducing ambition Ambition is the driving force behind human and organisational achievement. It has the power to motivate your talent to be the best they can be, yet it varies so much from person to person. Understanding the ambitions that drive the new generation of talent is an important challenge for businesses, but one that offers great rewards. 83 of the FTSE 100 companies have an ICAEW Chartered Accountant on their board. ICAEW members are clearly ambitious 83 of the FTSE 100 companies 1 have an ICAEW Chartered Accountant on their board. However, as business leaders from the baby boomer generation retire over the next five years, and as the new generation of millennials (those born in or after 1984) move into leadership positions, it is important to understand what ambition means to this new generation of business leaders. In many areas, the ambitions and working styles of millennials differ from those managing, training and recruiting them. Understanding and responding to these differences is essential if businesses are to attract, retain and develop future business leaders. ICAEW has commissioned this report as part of its desire to better understand the ambition and future aspirations of its millennial ACA students and ICAEW members. This report identifies practical actions that employers can take to fully harness the talent of this new generation. 1 Source: ICAEW member data at January 2015, FTSE 350 data at December 2014 Understanding ambition: Attracting the new generation of financial talent 1

4 Executive summary While there have been many studies looking at millennials, this study looks at the ambition and future aspirations of ICAEW millennials both for themselves, the profession and business as a whole. It provides valuable insights to help businesses attract and retain these potential business leaders of the future. The research reveals that ICAEW millennials are ambitious and highly optimistic about the future. They are ambitious to take on opportunities for leadership and senior management positions and could provide a valuable pool of talent to help businesses address the deficit in the skills that many businesses have reported. Most importantly, this ambition is underpinned by many qualities that can really make a difference to business. The research suggests that ICAEW millennials care about creating sustainable business for the long term, rather than just looking at profit generation as the main driver and measure of business success; they also recognise the importance of innovation and change in order to grow. Importantly, their ambitions for the profession suggest that ICAEW millennials could have an important role to play in rebuilding trust in business. The survey indicates that they are committed to a career in accountancy and finance, and want the profession to be recognised for a strong ethical position, trustworthiness, professionalism and high standards. The financial crisis and subsequent events have illustrated that these values are of paramount importance to all businesses, and indeed to the operation of the markets as a whole. Millennials are often referred to as loyalty light focused on rapid progression and quick to find a new employer if their development needs are not met. This is something that employers can take positive actions to manage and will be an important opportunity for those businesses that can get millennial management right. This survey identifies positive steps that employers can take to ensure they are attractive to, and can retain, ICAEW millennial talent. 2

5 Key questions for employers 1 4 Are career opportunities in your business clear to employees and are you fully exploiting all opportunities for leadership development? 2 Is employee development and collaborative working at the heart of your culture? 3 What steps have you taken to embrace flexible working? Are your reward and recognition structures sufficiently focused on millennial values? 5 Are your leaders visible and engaged with the workforce? 6 Do you have a clear strategy for communication with existing and potential employees? 3

6 Millennials: what drives them? The millennial generation is probably the most studied generation in history. The many reports 1 on this demographic allow us to draw a number of general themes as background to this report. These themes provide useful insights for business, but it is important to remember that findings differ in emphasis across different groups of millennials. Those millennials forging careers as finance professionals share many of the characteristics discussed here, but represent a much less studied group. They undoubtedly play a crucial role in the skills make-up of successful businesses. It is, therefore, important that employers understand the particular needs and ambitions of this group of ICAEW millennials if they are to get ahead in the race for talent. Opportunity Millennials are a generation defined by ambition. They have an appetite for new challenges and expect success to be rewarded with rapid promotion. Despite the economic downturn, they are optimistic about the future. Purpose While millennials recognise that the bottom line is important, they like to feel that their work is worthwhile, that they are making a difference and that employers recognise the value of their people. Variety Millennials are loyal if their development needs and aspirations are met, but most expect to move on to further their careers. Relationships Millennials work collaboratively and have a strong sense of loyalty to friends and peer groups. They value face-to-face communication particularly with peers. Development While millennials value independence and a high degree of freedom and autonomy, they also want structure and clearly articulated objectives. Access to training is important, as is continuous feedback on their performance from managers, who millennials expect to act as mentors and coaches. Balance Millennials expect to achieve success at work and still maintain a work-life balance, therefore flexibility in the workplace is important. Self Millennials want to work for organisations where they are listened to and where their personal needs are met. 1 Details of these studies are included at the end of the report 4 Understanding ambition: Attracting the new generation of financial talent

