How Your Firm Can Maximize its Only Three Assets
There’s an often-overlooked problem within the world of CPA firms that needs to be addressed if they are to succeed now and in the future.
All CPA firms have the same three assets: people, clients and intellectual capital. While we as a profession concentrate on driving revenue, client relations and even M&A or succession planning, we have traditionally underperformed in leveraging the heartbeat of our firms: our people.
More specifically, how we may bring more value to all our professionals to help them reach their definition of success, by developing them at their earliest entry into our firms to be value creators for our clients.
Retention rates within CPA firms are at best disappointing. A recent Inside Public accounting annual survey had turnover rates as high as 20 percent. Another study of CPA firms with revenues in excess of $75 million found the companies had an average turnover rate of 17 percent.
To make matters worse, one of the top internal risks that American CPA firms face is not having enough good people to fill roles.
CPA firms are not seeing this trend slow by any means. When your professionals are performing the bare minimum to meet your firm’s lowest threshold requirements, they eventually will jump to the next firm that is willing to pay them more.
Firms need to invest heavily in their people and allow the benefits of these investments, such as higher revenue and solidified client relations, to follow. The question now becomes what type of investment needs to be made?
I will posit that the best professional staff development, attraction and retention strategy is the best revenue enhancement strategy. By this I mean that the best course of action you may take to retain your best people is to train them from day one to bring more value to your clients than any other firm in your marketplace.
Professionals, especially from younger generations, need to see a future at the company they work for—one that is laid out for them clearly by their employer. In effect what are you doing for me every day that will assist me in achieving success in this firm. There are several ways that firms can not only present a viable future to their employees, but make the present just as engaging for them.
Here are some examples of core areas that CPA firms should be concentrating on when addressing the issue of employee retention:
1. Take Steps Toward Including Everyone in the Process of Bringing Value to Your Clients
To build a significant competitive advantage for your firm with your people and clients you need a structured accountable system to ensure all the intellectual capital of your firm is being brought out to all your clients. This system should include every single professional on the client service team.
In effect, you should be training and including your first year associates through partners as part of the same team responsible for determining what intellectual capital should be brought to your clients and they should all be involved in the process of presenting this value to the clients.
So your first-year associates will be as involved in bringing high value consulting tax (e.g.) services to your clients as the Partner on the engagement. Clearly not the model now, where the team below Partner is focused on the reactionary compliance with the Partner focused on the proactive value consulting.
You should be organizing all your intellectual capital and determining to which clients this intellectual capital applies, then organizing ALL your client service teams to ensure this intellectual capital is presented to your clients.
2. Embrace Technological Advances
We have all heard the horror stories that involve automation and robots taking every job in sight. Call a meeting with all your professionals and describe the process you would like to accomplish. Solicit their recommendations on how they believe technology may assist your firm in accomplishing this. You will be pleasantly surprised by the innovative and constructive recommendations this technology generation will have.
There are countless ways to create positions that work hand in hand with new accounting programs and technology. This is an enormous draw for available talent right now. A 2018 Harvard Business Review study found that 55 percent of respondents said workplace tech factored into decisions by applicants on whether or not to take a job. This weaves into the below element of fostering a strong company culture, and what better way to do that than to identify your firm as one that is cutting edge and innovative – and is able to give your staff access and training to these technologies.
3. Firm Reputation and Character with Professionals
Reputation is what the marketplace believes you are or perceives you to be, character is what you actually are. We want you and your firm to have the same reputation and character, that being your firm creates more value for the firm’s people and firm’s clients than anyone else in your marketplace. Every single person in your firm should live this credo every single day: What am I am going to do today to ensure that the people I work with will be successful and what am I going to do today to bring more value to my clients than anyone else in my marketplace?
CPA firms are seeing time and time again that their professionals are disengaged. Studies have found that replacing a professional may cost anywhere between 50 and 60 percent of that employee’s yearly salary.
That’s why it’s so important that those firms experiencing high turnover rates take a look at why that’s the case and address how to implement changes that will drive a better future. I can assure you that in 90 percent of the situations with high turnover your professionals believe they are in a revolving door of reactionary compliance related services and do not see a clear path to the value added aspect of the firm.
This needs to be top of mind for any CPA firm. In fact, it has been for years. In 2015, retaining professionals was the number one concern of CPA firms that had more than 11 employees. Even though the best time for firms to act on this issue was years ago, it’s not too late to start now.
It’s important to keep in mind that there is no one size fits all solution, and that’s okay. What will help your firm hire and retain top talent will be the unique system you implement for your business.
This is a unique opportunity for CPA firms all over the country to take a look in the mirror and reinvest in the people who truly drive the business. The state of our profession, and your business, depends on it.
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