stock image of someone working from home

Early factories relied on water or steam power to drive machinery until the development of electric motors and lighting, alongside effective supply systems, opened up a world of opportunities for reforming production techniques and processes. But the new technologies weren’t restricted to the workplace. While some businesses reaped the rewards of cheaper and more effective tools to satisfy undiminished demand for products such as cutlery, makers of gas-lamp fittings suffered as homes, factories, offices and public buildings switched to electric lighting.

These were not isolated changes.

A complex blend of advances in transport and infrastructure technology interacted with social change (some of it driven by the concentrating of wealth and shifting societal stratification) to transform not just how things were made, but the nature of things made, along with the lives of those directly and indirectly involved in both manufacture and consumption.

As the world comes to terms with the impacts of the COVID-19 pandemic, the term ‘hybrid working’ has become the latest focus for workplace change. Over the next few months, we’ll be looking at how hybrid working is going to affect employers and employees. We’ll also look at some of the technologies that, while fundamental to the rise of hybrid working, have far more significant implications for work than simply where it takes place.

What do we mean by hybrid working?

From an individual perspective, the UK’s Office of National Statistics says it is when individuals ‘both work from home and in the workplace’. But from the business’s perspective it means both accommodating home working and providing a workplace – regardless of whether any given individual operates entirely in one or the other or in a combination of the two.

Whether an individual role can be performed in a hybrid fashion will vary according to its demands. In general, it is easier for ‘knowledge-based’ work than for manufacturing or personal services, but that’s not a universal rule. At a business level, whatever sector it may be in, the larger the business the more likely it is to have at least some roles that can be performed in any location, bringing them within the hybrid working fold. There is little that a single restaurant can do away from its premises, whereas a large chain of franchises will have a significant back-office function, much of which might be digitalised. For a large manufacturing business, the impact on the traditional workplace may be limited, with only a small proportion of administrative and finance staff able to work away from the factory. For knowledge-based businesses, such as lawyers and accountants, the implications are far more significant.

For accountants, who play many roles in business, ranging from analysis, forecasting and planning to audit, assurance and risk management, hybrid working will often be an option. But the technologies that facilitate this also affect how they perform their work, and even the substance of that work. Managing a business with downsized workplaces and increased reliance on digital workflows will present very different challenges to a traditional workforce deployment, and even more so if employees are allowed to discharge their duties from a different jurisdiction to that of the main place of business.
The immediate short-term driver of increased hybrid working has, of course, been the COVID-19 pandemic, as significant parts of the workforce spent time working exclusively from home for extended periods. The digital infrastructure was in place and businesses and workers had an enforced trial of home working, where that was possible.
The world of work has been changing for decades, as technological advances have allowed colleagues and customers to communicate with each other from remote locations. Telecommuting has been a feature of some US workplaces for over 50 years, with real-time video meetings offsetting the need for transcontinental travel since the 1960s.
When telecommuting started, paperwork was still king. Information was valid only once rendered into physical form, and duplication of information was time-consuming and expensive. Transfer of data took time and cost money, and the concentration of activity around the physical manifestation of that information made sound economic sense.
For many years, the term ‘paperless office’ was central to discussions about the future of work. But the true impact of technology on the workplace lay not in transferring information from physical to digital format but in creating information tools that allow decision makers to model the impact of decisions and share those impacts instantly with other decision makers. The vision shown by the developers of the Lyons Teashops distribution system (the ‘Lyons Electronic Office’) in the 1950s demonstrated what could be done by exploiting the digitalisation of information and the power of computers. Since then, widespread access to the internet has allowed real-time two-way transmission of information. Now that information can be transferred instantaneously and at perceived or marginal costs at or around zero, the decisions that can be made are changing in character and importance and the location of the humans involved in the process is less crucial.

What are the specific implications for accountants?

