How innovative firms are reshaping business structures
21 January 2020: the death of middle management, flatter hierarchies, egalitarian ideals: business structures are rapidly changing. Where does that leave the Big Four? We take a look at the firms shaking things up with innovative restructuring.
Should accountancy firms be configured more like technology start-ups? The traditional image of accountancy firms – strictly hierarchical, deferential and strait-laced – is being challenged by entrepreneurial outfits whose business structures owe more to Silicon Valley than the City of London. Their innovations range from the incremental (trimming back on middle management) to the radical (eliminating partnership – and even job titles – altogether).
The United States is where many of the most pioneering and progressive practices are to be found, but some European firms have gained a reputation for enlightened management too. They include Grant Thornton Sweden, which has more than 1,070 employees across 23 locations and a sustainability strategy aiming to create a workplace where "employees can grow and develop" by engaging them in "an inclusive and equal culture".
Nordens, founded in 2002 by FCA Mark Norden, is an example of a UK practice that has embraced new management thinking from its very beginnings. Incorporated as a limited company, it has a flat hierarchy, recruits from non-traditional accountancy backgrounds, and even provides a "dreaming room" where team-members can come up with creative solutions to the thorniest challenges. It’s a formula that has worked: the Essex-based firm has built up an impressive trophy cabinet, including multiple wins at the British Accountancy Awards.
Norden says: "I realised if we wanted to grow, we couldn’t be the same shape as other practices with a vertical structure, one or two partners, a few managers and a sprinkling of staff with nowhere much to go. We take people at entry level and make them as highly qualified as we can, not just in professional examinations but in dealing with clients.
"For example, we’ll always use the most junior people we can at meetings, where traditional firms would insist on a partner or manager. Some other practices have frowned upon this as unprofessional, but we’ve ended up with gifted people who have had the chance to grow professionally and extend their opportunities. The business has grown because of it."
A criticism often levelled at flatter business structures is that they are impossible to scale. As the head count increases, the firm ends up with a complicated cat’s cradle of interpersonal links, bringing decision-making to a halt. This, the story goes, makes them more appropriate for smaller firms than the big players.
The key to making a less hierarchical business structure work, according to Norden, is communication. "Regardless of how you set up the firm, communication is the main thing," he says. "Without that continuous flow, we wouldn’t be able to pull everyone along with us."
The structural innovations of challenger firms are taking time to percolate through to the Big Four and larger mid-tier. But with Deloitte estimating that millennials will make up three-quarters of the global workforce by 2025, it’s likely that the changing demands of tomorrow’s recruits will drive the sector toward a more dynamic culture that rewards initiative, develops talent, and doesn’t stifle it with bureaucracy.