Change Agent

I've had on my task manager for more than 2 years now "Change Agent – Accounting Profession" and while I've been to a few conferences in that time where the topic of change has come up, I hadn't seen any mention of Change Agents in print, until I saw this article on WebCPA.

BROKEN

The traditional model breaks down with firm growth. It works well when a firm is new and has one or a couple of partners who do most of the work. In fact, it tends to be the easiest way for two people to split revenue. It makes a great deal of sense, in the beginning.

However, as a firm matures and grows, this traditional model begins to make less sense. At a point when most of the billable work gets done by non-owners/non-partners, there becomes a calculation that a rational non-owner makes. This calculation comes boils down to, "why am I going to put money into their pocket when I can put it into mine?" When you are required to "build a personal book of business" in order to progress in your career while giving up your rights to the business you've built, any incentives to actually progress diminish the closer you get to reaching the next career goal. At some point, a rational person doesn't want to enrich another person at their own expense.

A firm that recognizes this problem can address it in any number of ways and there is no "right" answer. A firm can get large enough to become a revenue generator in its own right (see the Big Four) where the firm brand generates significant and growing revenue. A firm can become profit center oriented, whereby every employee is evaluated and compensated by their contribution to firm profits (everyone is a partner/owner to some degree). In this way the employee is in-charge of their career path from the moment they come on board. I'm sure there are other models that work, but every firm must recognize the issue before the problem can be solved.

Where Were We When They Needed Us?

I firmly believe that most small (micro?) businesses and medium sized businesses need professional advice on their operations in an amount greater than they tend to seek. These businesses and the owners who run them tend to view that type of advice as "for the big guys" and/or too expensive to get. As accountants, particularly on the tax side (as we don't have the independence rules that the auditors do), we need to be delivering the advice whether they ask it or not, sometimes. We are their "most trusted advisor"!? We see how they are operating. We notice when they are slow to pay. We see when they are cutting staff or looking for other ways to reduce cost. In short, we know when there is business stress. It is in our interest to address these problems before they get out of control with our clients. We need to this more and, sometimes, even if they don't ask us too. We don't need our clients wondering "Where were they when we needed them?"

W.W.I.T? Part 3 - Vision

I've told many people and I've probably posted it here before, but – you can't drive forward by looking in the rearview mirror. In order for our profession and firms to move forward, we will need a clear vision of where we are going and how we are going to get there. 5 and 10 year goals are great, but if there isn't a detailed plan (which everybody agrees to) on how to get there nothing will happen. If there aren't provisions for the detours that will occur, the goals have no shot at being achieved. I'm concerned that too many firms currently have announced and promoted goals that they won't achieve and this will lead to the continued stagnation of the profession.

I have a vision for the accounting firm of the future that includes: maximizing the use of technology, true consulting and partnerships with clients, high degrees of efficiency, extensive knowledge bases, and attracting the best and brightest talent from every conceivable discipline at every stage of career.

Like a Ton of Bricks

While attending a continuing education class today, it hit me that a major reason why established firms fail to progress is the inability of the established leadership to relinquish control. It's not all about money, but the fear of losing status/prestige/control. If new people develop new business then they won't be needed the way they are now. I think this is what the established leaders fear more than the possibility of losing money and I think this is why they sometimes actively seek to remove people who threaten the status quo. These people have spent their lives convincing their peers, clients and themselves that they are so valuable that they are irreplaceable. This is why they won't retire and why they keep incompetent people around (even promoting them) and create conditions that make the exceptional people leave.

What Will It Take? Part 2

One of the absolute necessities to continue as a thriving profession is to keep the hard working and qualified people we have in the profession. I received an email the other day from a former associate that made the switch from public accounting to private industry. She is a young woman who has basically burnt out of public accounting because of the long hours (all year, not just during busy season) and the continual focus on the billable hour. She had enough and needed work/life balance. She has gone into industry and is getting the balance she is looking for, plus benefits that are not available to non-owners in public accounting practice. Public accounting has lost some real potential with her leaving. I'm sure she won't come back and she is exactly what our profession needs. We have to find ways to keep other like her from leaving. How?

We need to eliminate the focus on billable hours. Number of hours billed has become a worthless metric and is very outdated. The value that we create with our work is not measurable by how many hours we spend on a project multiplied by some arbitrary number. Sometimes we can spend a very short period of time on a project and yet create a great deal of value and other times we spend a long time on a project and create no value. We need to become more focused on creating value for our clients and billing for the value we create. Projects that don't create value (compliance) need to be done as quickly and efficiently as possible, if they are done at all. This will help us keep our people because they won't be under so much pressure to bill time for the sake of billing time, but they will be focused on creating value for our clients which should lead to greater job satisfaction and higher client and employee retention.

What Will It Take? Part 1

There is a radical change coming to our profession, whether we like it or not. How will we adapt?

In order to correct an issue, you must first recognize that there is an issue. This is the first step in any recovery process. The recognition that we are working in a manner that is detrimental to the long-term health of our profession is beginning to occur. Our profit margins are declining and our new business growth is slowing. These are the signals that business as usual will not keep us going for long. Our profession is evolving and the firms that recognize this will have the opportunity to be successful in the future.

The first step in this process will be the stepping aside of the established leadership to make way for the changes in structure and process that will be necessary to adapt. While utilization of new technology will be important to making this transformation, it will not be all that is required. It will take a complete evaluation and restructuring of processes and procedures to even begin this journey.