7 Understanding ambition Insights from ICAEW millennials 91% of ICAEW millennials describe themselves as ambitious. 93% of ICAEW millennials describe themselves as optimistic. 79% of ICAEW millennials are committed to a career in accountancy and finance. Ambition is often understood in a highly self-centred sense looking at what ambitions individuals have for themselves. This is clearly important; however, this study undertook to uncover whether there is more to ambition than this, and to understand the ambitions that ICAEW millennials have not only for themselves, but for their profession, and for the business world they see around them. This report considers three spheres of ambition: personal, business and professional. The findings reveal that the ambition of ICAEW millennials is underpinned by many qualities that are desirable to today s businesses and are vital for future business success. Personal ambition: fulfilling potential ICAEW millennials are optimistic about the future and driven to succeed 91% of ICAEW millennials would describe themselves as ambitious. When asked what ambition means for them, 42% cited the motivation and drive to continually challenge themselves, 37% cited the achievement of goals and 27% cited the development of skills. ICAEW millennials are also optimistic about their future (93%) and committed to a career in accountancy and finance (79%). While optimism is a characteristic associated with the millennial generation, it was particularly high in the ICAEW millennials surveyed. These findings may reflect their optimism around accounting and finance as a career, the opportunities available to them to realise their potential and the confidence that the ICAEW millennials place in their own abilities. The notably high level of optimism reported by ICAEW millennials is good news for employers, as there is a well-established link between employee optimism and positive business outcomes. 2 When coupled with the ambition that ICAEW millennials have for their career, this represents a significant opportunity for business. The ambition of ICAEW millennials is underpinned by many qualities that are desirable to today s businesses. 2 Avey, J., Hughes, L., Norman, S., Luthans, K., (2008) Using positivity, transformational leadership and empowerment to combat employee negativity, Leadership & Organization Development Journal, Vol. 29 Iss: 2, pp Understanding ambition: Attracting the new generation of financial talent 5

8 Understanding ambition continued 2 / 3 ICAEW millennials have the ambition to lead and inspire others or reach senior levels within an organisation. ICAEW millennials have the ambition to lead When asked what ICAEW millennials wanted most from their career, being in a leadership position was central to the majority of responses. 38% of ICAEW millennials responded that they wanted to be able to lead and inspire others, and 36% stated that they wanted to reach senior levels within an organisation. It is clear that ICAEW millennials are willing to seize the opportunities for leadership that retiring baby boomers will inevitably create. They will also contribute to the deficit of leadership and management skills that three quarters of UK businesses reported in The findings of the study demonstrate that ICAEW millennials are ambitious to lead, but that they are also aware of their development needs. They place a high priority on the importance of developing their leadership and managerial skills in order to realise their long-term career goals. These findings compare favourably with more general millennial research, which suggests that millennials are entering the workforce lacking the skills and competencies needed, and are moving into management and leadership roles without adequate preparation. 4 ICAEW millennial career ambitions Q Thinking about what you want from your career, which two of the following statements would you say are the most important to you? Being able to lead and inspire others 38% Reaching a senior/manager/director level 36% Earning a significant salary 26% Working in a respected field/profession 20% Working in a profession that makes a change to society 16% Being able to drive change/innovation Achieving the highest skills/qualifications you can Setting up your own business Being able to work internationally 16% 16% 15% 14% Being a voice of the profession 3% 3 Department for Business, Innovation & Skills (2012) Leadership & Management in the UK The Key to Sustainable Growth 4 Deloitte (2015) Global Human Capital Trends: Leading in the New World of Work 6 Understanding ambition: Attracting the new generation of financial talent

