As co-managing partner at accounting and consulting firm Friedman LLP, Harriet Greenberg, CPA/PFS, uses seniority as a factor in deciding whom to promote. But that's just one piece of the puzzle: She also believes in skills-based promotion — now more than ever.
"We've always promoted based on skills, not just on seniority," said Greenberg, who is based in Friedman's Manhattan headquarters. But she noted that the change in the skills needed in today's environment has made the search for the right skill set even more important.
The demand for highly technical skill sets in burgeoning new technologies — especially artificial intelligence (AI) and machine learning — has meant a scramble for capabilities that previous generations of workers, no matter how talented and capable they may be, often lack.
And with the accounting sector and finance departments competing with businesses of all stripes to find, hire, and retain the best talent, skills-based promotion has become a key element in the quest for success.
Where skills-based promotion matters
Job numbers tell a good chunk of the story. As of January 2018, the average tenure at a company for an employee in business and financial operations was just 4.5 years, according to the Bureau of Labor Statistics. That's down from five years in 2014: not exactly gold watch territory so far as loyal workers go.
"While seniority represents several benefits, promotions based solely on seniority have a critical problem," said Nishank Khanna, chief marketing officer at Clarify Capital in New York City. "Employees may not be as motivated to perform exceptionally. A CPA firm that emphasizes skills-based promotions fosters a culture of healthy competition and productivity."
And while high-tech skills of the 21st century are an obvious area of concern, skills-based promotion works as well for other competencies, which often form a potent mix. Khanna said that based on what he advises CPA firms, the deficit in skills "almost always boils down to three areas." They are, in his words:
- Data analysis: "Knowing how to turn big data into concise, decision-driving insights."
- Effective communication: "Cultivating strong written communication skills, the ability to think critically, and translate those thoughts into compelling documents."
- Business acumen: "The ability to provide counsel to the C-suite requires seeing the big picture."
So how far up the organizational chart can skills-based promotion go? Much depends on soft skills. Strong verbal skills, for example, allow a worker to talk with clients in a way that helps them to understand complex business issues, and with co-workers in a way that promotes team building and collaboration. The importance of soft skills begins right at the point of hire, as more than two of three employers (67.5%) rank verbal communications skills as a sought-after attribute, according to the National Association of Colleges and Employers Job Outlook 2018 survey. And a 2017 report by hiring software maker iCIMS indicates that 94% of recruiting professionals believe employees with stronger soft skills — including oral communication — have a better chance of promotion to a leadership position than someone with more years of experience but weaker soft skills.
Skills-based promotion has also created positive change in the way companies approach their current employees — who, after all, are often eager to conquer new skills themselves.
Training opportunities — and how companies promote them — also matter because when a company institutes a skills-based model, senior workers vying for promotions receive (and perceive) a fairer shake.
The limits of skills-based promotion
The models companies have used to promote talent have shifted several times since World War II, said John Beeson, principal of Beeson Consulting in New York City and the author of The Unwritten Rules: The Six Skills You Need to Get Promoted to the Executive Level. At first companies followed "a military model based on seniority and a fairly rigid career path," he said. Then came the leadership model, roughly 20 years ago, "where career paths became much more individualized and customized" and favored people "who had strategic skills and who could lead innovation and change broadly."
With skills-based promotion, Beeson sees not a wholesale change so much as a selective one. "With large corporate organizations, I don't see a lot of traction," he said. "But in startups, high-tech, and certain service and 'knowledge work' organizations, they're moving toward a skills-based approach. AI, machine learning, and data analysis are in short supply, so using a skills-based approach makes sense."
He added that there's another advantage to the skills-based model for employers: "One of the appealing things is that it can be perceived as more fair and equitable — and less political, less about whom you know."
Here are four actionable insights experts say CPA firms and finance departments can apply in developing a skills-based promotion approach.
Find the right criteria. While skills play an important part in talent management, "ideally, companies should outline specific criteria for promotion," Khanna said. "These should include skills, performance, and track record established over a period of time. It is essentially a mix of both seniority and skills."
Find the right areas. Mainly these will involve technical competencies that have become critical to the profession over the past 10 years. That includes not just AI and data analytics, but also the decentralized digital ledger known as blockchain and dynamic auditing tools.
Find the right people. Greenberg said that "digital natives" — those who've grown up from infancy with exposure to mobile technology and digital innovations — represent an ideal talent pool from which to build a skills-based promotion platform. She pointed to the cryptocurrency part of Friedman's practice, which is run by the youngest partner in the firm. "It's growing into a multimillion-dollar practice, all staffed by people under 30, who have a great understanding of IT, cryptocurrency, and blockchain."
But workers of all ages possess or can attain skills that should be put to the best use possible within the firm.
Which speaks to what may be the most valuable skills base of all: collaboration and teamwork.
Lou Carlozo is a freelance writer based in Chicago. To comment on this article or to suggest an idea for another article, contact Chris Baysden, JofA associate director, at Chris.Baysden@aicpa-cima.com.