Put staff first, clients will follow!
The situation is desperate. CPA firms are overwhelmed with client demands, and there's not enough staff to handle all the work. Employees are burning out and leaving public accounting, lured away by industry's signing bonuses and benefits packages. The time-tested formula of working longer and harder to increase profitability no longer applies. To make matters worse, the Department of Labor predicts the workforce shortage will only get worse for at least the next 10 years as baby boomers retire at increasing rates and colleges don't graduate near the number of accountants needed by public firms and industry. It's a pretty bleak picture, isn't it? Maybe not.
Actually, the staff shortage is the best thing that has ever happened to the public accounting industry. It presents a tremendous opportunity for CPA firms to reinvent themselves and change the way they deliver services. One new strategy centers on one simple concept: Don't double the hours employees are working - double the value they bring to the firm and its clients.
Happy Employees Make for Happy Clients
Ten years ago, accountants were plentiful and clients were more difficult to attract, so firms focused on acquiring clients. Today demand for accounting has outstripped supply. Firms are overwhelmed with work at a time when it's far more difficult to find and keep talent than it is to acquire and retain clients. This environment demands a whole new strategy. It begins with a radical paradigm shift - a "staff first" culture. But wait a minute! What is this about staff first? Whatever happened to the old mantra "customers first"? The fact is: it takes happy employees to make happy customers.
Anyone who has ever walked into a firm or retail establishment has experienced what it's like to talk to an unhappy or disinterested employee - someone who is just going through the motions to get a paycheck. Such employees leave customers feeling unwelcome, unlikely to return for additional business and extremely unlikely to refer other customers.
Happy employees, on the other hand, have a positive attitude. They are engaged and productive, fully aware that their success is tied to that of the organization. They view their interaction with clients as an opportunity to provide assistance and generate client satisfaction. These are the types of employees who are willing to go the extra mile for the client - because they have been empowered to do so, not because they have been prompted or coerced. Clients can feel the difference as they interact with responsive employees who provide consistently excellent service. They also know a workplace that treats its employees well is a good place to do business.
When it comes to pleasing clients, accounting firms have an additional challenge. People don't usually look forward to visiting an accountant. At best, it means they have to deal with dry, difficult to understand financial statements; at worst it means bad news because of unfavorable tax returns. Happy employees can help clients make the best of the experience and their relationship with the firm in general, surprising them with the positive experience they rarely find at CPA firms. In addition, employees with a positive attitude are more likely to attract positive clients, not whiners or people who don't pay their bill. Good clients in turn are more likely to return for additional services and to refer others.
Creating a "Staff First Culture"
The investment of hiring a new accountant takes about a year to recoup. If an employee leaves before one year is up, it's a negative investment, not to mention lost productivity and training time. It pays to keep employees happy with a staff first culture. Here are its components:
Leadership commitment. A staff first culture starts at the top. The managing partner, president or CEO has to set the tone for the organization and foster open, positive communication with the workforce. Leadership also sets a clear service commitment that links client success to employee and firm success. Employees know what they need to do to make it happen and are empowered with training and support to carry it through. They know the firm is committed to helping them accomplish their career goals.
Strategic IQ. Raising a firm's strategic IQ is accomplished by creating a vision, communicating it to the employees and aligning their activities accordingly. If employees understand how their role fits into the firm's vision, they will do whatever it takes to help the firm succeed and thereby bring about their own success. They will be engaged and loyal, diligently working toward the pot of gold at the end of the rainbow - but only if they can see it and know what they must do to get there. Creating this vision may be the most challenging step in developing the new strategic perspective. Driven by short-term deadlines, CPAs tend to spend little time thinking about the future. But raising the strategic IQ depends on a long-term view that focuses on outcomes, not tasks, on doing the right thing, not just doing things right. It's the difference between working in the business and on the business.
Flexibility. When it comes to attracting and retaining employees, one size does not fit all. Over half of all accountants are women, many of them mothers. Since technology has enabled greater flexibility in how work gets done, firms have the opportunity to focus more on outcomes than hours. In other words, rather than asking employees to put in 40 hours a week in a cubicle, ask for outcomes regardless of how and where the work is accomplished. Particularly smaller firms, which cannot always compete on salary, have a strategic advantage of being able to compete on flexibility. They can allow employees to work from home, work three days a week or do job sharing. This aspect of the staff first culture puts people in charge of their own destiny, which again has a tremendous impact on productivity. It also supports the work/life balance today's employees value so highly. In fact, being able to offer this flexibility gives public accounting a strategic advantage over industry where accountants are still driven to burnout.