9 Business ambition: beyond the bottom line Comparable data 5 suggests that ICAEW millennials have a sound grasp of the long-term factors driving business success, compared with other millennial groups who give greater priority to profit generation at the expense of other factors. ICAEW millennials regard growth, innovation, openness to change and the development of employee skills as key ambitions for business. The relationship between innovation and business success, and indeed survival, is well documented. 6 Innovative businesses drive both business growth and economic prosperity. 7 Millennials in this study recognise the importance of being open to innovation and change in order to succeed, and have a key role to play in helping organisations achieve this. Securing successful innovation requires the involvement of key internal stakeholders. In industry, accountants are critical to the conversion of creativity into successful commercial outcomes, and have a role to play in securing finance, evaluating competing projects, and monitoring risk and progress. This is also true in professional practice, where innovation is just as important to maintain a competitive offering and grow market share. The priority given to skills development by ICAEW millennials also implies a longer-term focus. Indeed, this focus on skills is something ICAEW millennials share with their employers. A UK skills deficit is frequently reported 8 and business leaders recognise the importance of investment in skills development as key to securing future growth. 73% of ICAEW millennials consider that business leaders have the right level of ambition in these areas, suggesting that, on the whole, they are not concerned about the overall ability of their employers to meet these aspirations. However, when asked what business leaders could do differently, 10% cited openness to innovation and change, with 8% identifying continuous development of skills and training of the workforce as areas that require change. ICAEW millennial ambitions for business Q Which two of the following factors do you think are most important for a business to achieve? Developing skills and training of employees Being open to innovation and change 36% 35% Ability to continue growing or diversifying 30% Having a flexible work culture 19% Having a strong ethical working environment 18% Rewarding employees Dedication to sustainable and responsible business Being leaders in their field 14% 16% 15% Ensuring diversity and equal opportunities High profits 7% 8% 5 Mind the Gaps: The 2015 Deloitte Millennial Survey 6 Hong, S., Oxley, L. & McCann, P. (2012) A Survey of the Innovation Surveys, Journal of Economic Surveys, 26(3) 7 Department for Business, Innovation & Skills (2014) Innovation Report 2014: Innovation, Research and Growth 8 Confederation of British Industry (2015) Inspiring Growth: CBI/Pearson Education and Skills Survey Pearson, London Understanding ambition: Attracting the new generation of financial talent 7

10 Ambition is Having a clear vision of what you want and the drive to go after it. Finding the right company to work with. The willingness to push and improve yourself along with those around you. Progressing in a job you are interested in and passionate about. 8 Understanding ambition: Attracting the new generation of financial talent

11 Achieving your goals in life without impairing your integrity or ethics. Doing something that people will remember. Having the opportunity to develop the skills you need. Balancing a family and career. Understanding ambition: Attracting the new generation of financial talent 9

12 Understanding ambition continued The top three things ICAEW millennials want their profession to stand for: Ethics Trust Professionalism Professional ambition: rebuilding trust Above all, ICAEW millennials want the profession to be recognised for demonstrating a strong ethical position, trustworthiness, professionalism and high standards. The financial crisis highlighted the importance of these values to business leaders, and this group recognises that integrity is essential both to long-term business performance and to the efficient functioning of capital markets. 9 At a time when there is a need to build greater trust in business, it is good news that these ICAEW millennials place such high importance on the need to demonstrate the value of upholding ethical and professional standards. This suggests that ICAEW millennials will have a key role to play in helping business establish and maintain ethical workplace cultures in the future. ICAEW millennial ambitions for the profession Q What do you most want the accountancy and finance profession to be recognised for? Demonstrating a strong ethical position Being trusted by those outside the industry Professionalism/expertise/committed employees High standards/providing good quality service Being respected commentators Promoting the chartered accountant brand Making a difference/helping/supporting business Being an attractive profession in which to work Being valued/adding value to the economy/business Good reputation/reliability/stability Transparency/being open/honest Being open to innovation and change Promoting more responsible and sustainable practices Social responsibility 8% 7% 6% 6% 5% 4% 3% 3% 3% 11% 13% 13% 16% 29% 9 ICAEW (2007) Reporting with Integrity. Market Foundations Initiative 10 Understanding ambition: Attracting the new generation of financial talent

