Random Sales Efforts Fuel Staffing Problems
By Terri M. Sommella, President, Sommella Market Strategies
Today, a bright and talented tax manager at a public accounting firm called to let me know that he had accepted a position in private industry. Why? The negative work environment and stress finally pushed him over the edge. Last week, a former managing partner lamented the scheduling decisions to which he attributed his firm’s merger. His comment summed up the biggest problem our industry is facing: “I have to accept responsibility for the fact that I drove our best senior into private industry because of the hours she had to put in.”
Every partner I’ve ever met has a similar story to tell. The revolving door is spinning so fast that we can’t take time to think about other options. Consequently, we try to be more creative in our recruiting and expend even more effort in doing so. First, we developed college recruiting and internship programs. Now, we’re convinced that college is too far down the educational line. So we’re talking to high school students, trying to influence these kids before their career decisions are made. Recruiting has gone from a part time job to a department, and yet, retention and recruiting remain the number one concern in professional services.
Maybe recruiting and retention aren't the problem. Maybe we need to look at this from the flip side. Firms expect growth to continue at a rate of 10% or more each year. The majority of firms still see their target market as privately held mid-size companies for which they provide a wide array of services. For this reason, firms continue to reactively accept most clients that come through the door. We’ve had a booming year. Partners say they have experienced record growth despite making little effort to market their services. But partners also tell me that recruiting cannot keep up with the growth rate. In other words, firms are continuing to allow clients to come through the door knowing that service to existing clients is suffering AND that recruiting and retention is worse than ever. To put it another way, we’re bringing in $5 million in business but we only have a $4 million delivery capability and the gap is widening.
Let’s step away from the staffing problem a minute and look at what’s going on earlier in the chain. What’s happening within the 10-20 hours a month each partner logs on the timesheet under the marketing and/or business development categories? I often ask partners and marketers what percentage of their professionals conduct marketing and selling in a random versus focused method. The initial response is usually an immediate transference of the issue: “We have all the business we can handle. What we need is staff.” Probe the operational and executional efficiencies, however, and the percentage of partners and managers who engage in random marketing and selling activities is over 95%.
Enormous amounts of time are being spent with no real focus. There are many partners who randomly attend functions and networking lunches, serve on committees and boards and give seminars and speeches. How many can talk about the specific goals for each of these activities? Of firms with formalized marketing programs, a rare few are successfully tracking the results of these efforts. Without even realizing it, partners and managers waste time pursuing nonqualified “opportunities” that have no chance of conversion. As a result of this lack of focus, a significant percentage of the business that does come in the door is undesirable work in the context of the big picture. These undesirable clients fuel the staffing problem without adding to the value of the workday. Billable hours have to be made up by others in the firm. The tensions and resentments increase the stress in the firm environment. Managers and staff decide they want more enjoyable work, turn in their notice and go into private industry. The recruiting cycle continues.
Chuck Snead, International Director of CPA Firm Association, Midsnell Group International states, “Some firms see the Big Five laying off and think that the staffing problems will improve at the lower levels. I don’t believe it. Private industry’s staffing demands are going up, too. Our competition isn’t just public firms anymore.”
So why do we waste precious time and resources on 1) random marketing activities that have no evidence of success and 2) the subsequent investments our firms are making in undesirable clients? How can we blame the entire problem on the staffing shortage?
Einstein’s definition of insanity is repeating the same action and expecting a different result. It’s time to break the cycle. There is no evidence to support the idea that this staffing problem will go away. During a recent speech in Toronto, Canada, industry change consultant, Ira Blumenthal emphasized, “If you want to change the future, create it.” We need to find a better, more efficient way to handle things.
What if partners and managers had a focused plan that excluded activities that didn’t advance their purpose? What if these individuals could assess the value of activities and “opportunities” before they made the conscious decision to invest the hours? How many hours could be gained annually by focusing these efforts? What if the focus shifted from “D” clients to “A” clients using the existing staffing levels? An accounting firm in the Midwest answered these questions. This firm now generates over $10 million a year with three partners and little to no staff.
What we’re talking about is taking control of the situation, narrowing the beam and focusing marketing and sales efforts on a higher value. For example, let’s say your firm’s gross profits are 20% right now. Out of that $5 million previously mentioned, we really only care about our $1 million. That’s the number that needs to be protected. What if your partners focused on high margin selling, instead of adding to the firm’s staffing burden by taking on more of the same mix of poor realization business, high risk business, small start up business, and so on?
By selling smarter, your partners get paid a premium and the firm can generate that $1 million in distributable profit out of a $4 million delivery. You don’t need the same number of people to do the work, so the recruiting problem is eased. The work becomes more interesting so your retention improves. The quality of life for everyone in the firm goes up and the work is more enjoyable. You’ve saved a ton on recruiting costs and you can nix your plans for adding a sauna to the staff gym as an added incentive.
So, the options are simple: 1) do nothing, 2) put more pressure on everyone in the firm, or 3) make an investment in a credible, focused plan. Which option makes the most sense to you? How this shrinking pool of talent gets distributed will be determined by your choice.
By Terri M. Sommella, President, Sommella Market Strategies