CPAs should watch their language during tough economic times.
They are unquestionably the most trusted business advisors, but are not necessarily known for their skills in innovation and change management. Both of these are important in today's marketplace.
CPAs are known to use words such as analyze, consolidate, decrease, defer, reduce, shrink, negotiate, eliminate, bargain, restructure, streamline and cut. While there is nothing wrong with any of these words and strategies, they tend to focus on the short term and a survival mindset. (I have compiled a list of about 50 similar words that are too often used among accounting professionals.) The reason I point out this perspective is that as the most trusted business advisor, you should also focus on creating value. Value creation comes from leadership, relationships and creativity. Leadership provides direction, relationships provide confidence and creativity provides new capabilities. Creating value provides more than just a short-term survival perspective. Now is the time for great firms and businesses to invest in their futures.
These words are also associated with Level 4 change, as defined by Rolf Smith in The Seven Levels of Change. The first three levels are 1) effectiveness, 2) efficiency and 3) improving.
Level 4 is associated with "cutting," and CPAs can get caught in the "cutting trap" if they are not careful. Like the three previous levels, there is nothing wrong with Level 4 changes, but 4) cutting, 5) copying, 6) different and 7) impossible changes require a different set of skills. The first three levels are associated with management skills, while the last four levels require both leadership and management.
In today's economy, frugality is certainly a trend, but it can border on foolishness if carried to an extreme. I have documented a list of strategies classified as frugal, foolish and value-creating that outline examples of each in today's environment. These strategies apply to firms and their clients.
Levels 5, 6 and 7 also require different mindsets. In Level 5, firms and clients must be willing to look externally for better ways of doing things, as well as innovation (an opportunity for the CPA). Level 5 change requires sharing and external resources (another opportunity). Many of you will simply say, "We don't want to be different or attempt Level 7 (impossible) change." You should understand that what is impossible for one firm or business may be difficult or simply copying for another firm. In other words, the levels of change defined by Rolf Smith vary from firm to firm.
The ability to create value is determined by available skills, experience, confidence and a team, rather than a "rugged individualist" approach. With the seven levels of change in mind, consider the three types of strategies that impact planning, people and processes. The formula for success is planning x people x process = performance. We refer to this as performance management.
Technology is an accelerator for improved performance and a significant factor at most levels of change. The strategies mentioned above deal with change management, people, planning and processes. You may question how to get started or how to incorporate what you currently do into strategies that will help your firm grow and increase profits in a difficult economy. The answer to these questions is summarized with the following plan of action:
1. Update or develop a one-page strategic plan with a shared vision, a mission, core values, strategic objectives, measurements of success, initiatives, due dates and assigned responsibilities.
2. Assess your required and current inventory of skills. Staff to the plan.
3. Develop 90-day game plans for everyone in the firm and conduct 90-day accountability reviews.
4. Conduct conversations with clients regarding their current dangers, opportunities and strengths. This will strengthen relationships and produce new revenue.
5. Implement the required technology to do more with fewer people. Increase revenues per full-time-equivalent.
All progress starts with the truth. Be proactive, avoid procrastination and make the tough decisions.
* One-page plan; shorten planning time to 2-3 days and focus on high priorities
* Hold partners accountable to the plan
* Laminate the plan and provide everyone a copy
* Staff to the plan; trim excess capacity and non-performing people
* Hold everyone accountable
* Avoid updating plan, or often too busy to think and plan
* Avoid accountability at the top
* Do not share the plan
* Retain unnecessary skill sets at any level - including partner
* Avoid accountability
* Include staff, managers and clients in the process
* Implement 90-day game plans and 90-day accountability reviews
* Share the plan with staff and clients - leverage resources
* Utilize the Kolbe Index and build unique-ability teams based upon client requirements
* Utilize 360-degree behavioral reviews such as BPA 360
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.
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