13 Attracting ambition Reaching the next generation of business leaders The top three important factors for ICAEW millennials in choosing a new role (salary aside): Flexible working Skills development opportunities Working relationships The study has identified some specific areas of working practice that are important to ICAEW millennials; these will help businesses tailor their recruitment and retention strategies if they wish to attract this talent. The currency of culture It is interesting to note that workplace culture is identified throughout the survey as being important to ICAEW millennials. When asked to identify the most important factor, other than salary, in their decision to accept a new role, 25% of respondents cited flexible working, 21% cited skills development opportunities and 11% cited working relationships. These factors were significantly higher than responses relating to other measures of business success, such as the employer s reputation or size. The research suggests that ICAEW millennials value cultures where there is an emphasis on working with and supporting colleagues, and where there are opportunities for personal development and continuous learning. When ICAEW millennials were asked what they thought business leaders in their industry could do differently, the way that employees are supported and listened to and the importance of a flexible culture were identified as important factors. ICAEW millennial priorities when choosing an employer Q If you were offered two jobs with the same salary, what would be the most important factor to you in choosing an employer? Having a flexible work culture 25% Developing skills and training of employees 21% Attitude of colleagues/team of people I would work with/ how management treat staff 11% Type of industry/company/job/what the role involves/job satisfaction 11% Having a strong ethical working environment 10% Reputation of the company 6% Work-life balance 5% Understanding ambition: Attracting the new generation of financial talent 11

14 Attracting ambition continued 63% of ICAEW millennials, to a large extent, already feel well equipped with the skills they need to reach their potential. 60% of ICAEW millennials have a clear idea of how they want their career to develop. Flexible working A flexible working culture was the single most popular factor, other than salary, cited by ICAEW millennials as important in deciding to accept a new role. Other millennial surveys suggest that flexible working is necessary to achieve a work-life balance, and this may also be important to ICAEW millennials. However, achieving this was not identified as a priority and, in fact, only 5% identified work-life balance as the most important factor in career choice other than salary. The priority given to flexible working may therefore only be partially driven by a need for work-life balance and may instead be more reflective of how ICAEW millennials expect to work. They want to work flexibly perhaps working in particular settings or at particular times of the day and it is clear that this flexibility may improve their job satisfaction and effectiveness. Opportunities to grow ICAEW millennials recognise that to realise their ambitions and long-term career goals, they need to continue to develop their skills and therefore need opportunities to do this. The good news is that only 8% see a lack of skills as a barrier to achieving their long-term career goals; 63% consider that, for the most part, they already have the skills they need to reach their potential. The results of the survey clearly demonstrate the priority that ICAEW millennials place on skills development, and the fact that they are drawn to work for organisations that will invest in them. The research suggests that many ICAEW millennials also value development opportunities that extend beyond specific skills, such as support to help them in establishing career goals. While these ICAEW millennials are committed to a career in accountancy and finance, only 60% considered that they had a clear idea of how they wanted their career to develop. And, while respondents did not identify this as a barrier to achieving their career aspirations, there is clearly an opportunity for employers to support talent and develop future leaders in this area. The results clearly demonstrate the priority that ICAEW millennials place on skills development. 12 Understanding ambition: Attracting the new generation of financial talent

