By Kyle Walters
As most of you know, the accounting profession is feeling the pressure of commoditization and fee compression. What’s more, many firms are finding it difficult to hire and retain qualified staff.
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In order to overcome these challenges in your practice, you will need to address three important considerations ASAP:
- Work is not a place, it’s an output.
“Has anyone ever said, 'I wish I could go to more meetings today'?” – Matt Mullenweg, developer of WordPress
What are you looking for in your employees? Are you looking for worker bees who are good at crunching numbers, or are you looking for top talent that’s going to help you bring in great clients, not just do great work? How much time do you want your team members to expend just getting to and from the office? Is face time at the office really more valuable than working remotely after you factor in meetings, friendly banter around the water cooler, gossip and unannounced “pop-ins”? And that’s before you even factor in commuting time.
College graduates and young professionals are not interested in being stuck in a cubicle for 60 or more hours a week. They want flexibility. If they are delivering results – the results you hired them to deliver – does it really matter where they are doing the work? In addition to facing fewer distractions when you work remotely, you become a much more effective communicator.
Naturally, not every firm partner or senior manager is comfortable with remote workers and telecommuters. If that sounds like you, remember that your younger staff are much more comfortable with this type of workstyle – and so are the younger clients you have coming on board. People's attention spans are getting shorter and shorter. You need to adapt to that in every part of life.
A young professional I know makes her living negotiating complex contracts with people from India, Germany and other far-flung countries in numerous time zones. She takes calls at all hours of the day and night. Is she supposed to sleep in her office? It doesn’t matter where she is when she’s working. Work is not a place for her. Like many knowledge workers, her job is not to sit in a chair in an office. It’s to get good contracts done and produce results.
- Career development v2.0
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” – John Quincy Adams
At many CPA firms, new hires are introduced to a senior partner early in the onboarding process who will serve as their mentor. It’s great that new hires are being given a mentor from Day One to provide guidance and to show them the ropes. But it doesn’t give new hires time to find the mentor who’s the right fit for them.
Further, at most firms, new hires are taught early on that if they work hard year after year, then one day they may rise to partner. The problem is that after decades of work, a rising start at your firm may not actually want partner responsibility or life path. As the accounting profession changes, the target for the best advisors changes.
The CPA profession – long based on billable hours – is governed by a system that tells workers it doesn’t matter how well you are doing; it only matters how much time you spend doing it. Accounting firms created an effort-based business model, not a results-based model. Why would CPA firms promote and encourage ingenuity when they can create systems and processes that cut the amount of time it takes to get the client the kind of results they’re paying for? That kind of efficiency is only going to reduce fees, right?
More importantly, the majority of CPAs have said they would not want their kids to enter the accounting profession or start a tax practice. If most CPA firms are run by folks who wouldn’t encourage their own kids to join their profession, then why would somebody who doesn’t know you want to be you?
- Seeing around the corners
“If the rate of change on the outside (of the firm) exceeds the rate of change on the inside, the end is near.” – Jack Welch
We know the rate of change in the accounting industry overall is happening faster than things are changing within individual accounting firms. Competition within the industry is not driving this change, either.
Uber is not a taxi company; it’s a technology company. Uber doesn’t own cars; it owns an app. Yet, Uber is putting traditional taxi companies out of business because taxis got confused about what their job was. Their job is to make people’s lives easier by getting them where they want to go at any time of day or night from any location. Uber found a better way.
Kodak thought its job was to be a photo company. No, its job was to help people capture memories – not to make photo books. But, Kodak forgot what its true job was and got its butt handed to it by tech-savvy startups.
A number of studies have shown that the No. 1 thing clients are seeking is more simplicity in their lives. They want to talk to fewer people – not more people – about what they need. It’s not just tax prep, but tax planning and the CFO solution.
I talked to a client the other day whose close relative just died very suddenly in his sleep. Now my client really has estate planning on his mind. I could tell from his voice that he was worried when he called me. He said, “Hey if something happens to me and my wife (Linda), I want to make sure my kids and grandkids are taken care of.” He asked me, “What do we need to do?” When I told him he needed to get an estate planning attorney involved, he said, “I don’t know how to talk to attorneys, can you do it? You know everything about me and what we’re trying to do.” That’s what clients want. They want me on every single call that pertains to their financial life.
I had a meeting last week with a physician client of mine whose estate attorney failed to put together an irrevocable life insurance trust (ILIT) correctly. It almost cost my client $12 million. The attorney didn’t assign the correct value to the policy. The attorneys put the whole structure at risk. If you have $20 million in life insurance and you’re already over the exclusion and it has to get pulled back in because you didn’t set it up right, that’s a $10 million mistake. If I wasn’t at that meeting, the mistake wouldn’t have been noticed. I’m certainly not an expert in insurance. I’m not an expert in taxation. I’m not an expert in investments. But, I am an expert in my clients. In this case, I sensed that something didn’t smell right and that the estate attorneys needed to go back to the drawing board and get the policy value correct.
If you want to remain relevant in the accounting profession, you must understand that the way the industry is structured today won’t work in the future. When trying to hire qualified staff, consider bringing in people from industries outside of accounting. Figure out how you can take the principles of their business models and adapt them into your own business model. If you do, you can leverage the talents of the new hires you are bringing in today to build a firm that’s going to be successful in 10 years and beyond.