PKF South Africa Inc. is a family of legally independent firms in South Africa. PKF South Africa is a member firm of PKF International, a global network of legally independent firms bound together by shared commitment to quality, integrity and the creation of clarity in a complex regulatory environment.
SAprofessionals.com spoke to National Chairperson of PKF South Africa Theo Vermaak about his personal, professional, and entrepreneurial journey over the years.
Theo says his passion is the accounting profession, specifically learning and development and increasingly, the future and sustainability of the profession and regulation thereof. He has experience in training and consulting to the accounting profession and business, on financial and related reporting (public and private entities), ethics, audit strategy and risk assessment.
Tell us about your early life, training, personal development to your role today
There were a number of events and experiences during the course of my life which I believe played a major role in shaping the person that I am today, and importantly, my leadership style. I grew up on a farm and later in a small town in rural KwaZulu-Natal during a time when racial segregation and politics had a significant impact on everyone in South Africa. While my family was fairly conservative, we were taught to treat every single person we encountered with dignity and respect, something which I strive to live out to this day.
I graduated from the then University of the Orange Free State in 1994 with a B. Compt (Hons) degree, on the path to becoming a Chartered Accountant. This was of course a time of great change in South Africa, when the need to challenge preconceptions and indoctrinated beliefs, heated debate and sometimes fear were major influences on my life.
I was extremely fortunate to obtain a bursary from what was Coopers & Lybrand and completed my training with the firm that later became PwC Durban. My work style was heavily influenced by a few extraordinary people I had the honour of working with, even in my very junior years. I embraced opportunities to work on projects in and secondments to Kenya and a few countries in Eastern Europe. I consider my time in Slovenia as especially precious – I entered a foreign world where language and cultural barriers taught me more than any university degree could about myself and human resilience and adaptability.
Since 2001, PKF has been part of my life in many different forms, including when I started my first professional training company in partnership with PKF South Africa in 2003. The nature of the PKF network is such that all members globally are independent firms. As such, I have “left” PKF a few times, but each time to join the PKF family in a different capacity. This included PKF New York and the central office of PKF International. After a brief break from the profession, I was approached by PKF South Africa last year and took up the position of National Chairman on 1 June 2018.
What inspired you to join the industry?
What inspired me originally to join and what inspired me later to return to the profession are very different. I chose to become a Chartered Accountant as I believed, and still do, that the CA qualification opens doors to endless opportunities. If approached correctly, the training is about so much more than technical expertise. Working with diverse clients teaches very valuable interpersonal and leadership skills at an early stage. What inspired me to return to the profession after joining a bank for a few months early in my career, and continues to inspire me today, is the belief that our profession has a pivotal role to play in society – from upholding corporate ethics to nurturing entrepreneurs and helping businesses succeed.
What does it mean to you that your colleagues have entrusted you with your current position of Chairperson in the organisation?
I have been part of the PKF family for a long time, albeit in different roles in different parts of the world. Being asked by the PKF South Africa Board to serve as Chairperson was hugely humbling. I have known most of the people for a long time, and while I knew there was mutual respect, many of the PKF partners and some of my team members have significantly more experience than I do. I am eternally grateful for their support, but more importantly, their buy-in for the new vision I have set for our network. Their trust means the world to me.
What does the role mean to you?
This is the first time PKF has had an independent chairperson, not directly involved in any of the individual practices that make up our network. As such, I believe that my role is to bring an outsider’s perspective, tapping into my international experience. While we have a strong, cohesive network, there is scope for greater alignment in critical areas. I can focus on broader objectives and aspirations, and unencumbered by day-to-day practice challenges, I need to scan the horizon and position PKF to remain relevant in a challenging and fast changing world.
What would you like to have achieved by the end of your term?
The PKF South Africa network has historically focused on resource sharing under a common brand. While this remains a critical contributor to our collective success and an important reason for the very existence of our network, I believe we need to shift gears and explore ways to leverage our combined, diverse strengths to deliver greater value to our people and our clients. In short, I am working to deliver on a national strategy that has an appropriate focus on enhanced governance, risk management, proactive quality management and ethics. My vision is to position PKF as an obvious choice of business adviser to the owner-managed market, and to be a compelling choice as employer for talented and passionate people looking for opportunity to grow. I hope to strengthen and modernise the PKF brand, better incorporate technology into our processes and service delivery mechanisms while always maintaining our personal approach, and expand our service capability for the benefit of our clients.
How would you describe your management and leadership style?
First and foremost, inclusive. No one person has all the answers, and I believe consultative leadership achieves more sustainable results. I continuously consult with the PKF South Africa Board and partners and managers around the country to get their input. I am also transparent – decision making should follow transparent processes and it is important to communicate the reasons for decisions being made. This promotes buy-in, or at the very least understanding. Humility and the willingness to admit to mistakes are important. I also believe in allowing people freedom to come up with solutions and to make mistakes themselves.
Of course leaders need to challenge the status quo, set a course and be willing to make tough decisions. But this should be a process of inspiring a shared vision rather than pushing people towards “my” vision for the future.
Finally, I like to think that I am approachable. Many leaders and professional services firms describe themselves as having an “open door policy” but frankly, it is not about what you say or what is written on your website. The test lies in how this plays out in practice and your reaction when people do approach you. I have already mentioned the importance of treating people with dignity and respect, regardless of who they are. Every single person in PKF has permission to approach me or any of our leadership team with ideas, issues and requests for help.
What makes you tick or keeps you awake at night with respect to your position?