Digitalisation is going to affect both aspects of the accountant’s role – what they do, and how they do it. Hybrid working is in some ways a reversal of the post-industrialisation shift towards concentrations of activity. Economic activities in their earliest forms tended to be small scale and localised. Various factors contributed to the centralisation of production processes – initially, physical advances such as the ability to reliably extract energy from inanimate sources (water power, then steam power, then electricity) drove improved machinery and production processes. Legal forms and norms drove further aggregation of capital, while later developments such as improved transport networks created the concept of the commuter. Even though the concept of ‘the works’ and the ‘head office’, and even remote sales offices, took hold, each function nevertheless relied on physical assets that in turn imposed a requirement for physical proximity, further driven by ‘economies of scale’.

But as technology marches on, digitalisation has irreversibly altered the character of every aspect of business life. The products people buy have changed, and so have the ways they are made. But even more fundamentally, the economic and legal frameworks themselves, which initially drove much of the aggregation of capital, are also changing. Blockchain-based self-executing contracts could in the long run see traditional corporate forms superseded.

So what is all this going to mean for accountants?

As individuals, they can expect to be working in roles that lend themselves to non-traditional workplaces. Learning skills, or tutoring others, will be a very different. As part and parcel of the digitalisation that enables remote and hybrid working, processes and transactions will rely on increasingly proactive software, with checks and controls built into operations, rather than relying on subsequent review by a second human being. The freedom to work remotely from colleagues opens up the possibility of working on more than one project, or for more than one employer, at a time – but what skills will accountants need to take advantage of such opportunities?

For accountancy practices, the concept of hybrid working offers the scope for employing the best talent, wherever in the country (or world) they want to work from – in certain roles. But where client records are still on paper, hybrid working poses challenges for document security. While the current experienced workforce know one another, and are a known quantity to management, how should recruitment be handled? And training?

Many accountants will be working in finance teams within larger businesses and facing a different range of challenges. The digitalised platforms on which Cloud-based records and enterprise resource planning (ERP) systems operate offer scope for interacting with specialised tools. Working from home could encourage fraudulent behaviours, which artificial intelligence (AI)-assisted software might help to counter. But when and how should such systems be deployed, and what are the regulatory implications for employee privacy? What are the implications for BYOD (‘Bring your own device’) policies? And what of cross-border working? One of the benefits of remote working is that the internet need not necessarily recognise national borders – but international businesses should, especially where data regulations restrict the flow of certain information across borders. While software solutions such as homomorphic encryption could offer a solution, the hardware needed to operate such tools reliably may well be several steps ahead of what employees currently use. Turning back to the regulatory burdens for individuals, if some staff work from different jurisdictions, where are they ‘employed’? And which tax and social security rules will apply? Can they benefit from a ‘right to disconnect’? If they identify a fraud, what levels of whistle-blower protection might they receive? For those preparing or auditing financial statements, how should headcount be calculated, and on what basis would geographical bases of operation be recognised?

Looking further on, to ACCA members in the public sector, there are broader structural implications of any shift from centralised workplaces to hybrid working patterns. Businesses will naturally look to source talent wherever it is cheapest – and if that talent can be accessed digitally from historically lower-waged developing economies, the corollary will be a shift of employment taxes away from developed to developing countries – if the developing countries can identify and capture their new tax base. But even a domestic shift in worker location has implications. Infrastructure built over decades to serve a population of daily commuters will need to be refashioned. Service industries such as dry cleaners, lunchtime sandwich bars and morning coffee shops in city centres will lose their trade, as we saw in the pandemic, but will these businesses relocate to the suburbs where workers now spend their days? There are implications not just for those businesses, but for business rates, and for energy consumption patterns as commuters abandon mass transit systems or motorway commutes.

Check back in as we discuss all the issues flagged above, and more, over the coming months.

The implications of hybrid working are fundamental to the future of the accountancy profession, and with it the better world that we’re all working for. The fast-changing nature of the challenges and opportunities, and the differing implications for different actors, mean we’ll be focusing on different aspects of the brave new world to lay out an overview of the separate yet interdependent implications of hybrid working.