15 ICAEW millennial long-term goals for skills development Q What skills, if any, would you like to develop further in order to achieve your long-term career goals? Managerial/project management/strategic skills 28% General experience/commercial awareness 24% Leadership 17% Working and client relationships/teamwork Technical knowledge/it skills/report writing 15% 15% Communication Financial/accountancy/auditing/tax 12% 13% Soft skills in general 9% Gain professional qualifications/further education 7% Presentation Networking 5% 5% ICAEW millennial challenges to long-term career goals Q What, if any, challenges are there to you achieving your long-term career goals? There are no challenges 15% Few opportunities within my industry Few opportunities to develop within my company Opportunities in the job market 9% 9% 9% Too much competition within the profession Family commitments Lack of skills Personal confidence/making the right decision/ determination/lack of experience Exams/passing exams/gaining qualifications/relevant courses Time constraints/time it takes to gain experience 6% 6% 7% 8% 8% 8% Too many commitments outside of work Work-life balance 5% 5% Understanding ambition: Attracting the new generation of financial talent 13

16 Recommendations for employers Getting the most from ICAEW millennial talent ICAEW millennials are clearly extremely ambitious and driven to make a difference. The results of the survey and more general studies have a number of implications. Employers should be aware of these if they are to maximise the value ICAEW millennials can add to their business, and if they are to make the most of their talent. Focus on leadership development The leadership challenge for business is twofold: it ensures that leadership opportunities are made available, and it also provides appropriate training opportunities for developing leadership skills. The solution is not simply one of expanding or enhancing existing leadership programmes, but of establishing different career paths and therefore widening the availability of leadership opportunities. For millennials, leadership is more about personal accountability than it is about organisational hierarchy. There is therefore an opportunity for businesses to be creative in identifying new leadership positions to support development. For example, businesses could make more specialist tracks available, open up avenues beyond regular full-time positions, or offer project-based work with a learning component. Be proactive Ensure that existing opportunities to lead are used proactively to develop more junior leaders. Leadership skills gaps could be addressed by creating a culture where job rotation is encouraged, and by offering mentoring and coaching schemes. Reverse mentoring, where ICAEW millennials are coaching more experienced staff in new technology, is also an effective way of empowering ICAEW millennials and developing leadership skills delivering clear benefits for the business at the same time. Create opportunities for skills development Studies agree that the development of skills for their own sake does not bring benefits to business, or indeed to individuals. Rather, skills development needs to be closely aligned with business strategy. Strategic alignment is particularly important to millennials who require clarity and need to feel that the actions they take have meaning. In terms of how this skills development is delivered, wider research suggests that internal development activities are considered to be the most effective, particularly on-the-job training, in-house development programmes and coaching delivered by line management. These approaches are likely to work well, particularly if these development opportunities are embedded within a broader workplace culture of continuous development and learning. Business context is also important. Employers should consider how they ensure that employees are exposed to a variety of roles that draw on different skill sets and build broader commercial awareness and business knowledge. The very nature of the work of a chartered accountant means that it can be very varied in terms of client base and type of work. 14 Understanding ambition: Attracting the new generation of financial talent

17 Feedback is extremely important to millennials and regular feedback is essential to development, particularly when there is an emphasis on work-based learning. Feedback and coaching are traditionally resource intensive; the challenge for business is to harness technology to deliver a personalised skills offering that uses management time in an effective and efficient manner. The judicious use of e-learning content, peer feedback, collaborative and social learning, and knowledge-sharing events may facilitate efficiency, and broader research suggests that millennials are comfortable with these mechanisms. Businesses should consider how they can introduce ongoing regular feedback into the way they work, rather than waiting for the traditional six-monthly or annual appraisals to motivate and meet the needs of ICAEW millennials. Get in the feedback habit Challenge employees to ask peers and managers on a regular basis: What went well? or What could I do differently? Identify opportunities to develop flexible working practices The desire for flexible working and the importance of achieving a work-life balance do not mean that ICAEW millennials are not ambitious; the results of the survey show that this is far from the case. The challenge for business leaders is really a cultural one. Millennials want to work for organisations where values are aligned with their own, so flexible working practices are a mechanism by which values of trust and empowerment might be realised, and in turn produce high performance. In order to attract ICAEW millennials, employers need to consider their flexible working arrangements and how they harness communication and collaborative technologies to support this. Companies should also consider patterns of work, working locations, the creation of flexible tasks, tailored hours and an emphasis on teams rather than individuals in terms of service delivery. This should be supported by a culture of rewarding output, rather than time spent on task. Say YES Challenge junior managers to say yes to working from home when it suits the task. Clearly articulate the career paths available There is an opportunity for organisations to strengthen their retention strategy by clearly articulating career paths through the organisation, and ensuring that ICAEW millennials are aware of all opportunities available to them. Companies are increasingly using online technology to develop knowledge banks that provide upto-date information on career opportunities, as well as providing insight into ways in which careers can be developed within the business. These can be used as a basis for development discussions with managers. Align company culture to ICAEW millennial values When recruiting new members of staff, cultural fit is clearly important. However, rather than considering the extent to which the values of ICAEW millennials are aligned to the organisational culture, companies may need to consider adapting their culture to meet ICAEW millennial needs. Effective internal and external communication mechanisms are important in aligning company culture and employee values. The alignment of individual objectives with broader company objectives is one way to ensure ICAEW millennials feel part of a team. Millennials generally prefer open and regular communication and a need-to-know strategy is not a good cultural fit. While regular communication is also important to other generations, in the case of millennials it needs to be frequent, open, positive and affirming. Millennials value regular communication from business leaders within their organisation, and research shows it leads to greater engagement. Understanding ambition: Attracting the new generation of financial talent 15

