Often people ask, "What are the key ingredients that distinguish the great firms from the good firms?" Annually, we work with hundreds of accounting firms ranging in size from small local firms to the largest national firms.
  Many expect my answer to be profitability, great people and great clients. While these are the results of a great firm, I believe that there are numerous components that comprise the "model firm." It’s the results that are high profitability, great employees and great clients.

Visionary leadership

  Every firm needs a strong leader with a clear vision that can be communicated to the entire firm and clients. The days of a successful firm being run by a committee or group of partners is over.
  A leader must be selected and then allowed to lead the firm just like a chief executive of a successful corporation. The visionary leader should have key contacts in the accounting profession, as well as in the business world.

Shared vision

  A leader with vision is not enough. The vision must be shared throughout the firm. Successful firms have strong leadership but involve personnel and even clients when determining that vision.
  Great firms know their strengths and opportunities, as well as their weaknesses and areas of risk. They focus their resources only on their best opportunities and avoid wasting resources. They protect their confidence by celebrating successes.
  Those who don’t share the vision are quickly asked to leave. The client and a shared vision drive these firms.

Client-centric systems

  Because the best firms are client driven, they are developing client-centric - rather than application-centric - systems. This reduces the number of databases, as well as eliminates redundant data entry.
  Great client service comes from sharing client information rather than duplicating it. This is a challenge for all firms due to the fact that the majority of the software in the United States has been application driven.
  The great firms have developed centralized databases that communicate with existing applications. Firms should understand the importance of client-centric systems when making any software decision.

Open architecture

  Proprietary software is out. Open architecture is in. Applications must easily share common data regardless of the technology platform. The data must then be converted to information, knowledge and wisdom in order to create value.
  Clients and their advisors must be able to access the same data. Security is as important as accessibility. The model firm is moving toward Internet accessible systems.

Value billing

  Billing by the hour makes no sense in today’s environment for either the accountant or the client. We are now in a results-based economy rather than an effort-based economy.
  Any firm that uses its practice-management system for pricing is going to struggle to be a model firm. Firms that use their practice management system as a cost accounting system and to manage projects will be successful.
  Old habits are hard to break, but the successful firms have already started the conversion. The model firm collects fees in advance and during the engagement, rather than waiting until the conclusion of a project.

Digital document management

  Management of paper is inefficient and expensive. Changing to a digital system requires changes in processes, as well as breaking old habits.
  Firms are spending over $100 per client annually with their manual systems when copying, filing and retrieving documents. This cost can be driven down while providing better client service through the use of digital document management.
  Firms must commit to changing their entire system in order to benefit. Documents must be secure, as well as accessible from any location by those who are authorized. Indexing and storing documents, such as tax returns and financial statements, is rather easy.
  It is more difficult with documents, such as e-mails and telephone communications. All systems must be integrated with an easy-to-use interface. This must be an enterprise rather than a departmental system. It requires planning and setting expectations in order to succeed.

Defined processes

  Every firm has processes. In the great firms, they are documented and continually reviewed in order to reduce redundancy and inefficiencies. Too many firms have simply used the computer as a high-speed typewriter and have not integrated their systems.
  A process is an organized group of related activities that, together, create value to clients. No single task creates the desired value. The entire process in which all tasks are merged in a systematic way for a clear purpose creates value.
  Without processes, firms crumble in chaos and conflict. The great firms have firm processes, not processes that vary by partner.

Learning culture

  Lifetime learning is part of the great firm’s culture. Continuing professional education - as the profession has known it - no longer delivers the necessary learning experience.
  Employees learn from a variety of experiences and not just from putting so many hours in a technical class. Learning the soft skills is as important as learning technical skills. According to the Gartner Group, a firm gains five hours of capacity from each hour of training.
  Training is only part of the learning experience. The leaders of the great firms have figured this out and are investing significantly in creating the learning experience. It is a key ingredient to attracting and retaining quality people.

Skill centered team building

  In great firms, teams are built utilizing personnel with varied skills. Less than 25 percent of the employees of the national firms are accountants. Historically, it has been just the opposite in many small firms. Model firms avoid hiring clones and hire people with complementary skills. Employees should interact in a positive manner that creates client value.
  There are many tools including the Kolbe Index that can benefit firms in hiring, team building and retaining employees. It generally is the employers’ fault, and not the employees, when failures occur. Success is dependent on utilizing unique abilities.

Blueprint and budget

  Every good team needs a game plan and coach. The best firms have a written blueprint and budget that integrates technology with the marketing and strategic plans of the firm. The planning process is as important as the plan itself.
  The plan is everyone’s responsibility when it comes to implementation. It is not just the information technology department, marketing coordinator or administrative personnel’s responsibility.
  The best firms utilize task forces with written responsibilities and due dates. Coaching is necessary to maintain confidence and ensure people play as a team.

Wisdom sharing

  Knowledge is power in most firms. The best firms share the wisdom and, along with good processes, allow ordinary people to provide extraordinary client service. Too many firms operate under the "rugged individualist" approach where only extraordinary people can provide extraordinary service.
  Today, the tools are available to share resources, knowledge and wisdom. But, it takes leadership and a learning culture to succeed.

Conclusion

  Building and maintaining a model firm is not an easy task. For the few who are committed to the process, the rewards are significant - increased profits, great people and great clients!
  The starting point is the right attitude, which, with the right ingredients, increases the possibility of your firm’s success. You can either look at your resources as overhead or as strategic assets. The best firms decide that their people and technology are strategic and then manage them accordingly.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access