Passion for our profession and for PKF makes me tick. PKF South Africa has experienced rapid growth in recent years. With growth comes the need to reassess the way things are. Firms that have joined our network provide a fresh perspective and I believe it is healthy to pause and ensure we are doing the right things. Our growth and new membership has resulted in greater critical mass, opened up new opportunities, and introduced much-needed diversity. This is a very exciting time to be leading PKF. There are tremendous opportunities for us to not only improve our business, but make a real contribution in South Africa.
What keeps me awake? It is increasingly difficult for accounting firms, especially in the mid-tier, to differentiate. Attracting and retaining top people remains a massive challenge. Technology is increasingly going to impact the way that we work. Fee pressure means we need to continuously challenge the way we do things to improve efficiencies and deliver real value. While there is a need for regulation of our profession, I fear that recent events may lead to a further imbalance, not necessarily over-regulation, but regulation that focuses on the wrong things. This is undoubtedly a trying time for the auditing and accounting profession, impacting on our ability to attract talent and win the trust of clients. We need to work tirelessly to improve quality and exhibit faultless ethics. I would like to see PKF contributing to the efforts that are needed to restore faith in the profession in South Africa.
How have you taken part in mentoring others?
I have in previous positions been assigned formal mentoring roles. My background and past experience are very much rooted in training and development, so I tend to approach most interactions with my team members as a mentoring or coaching opportunity (in both directions, by the way). I will from time to time identify people who I believe have potential to make very special contributions to PKF or the accounting profession, and will formally or informally mentor them, as I have been mentored over the years. I also participate in new business owners’ forums, sharing advice and insights from my own entrepreneurial endeavours.
If you had to relate a couple of experiences, what would be the highs and what would be the lows of your working career?
There have been many highs, but undoubtedly one of the stand outs was when I was elected Chairman of the Forum of Firms (I served in this role from 1 January 2015 to 31 October 2017). Chairing an association of the top global accounting firms, interacting with the Board of the International Federation of Accountants, regularly engaging with the global standard setters… I learnt so much in this time and it expanded my thinking more than I could have imagined.
As for lows, I once left a senior leadership position due to irreconcilable differences, and importantly, diametrically opposed leadership styles, between me and other members of the leadership team. While this was a low, it also resulted in me engaging a professional coach and in the process, learning and developing skills that I would not otherwise have acquired.
How has the firm fared in terms of achieving its business growth?
In 2013, PKF in South Africa lost a significant number of member firms and our revenues dropped from R320m to R115m over a period of nine months. We focused our efforts over the next five years to rebuild the network, and I am delighted that our revenues are now well over R400m. Our individual member firms continue to meet revenue growth targets, a significant achievement in a flat or retracting economy. This is however only part of the story. As alluded to before, profitability is a challenge and if we want to ensure the sustainability of the profession in South Africa, this needs to be addressed.
Through what means does the organisation ensure that the firm maintains high levels of ethics and integrity?
Integrity is one of the core values of PKF – it is part of our DNA. Our values and related behaviours are communicated regularly to all employees and every decision we make is measured against our values and our strategic objectives. Our top leadership regularly communicate the importance of quality, integrity and unwavering ethics. We conduct regular ethics training (mandatory for all professionals), reinforcing core principles and educating our people on changes in requirements. We have a formalised complaints and allegations process which provides a safe way for people to report ethical concerns. Our internal risk management and monitoring and compliance systems include measures to assess ethical compliance, including independence, which is so important in our profession. While no system is fool proof, and ethics ultimately comes down to each individual, we have had cases of “whistleblowing” or our monitoring has identified potential issues, resulting in us having to make some tough decisions. This provides some comfort that the system is working and that the very vast majority of our people live our values.
Is transformation considered a key objective at the firm, and if so, how is it attended to?
Transformation is a very important part of our Board’s duties and of our strategic focus for 2020 and beyond. 33% of our partners and directors are female, but only 11% of our partners and directors are Black, Indian or Coloured. This number changes to 47% when looking at our staff complement overall. We aim to address the leadership gap through leadership development programs targeted at high performing individuals, with the necessary focus of course on previously disadvantaged groups.
We would however be delusional to think that we can address transformation on our own. I’ve already mentioned the challenge of attracting and retaining the right people, largely due to the risk associated with our profession, perceptions of over regulation, and recent scandals discrediting accountants and auditors. This is exacerbated in the context of transformation – the pool of talent to select from in order to promote transformation goals is small. Our regulators need to remove some of the barriers to entry into the profession and Government has an important role to play in improving the quality of education for all in South Africa, especially Mathematics and Accountancy education. Transformation will be a journey, one that we need to approach holistically as a profession and country.
Highlight some recent contributions by the firm to the community and to the relevant profession your professionals are part of.
Each of our individual member firms contribute to their immediate communities in the form of assistance to schools, charitable donations, and contributions to education and mentoring programs, some of which are facilitated by our Institute. We plan to have a coordinated Social Responsibility initiative in 2020, where we will align these individual efforts to focus on one single cause.
What values do you hold dear and why?
Respect for others and the earth. Honesty and integrity. We can’t exist together if we don’t respect each other. We won’t have a pleasant environment to live in if we don’t respect the earth and all its life forms. Without honesty and integrity, the very fabric of our society falls apart.
When you not at work, what do you get up to including family life?
I co-own and run a cocktail bar, wine retail outlet and distillery, and am in the process of opening a restaurant. This allows a certain creative expression which is important to balance my interest and stresses. I live near the beach and when I’m not working, I spend time with my two dogs and take them to the beach as often as possible. I go to the gym to be tortured by my personal trainer at least three times a week. Occasionally, when time allows, you will find me in the garden, planting, pruning or weeding.
Where can people follow you online?
I am admittedly not very active on online platforms, but people can find me on LinkedIn as Theo Vermaak.