18 Conclusion The findings of this study suggest that employers will benefit from, and should embrace, the challenge of supporting ICAEW millennials to achieve their ambitions. This group of ICAEW millennials are ambitious and optimistic, they aspire to leadership and have their sights set on the long-term future of business. Businesses need to develop innovative opportunities for skills development, and adapt workplace culture and working practices to attract and retain ICAEW millennial talent. Some of these changes may be challenging. However, the values and aspirations of ICAEW millennials suggest that when they reach the leadership positions to which they aspire, they will focus on growth and innovation, developing the skills of their employees and making positive changes to working lives ambition that can make a real difference to your business. This group of ICAEW millennials have their sights set on the long-term future of business. 16 Understanding ambition: Attracting the new generation of financial talent

19 Want to go further? For more about what ICAEW talent can bring to your business, visit: icaew.com/ambition Or contact us by This report adds a new perspective to a growing field of insight into millennial talent and workforce trends. If you want to learn more, here are a few suggestions for further reading: On millennial attributes CIPD & Penna (2013) Deloitte (2015) Gen Up: How the Four Generations Work Mind the Gaps: The 2015 Deloitte Millennial Survey IBM (2015) Institute of Leadership & Management and Ashridge Business School (2011) PwC (2011) Universum Report (2015) Myths, Exaggerations and Uncomfortable Truths: The Real Story Behind Millennials in the Workplace Great Expectations: Managing Generation Y Millennials at Work: Reshaping the Workplace Millennials [online] On skills development CIPD (2015) Annual Survey Report, Learning and Development 2015 Meister & Willyerd (2010) PwC (2015) Mentoring Millennials, Harvard Business Review 18th Annual Global CEO Survey On workforce trends Financial Reporting Council Key Facts and Trends in the Accountancy Profession 2015 Madouros, V. (2006) ICAEW (2014) Projections of the UK Labour Force, 2006 to Office for National Statistics Business Futures Understanding ambition: Attracting the new generation of financial talent 17

20 ICAEW is a world leading professional membership organisation that promotes, develops and supports over 144,000 chartered accountants worldwide. We provide qualifications and professional development, share our knowledge, insight and technical expertise, and protect the quality and integrity of the accountancy and finance profession. As leaders in accountancy, finance and business our members have the knowledge, skills and commitment to maintain the highest professional standards and integrity. Together we contribute to the success of individuals, organisations, communities and economies around the world. Because of us, people can do business with confidence. ICAEW is a founder member of Chartered Accountants Worldwide and the Global Accounting Alliance. ICAEW Chartered Accountants Hall Moorgate Place London EC2R 6EA UK T +44 (0) E contactus@icaew.com icaew.com/ambition facebook.com/icaew twitter.com/icaew linkedin.com find ICAEW ICAEW 2015 MKTPLN /2015