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The Boomer Bulletin - 2012
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Three Disconnects That Can Stall Your Firm

Posted By Dustin Hostetler, Tuesday, May 08, 2012

The Importance of Connections.   Anyone who leads or manages a business (or any organization for that matter) knows the importance of connections.  Often times connections are defined in terms of customers / revenue / success.   In business, making connections with clients and potential clients is everything.  Without an outlet for your services, there is no business.  Same goes with not-for-profit organizations.  Connections to donors and community leaders who are supportive of your cause allow your organization to have the resources to carry out your mission.  And let’s not forget about sports and other recreational organizations.  Making connections with your fans and audience is everything – you must put a winning and entertaining team onto the field of play or stage in order to "connect” and generate buzz and excitement in your communities.  

However, beyond the obvious customer-type connections that organizations must be continuously fostering and growing, there are other less obvious (or ignored by leadership) connections that must be developed and strengthened as well in order to have the organizations that potential customers and supporters want to be associated with.

I was recently asked by an industry group for my thoughts and feedback on the following question:  "What do you think are some of the biggest issues facing the profession today?”  The responses began to flow naturally for me and I began to realize the theme centered on the idea of "disconnections” in many areas of our practices.  These disconnects can be summarized into three categories:

  • Technology
  • Training and Development
  • Client Value

The Disconnect in Technology.  One of the main disconnects I continue to observe in firms of all shapes and sizes is the multiple disconnects in technology.  This may come as a surprise that I list technology in the disconnect category, because so much emphasis and money has been devoted to expanding and growing technology within our profession over the last few years.  The proliferation of vendors and products speaks to this scenario.   However, I think the disconnect now may be larger than at any other point I’ve observed over the past 5 years in the profession.

For starters, the gap between the technology savvy and the technology "un-savvy” in firms doesn’t seem to be shrinking.  There are numerous levels and groups of individuals within firms who are able to skirt the process and not fully adopt the new technology deployed.  Many times these individuals are operating outside the process – adding non-value added steps and processes to others who have to mend the process to deal with the outliers – and who are barely able to keep up as it is.  And often times with just a little bit of training a net gain in time savings could be realized if these individuals adopted the process and technology the majority of the firm is comfortable using.  

Second, as a general statement firms are not leveraging the full scope of the technologies they have (and have paid for) to their benefit.  I often find within firms there are multiple individuals who each understand and/or use unique features that the majority of the firm doesn’t know about or has taken the time to learn.  When we began taking an inventory of this knowledge and ability, we quickly see a lot of opportunities for training and time savings by adopting these internal technology "best practices” firm-wide.  

The Disconnect in Training and Development.  We’ve all heard the cliché "Your people are your greatest asset”.  Unfortunately, many firms are failing in the general maintenance, care, and attention given to these important assets.  I recently wrote in one of my newsletters about how, generally speaking, we are one of the leading professions in keeping close track and measure our "CPE”.  Oftentimes firm-wide programs are utilized to track, manage, and measure CPE.  But, with that said, I think we’re falling considerably short in measuring how productive the training is we’re sending our people to.

It never fails, every firm I go to I hear at all levels below partner the clamoring for more effective and hands-on technical and leadership development training.  But there’s also huge disconnects.  Staff are begging for more hands-on training in the tax and audit programs, understanding standards, understanding tax principles, etc…  They want to grow.  But Managers and Partners say they are getting sufficient training.  How can that be?  At the Manager level, they are asking for more project management and leadership training.  But often times they are "promoted” to Supervisor and Manager based on their years of time put in instead of their demonstrated competence in project management and staff development and are put in this position to fail.  As these individuals struggle to keep up and manage, they aren’t spending enough time training and developing the next group of leaders and it becomes a vicious cycle.  Firms end up producing a bunch of what I call "zombies” who must always be told what to do instead of problem solvers.  How can that be?

The Disconnect in Client Value.  A major Lean Six Sigma principle is understanding "The Voice of the Customer (Client)”.  Therefore the disconnect I see in firms where the Partners or Managers who are in charge of the client engagement and relationship don’t understand what their clients value, I know how damaging this can be.

Clients want value for the high fees they are paying.  Even in this new economic reality of downward fee pressure, clients want and expect more value.  Clients expect their work to be handled professionally and completed timely.  Clients expect to receive more strategic advice and guidance than what we’re currently providing.  They believe any CPA can perform their basic compliance needs.  They are paying your firm to be their trusted advisor.  To go beyond the basic compliance and help them navigate their business and personal situations.  As firms continue to struggle with their processes and workload, the proactive guidance time is being squeezed out.  This is not a good trend.  Clients are beginning to feel they are paying a premium fee for basic compliance services and nothing else – a recipe for future client retention problems.

How Does Your Firm Stack up with these Common Disconnects?   I believe firms who continue to underestimate the importance of improving and reducing these disconnects are going to find themselves continually playing from behind in our new economic reality.  I always get back to the fundamental principle that successful firms master better than their peers – that principle of excellent client service.  When you have these disconnects, not only is it costing your firm time, but it’s costing your firm current and future opportunities of providing excellent client service. 

Do you want to improve your firm?  Tackle the disconnects and agree to the following:

  • We must continue to reduce the numbers of people in our firms who refuse to get on board with our new technologies deployed.  Age is not an excuse (I know many technology-savvy senior partners and managing partners).  Client service is not an excuse.  If these individuals want to be included in the process of work for the client, they must follow the process.
  • We must find ways to continue to leverage the capabilities of our current technologies.  This means working together in cross-functional teams to improve our knowledge and processes.
  • We must understand that the best learning is done one-on-one, collaboratively in our offices with our team.  In order to progress and move up, you must train your replacements.  We can’t slack on staff training and just "throw them to the wolves” with one day of tax training.
  • We must understand that a promotion to Supervisor or Manager means these individuals need to be demonstrating the abilities expected of them – the ability to manage clients, projects, and staff and develop their people.
  • We must understand that client value goes beyond how many "charge hours” we have into a job.  A client doesn’t care about the effort.  They care about results.  
  • We must find ways to provide higher value to clients in order to keep our fees high and our competitors from poaching clients.  Being a trusted advisor means doing so much more than just basic tax, audit or accounting work.  It means helping the client navigate through their personal and business decision making processes.

With more focus, measurements and rewards on these activities, you’ll see a greater transformation in your firm and your people.  You’ll develop and build upon connections, instead of disconnects.  Challenge the status quo and get results.

Dustin Hostetler is a Lean Six Sigma Master Black Belt and the founder and Principal of Flowtivity, LLC.   He is the pioneer in applying Lean and Six Sigma principles within public accounting firms.  His firm works with leading CPA firms to improve process efficiency and build the foundations for profitable growth.  Dustin also teaches the industry-leading Lean Six Sigma CPA Green Belt certification program in conjunction with The Ohio State University.

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