Double value for clients. A strategic focus addresses the total needs of the client, not just their compliance needs. This in turn generates more meaningful, rewarding work for employees, such as advisory services and consulting, thereby leveraging the firm's talent and doubling its value to clients. Clients receive comprehensive services, and employees gain a sense of purpose that fosters their career advancement and the firm's growth. The firm becomes a stimulating place to work with loyal employees and clients. Finally, it's critical to turn those value-added services into the core services of the firm with compliance work only as a by-product.
Of course it's not enough for just one or two people to double their value to the client. It has to happen across the board. For too many years, firms have committed one or two people to a value-added service line and then expected that the service will magically, as if by osmosis, spread to others in the firm. It just doesn't happen. Why? Because firms are still operating under the paradigm that technical training is more important than people skills. That translates into a compliance focus, not a client focus.
Desirable clients only, please. But what about those clients who just won't be satisfied no matter how hard everyone works on their behalf? Why not fire those complainers? With more than enough work to go around, there is really no reason any more to work for difficult clients who often don't pay their bills to boot. The fact is that 20 percent of a firm's clients are buying 80 percent of its goods and services, while the other 80 percent take up 80 percent of the time without being nearly as profitable. These undesirable clients create serious morale problems, leading staff members to leave the firm or the accounting profession altogether. Usually partners or senior members of the firm are not aware of the impact these demanding, often rude clients are having on the employees who work with them directly. The answer is simple: Ask staff to create a list of undesirable clients to be fired. There may be surprisingly few, but getting rid of them will have a huge impact on morale and productivity.
Case Study: Creating a Staff First Culture at Meyers Norris Penny, LLP
Founded in 1945, Meyers Norris Penny, LLP (MNP) is one of Canada's largest accounting firms with approximately 2000 employees in over 50 offices throughout western Canada. In the last 10 years, MNP has grown dramatically through acquisitions under the direction of CEO Daryl Ritchie. In an effort to assimilate the different cultures of the newly acquired firms, it defined its future, not in terms of revenues and number of clients, but in terms of culture. MNP decided to create a culture where staff feels valued and therefore gives value to clients.
"In our mission statement we encourage employees to have fun and to stay in balance," says Mark Brown, the firm's Director of Business Consulting Services. "Those are the underpinnings of a culture we live every day. MNP's senior team lives and communicates a culture in which people work together rather than practicing one-upmanship. The firm keeps up its side of the bargain with regard to developing our up-and-coming people and giving them the opportunity to grow. Employees have interesting and challenging tasks, which make their work worthwhile. We also invest in training and development, particularly through MNP University."
Another one of MNP's success factors is to reduce attrition. "We do a good job of selecting and promoting people to partnership with the idea that we need good, strong people to stay with us and grow with us," says Brown. "In larger firms, it often takes a long, long time before someone achieves partnership. During that long wait, people often leave for more attractive opportunities." MNP also encourages the firing of difficult clients. "When someone is belligerent and refuses to follow our advice, employees usually bear the brunt of that individual's frustrations," says Brown. "We free those clients up for other firms."
MNP's mission also expresses a commitment to client success. "The business of preparing financial statements and tax returns is very much a commodity game," says Brown. "While it is a big part of our success, we go far beyond it. As many of our clients are growing or going through a transition they look to us for support. We improve their efficiency through business consulting services that run the gamut of all the functional areas, from human resources, to corporate finance, to performance management. It's interesting," adds Brown, "that when our clients do well, we do well with them. We take pride in helping them be successful by supporting their endeavors, without telling them how to run their business."
MNP's last five-year plan more than doubled its revenues. The growth has come from ongoing client relationships and mergers with like-minded smaller firms. "We are training our Chartered Accountants in performance management and the skill sets of consulting so they can truly be trusted advisors to our clients," says Brown. "The more we are aligned with our clients' endeavors, the better we can respond and help them be proactive rather than reacting to decisions they may have made without our input."
Double the Value
Given the increasing dependency on accounting professionals to integrate financial reporting with other mission-critical management information, client demand is not likely to let up. And with the shortage of accounting talent, it's a case of increasing demand and diminishing supply. What's the answer? Don't double the number of employees or their working hours. Instead, double the value employees bring to clients. Everyone benefits. Employees will enjoy the financial, social and emotional rewards of providing meaningful, value-added services. Clients love to work with engaged employees who take a holistic view of their financial needs. And the firm that establishes such a staff first culture will have a distinct competitive advantage. It will become more profitable and grow - without working harder.
About the Author:
Steve & Edi Osborne, co-founders of Mentor Plus, a company that provides turnkey training and consulting to help CPA firms and their clients achieve extraordinary business success. For further information, please visit www.mentorplus.com or call 831-659-7587.