Expanding advisory services is a hot topic at virtually every accounting conference and our Business Transformation Circle meetings. Some firm leaders ask how they can hire or develop the necessary skills. Others opt to purchase consulting firms to acquire the talent (and client base) to hit the ground running. Whether they build it or buy it, I caution firms not to attempt to run a consulting firm like their traditional tax and audit practices. Otherwise, you'll spend a lot of money and might not get what you were hoping for in return.
The right mindset In her book Mindset: The New Psychology of Success, Carol S. Dweck argued that there are two kinds of people: those with a fixed mindset and those with a growth mindset.
People with a fixed mindset believe:
Abilities, intelligence, and talents are traits
There is a limit you are born with, and that's all you'll ever be
They must protect what they've done, look smart, and avoid looking dumb
People with a growth mindset believe:
They can develop talents and abilities through effort, teaching, and practice
Anyone can improve and gain knowledge if they work at it
They are open to new ideas and learning and recognize not everyone is the same
To truly embrace advisory services, your firm must have a growth mindset. Here's why:
One size no longer fits all For years, we've counseled firm leaders to get tax and audit departments using the same systems. While these strict standards create cost savings and efficiencies in training and response times, they reduce flexibility and innovation – attributes crucial to an effective consultancy!
Advisory services need entirely different tools and aren't bound by the same compliance services as tax and audit. Innovative tools can provide the flexibility and freedom advisory consultants need to perform their jobs from anywhere, at any time.
This can work well if your in-house IT group is open-minded and willing to collaborate with your advisory team. But if not, you could end up with shadow IT—consultants using devices, software, and services without the knowledge or approval of your IT department. Shadow IT causes many potential problems, including creating large-scale compatibility issues, adding additional often unbudgeted costs, and, most concerning, opening security holes that put your firm at risk.
Location vs. performance
You might measure the performance of audit and tax professionals by face time in the office and billable hours. This simply isn't feasible for advisory services.
Many consultants may never set foot in a standard office. They often have a road warrior lifestyle that necessitates working when and where possible, and jobs may take years to pay off. So, how will you measure performance?
Some of the key performance indicators (KPIs) we see successful firms using are:
Annual revenue per billable consultant
Annual revenue per employee
# of services delivered to the client
New client growth
Average revenue per year per client
Strategic actions that enable remote consultants Now that we've looked at the considerations you'll need to consider for Advisory Services, let's talk about what you can do now to enable your team.
Performance before perfection. Audit and tax services are process-driven tasks that must be carried out 100% correctly. Advisory Services are more about performance. These consultants help clients by digging in and offering creative courses of action and solutions in very short timeframes. They have to hit the ground running.
When a consultant has a technical issue, they don't need to spend hours determining the perfect fix. Solutions to a consultant's problems in the field are an iterative process! They don't have to work perfectly; they just need to work RIGHT NOW . . . and we'll get it working better later when there is more time and less pressure on the consultant.
Ease stress. Focus on improvement in your technology systems. Advisory consulting often demands 24/7/365 schedules. They work across global time zones, travel extensively, work on holidays and have little downtime. Where traditional IT support may allow for maintenance windows, advisory IT needs resilient systems and support teams that are available and working when required.
Identify ways to move away from billable hours and toward fixed fee billings. Look for alternative metrics. The ones mentioned above are just a few examples. Find out what works for your team.
Implement professional development plans for all team members. Firms tend to focus on professional development for their audit and tax teams but forget about other professionals who don't have an annual CPE requirement to meet. Everyone in the firm needs professional development and a clear career path.
Dump the hierarchical structure. Focus on collaborative management and empower all team members. This encourages your team to work together rather than focus on their climb up the career ladder. There's also a focus on "knowledge transfer" so that client information isn't locked inside the head of any single staff member.
Focus on flex and remote work. The people who make excellent advisors and consultants are driven self-managers. The nature of their work means they'll be offsite and working outside of the traditional nine-to-five work day. Prioritizing flex and remote work demonstrates that you understand the unique needs of these professionals.
Having first-class Advisory Services requires excellent leadership, different skills and new processes. It's not enough to follow "best practices." There's no competitive advantage to following the herd! Work on nurturing a growth mindset in your firm that supports innovation in your Advisory teams, and they can drive innovation throughout the firm.