by L. Gary Boomer

What are the key benchmarks when it comes to firm management? While the answer may seem easy to some, it’s a much more complex question than most firms and their partners think.

The old measurement statistics such as utilization and realization may no longer be the key management statistics. Having the right team in place to address client requests and requirements today is more important than it has ever been.

However, the skills required today are broader and go far beyond just technical accounting and tax skills. Clients are looking for “experiences” as well as “compliance.” How the clients are treated will have more to do with retention than either technical skills or fees.

Benchmarks are important in any business, but the tendency of too many accountants is to look at benchmarks and attempt to analyze, rather than manage from, the data. Statistics are interesting but sometimes misleading.

Size, market and type of practice are factors. We have learned from those responsible for assembling the numbers that, in many of the surveys, the information submitted may not be accurate.

Therefore, it is important that firms look at benchmarks as they would their golf scores. It is all about getting better and improving your handicap. While net income per partner is important, it is not the only benchmark. Firms that are maximizing net income per partner may not be training their people and investing in technology. As Allan Koltin, chief executive of PDI Global, a practice management consulting firm, said, “They are milking rather than building their assets.”

If you really want to improve the performance of your firm, you need to follow the advice that accountants often give their clients, but don’t follow in their own firms:

• Hire great management and leadership.

• Operate from a strategic plan.

• Hold partners and staff accountable to personal game plans.

• Insist upon a training and learning culture.

• Document and re-engineer your firm’s unique processes.

• Terminate low performers and those who do not fit the firm’s culture even if they are high performers.

• Focus marketing efforts toward existing clients.

• Outsource where you can leverage or don’t have personnel with the required skills (tech, payroll, tax and bookkeeping are all possibilities).

• Utilize job descriptions and build effective teams.

• Focus on clients’ dangers, opportunities and strengths.

This list of performance improvements is not comprehensive, but shows how important leadership and management are to an accounting firm. Too many firms are not managed, but are simply reactive.

Particularly in smaller firms, management is often a second thought. Owners focus on client service while the firm suffers from lack of management and leadership.

Leadership provides vision, while management focuses on goals and objectives. Both are required in successful firms, yet many attempt to allocate the responsibilities among partners who are not prepared, trained or motivated to operate in these areas. This is a formula for frustration and poor results.

Firms that are well managed and positioned for extraordinary growth during this dec­ade can describe their management style with a single word: Confidence. Confidence is the most important ingredient in learning/training and performance.

The leadership of the firm is responsible for allocating resources in accordance with the firm’s strategic plan, as well as maintaining the confidence of the players. How do you maintain partner and staff confidence in today’s changing environment? The answers are relatively simple.

Not only must the firm have leadership, it must have management that holds everyone (including owners) accountable. This can be accomplished only if the firm has a strategic plan that includes objectives and goals, measurements, initiatives, assignments and due dates. The firm’s objectives must then be filtered down to individuals. We recommend the use of 90-day game plans.

This drives the responsibility and authority to lower levels within the firm and, more important, to the right people (those who have the necessary skills and unique abilities necessary to accomplish the tasks). Most firms avoid this step due to the anticipated amount of management time. By avoiding this step, firms fail to leverage resources properly and often promote mediocrity.

Another key is getting the right people in the right jobs. Many firms don’t have job descriptions and tend to hire personnel with the “Mini-Me” approach. This is where professional human resource skills and benchmarking can make a huge difference. Most partners don’t think of this as benchmarking — they only think of financial benchmarking. Using tools such as the Kolbe Index will get the right people in the right jobs.

Start with the owners so they can learn about the tools, as well as improve communications within the firm. You gain valuable information about yourself, how to communicate with others and how to build the teams that are necessary in today’s firm. The Kolbe Index can also assist you in evaluating candidates for various jobs. It compares the written job description with the candidates as well as the expectations of the supervisor. You may also find you have some good people in the wrong jobs. Job re-engineering may be required.

The Kolbe Index is inexpensive and requires approximately 30 minutes via the Internet. Caution: Only someone who is Kolbe-certified should do the interpretation. The reports from the various indices are valuable in multiple ways (individual, team and job design).

Versions of the Kolbe Index are available starting at $49.95 at

Unlike many of the cognitive measurement tools, the Kolbe Index measures drive, instinct, necessity, mental energy and talent. These are key ingredients that differentiate people in different jobs.

The Bureau of Labor Statistics does not provide a very bright picture when it comes to the future work force. Jobs in the medical and technology fields will grow the most during the next 10 years.

Many accountants will be retiring over the next 10 years. Where are their replacements going to come from? They are not in the colleges and universities today, even though we have been told that the number of accounting majors in universities has increased over the past two years. There simply are not enough of them, and public accounting is not attracting the best and brightest for a variety of reasons.

The good news is that many firms are aware of and are beginning to focus on some of the above areas, even if they are not as efficient and as effective as they could be. The differentiator is execution.

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