IMGCAP(1)]I continue to be asked, “What is the firm of the future?” I have heard the question consistently over the past 15 years, especially since Ron Baker and Paul Dunn wrote their book, The Firm of the Future, in 2003.
The attitude of the majority of the CPAs who ask me the question has been inquisitive, rather than focused on innovation and change. I do not normally perceive a sense of urgency for change, likely because partner income has continued to grow. I believe the question should be, “What is the firm of today, which will continue to be successful and future-ready?” My answer to that question is a formula: Planning + People + Processes = Success, all accelerated by technology and accountability.
For the most part, firms tend to focus on financial results, especially partner income. While this is not necessarily bad, if partner income is the only focus, it may impede progress toward success and future-readiness. Author Jack Dixon states, “If you focus on results, you will never change. If you focus on change, you will get results.”
Most firm leaders will agree that we are seeing disruption from the following factors:
- The need for a different economic model (hours times dollars is not sustainable).
- The continued retirement of the Baby Boomer generation.
- The need for quality talent and a diversity of skills to meet client needs and wants.
- Technology — the cloud and Web-based applications are automating many tasks that accountants have done in the past.
- Process improvement.
I will touch on each of these disruptors in summary — but before I do, I want to point out that most of my conversations with partners can be categorized into one of these three demographic groups:
- Those new to the profession (up to five years in);
- Those in the middle of their careers; and,
- Those approaching or thinking about retirement.
At first look, you may think these categories are generational. I believe a more important point is that they reveal perspectives of being self-focused, rather than firm-focused.
For example, what is best for the firm may not be best for those who are preparing for retirement. In fact, it generally is not. Prospective retirees may want to maximize current earnings in order to maximize deferred compensation and retirement payments.
Likewise, those entering the profession are extremely concerned about talent development programs and their future employability. For the most part, they do not see the need to work the hours the Baby Boomers did, because technological advances and improved workflow eliminate much of the data entry, aggregation and reconciliation that the Baby Boomers performed when they started in the profession. Naturally, those entering now have expectations that are much different from those who are still inefficiently working in a paper world.
So let’s take a quick look at the five factors disrupting the profession: economic model; retirement; talent development; technology; and process improvements.
While there is no silver bullet, most successful firms have strong leadership and a shared vision throughout the firm. Great leaders identify and develop their successors, usually long before they are needed.
Many of the measurements and processes used in today’s practice management systems are outdated and add little, if any, value. Scheduling, project management, billing and cash collection processes are more important than utilization and realization calculations. While utilization and realization many be interesting indicators to project managers, they have little to do with your client’s perception of value and willingness to pay for and purchase performance and strategic advisory services. Metrics like revenue per full-time equivalent, project cycle time and elimination of loops in the workflow are more relevant. This requires different thinking and communication of a different value proposition to clients and prospects.
The talent wars are real, with few experienced people available in the market. Most experienced people who leave public accounting do so for numerous reasons. Firms are focusing on talent development with learning ladders and individual professional development plans. This requires firms to commit time and resources to the development of people at a much higher level.
Talent development challenges can also be reduced with improved processes and digital workflow, empowering firms to utilize a remote work force. Lean Six Sigma process reviews in the areas of tax return preparation, audit, and time and billing can identify efficiencies that lead to improved cash flow and profitability. New technology is also reducing the time required for expense management, audit work papers and financial statement preparation, and collections using electronic billing and ACH payments.
A QUICK TEST
Answer the following questions for a quick survey to see if your firm is positioned well and future-ready.
1. Does your firm have a current vision/strategic plan that is shared with everyone?
2. Does your firm have a technology plan and budget that integrate with your firm’s vision/strategic plan?
3. Do you identify leaders early in their career and provide leadership development?
4. Do you have someone in charge of talent development?
5. Do you have someone in charge of innovation?
6. Do all members of the firm have personal development plans?
7. Have you conducted a Lean Six Sigma review of key processes? Do you continually improve by leveraging available resources?
8. Does your firm have a plan to grow advisory services? Who is in charge/responsible?
9. Do you utilize 90-day personal game plans and accountability reviews?
10. Does your firm have a yearly growth plan that includes organic as well as merged growth, required full-time equivalents, and net income before owner compensation?
These 10 questions will give you an idea about how well you are preparing for the future. Start today by building your vision and roadmap.
L. Gary Boomer, CPA.CITP, CGMA, MAcc, is CEO, senior consultant and shareholder at Boomer Consulting Inc.