Since joining RSM McGladrey in April 2003 from the Gartner Group, Steve Tait has made it his mission to build the RSM brand and to establish the company as the firm serving the middle market.
While the RSM name is well-known in the accounting world, Tait has focused much of his tenure on building the firm's reputation beyond tax and accounting services.
In a Q&A with WebCPA editor Melissa Klein Aguilar, Tait talks about the challenges of cross-selling, the advantages of being part of H&R Block, and the opportunities created by the Sarbanes-Oxley Act and recent auditor independence interpretations.
Since you joined RSM McGladrey, the cross-selling of services has been a major strategic goal. Is it working? Do clients want a one-stop shop?
ST: RSM McGladrey is truly different from all the other competitors in the middle market today. Our clients can access almost any financially focused service that midsized businesses and their owners need.
Our research has found that midsized business owners prefer a relationship with one trusted business advisor rather than having to manage multiple relationships. That said, by not introducing clients and prospective clients to the full line of RSM McGladrey services, we really do our clients a disservice.
During the past two years, we have improved these value chain linkages. Are we where we should be in introducing clients and prospective clients to the full power of RSM McGladrey? No. Are we getting better at it? Most definitely.
What has been the biggest challenge in getting clients to consider the firm for services other than tax and accounting?
ST: In all honesty, it's brand awareness. Neither RSM McGladrey nor McGladrey & Pullen enjoy the same instant recognition factor as the Big Four. But that's changing.
Last year we introduced a powerful business publication called RSM McGladrey Advantage. We believe that this is one of the first monthly newsletters that exclusively addresses the needs and issues facing midsized businesses and their owners.
This publication has been positively received by its 80,000 CEO and CFO-level subscribers. Recent research also suggests it's helping to build brand awareness.
This publication and other brand building efforts have helped open doors to new midsized business clients who previously only considered the Big Four.
What has been the company's biggest challenge in terms of delivering a wide range of services efficiently?
ST: Probably the same challenge that faces every accounting and business services provider in our industry: the war for talent.
The annual busy season and solid growth of our business have caused tremendous stress for our people. It's business-critical that we support our employees if we expect them to remain productive and committed for the long term.
This summer we are rolling out new policies and offerings as part of our comprehensive work-life strategy. It started with the implementation of summer hours in May, making us the first national firm to establish a firmwide policy about summer flexibility.
We intend to be the employer of choice in the accounting and business services industry -- a place where the best and brightest people aspire to work. Based on recent successes in our campus and experienced-hire recruiting, we think that's starting to happen.
What is the value of RSM McGladrey's connection with H&R Block? Do you expect it to continue?
ST: RSM McGladrey is a valued member of the H&R Block family of businesses. While it has taken Wall Street some time to fully recognize the value that RSM McGladrey can deliver H&R Block's shareholders, that's started to change this year.
At this writing, the FY2005 results have not been officially reported. However, RSM McGladrey experienced the most profitable first three quarters of fiscal year 2005 that it's had since Block acquired the non-attest assets from McGladrey & Pullen in 1999.
During those first three quarters, tax revenues increased almost 24 percent and consulting revenues increased 28 percent over the same period a year ago. Risk management drove much of the success in consulting, with an increase in revenue of almost 210 percent in the first three quarters of FY2005. Our emerging businesses -- wealth management, financial process outsourcing and employer services -- also posted impressive gains.
With the investments Block has made and continues to make in our enterprise, I'm confident we will continue to drive shareholder value.
Could you see the day coming when it might make sense for RSM to strike out on its own?
ST: We are an important part of the future of H&R Block, and being a part of the Block enterprise is a win-win for our business and Block's shareholders. By being part of H&R Block, we have the necessary capital and resources to help us strategically grow our business in new marketplaces.
Likewise, as we continue to grow our business, especially our emerging business units, we can deliver more annuity-based, year-round revenue back to Block.
How is Sarbanes-Oxley and the American Institute of CPAs' interpretations with regard to independence for attest work influencing RSM McGladrey Business Services engagements with existing and potential clients? How has the regulatory environment affected the firm's relationship with McGladrey & Pullen?
ST: If anything, we may be the beneficiary of Sarbanes-Oxley and the AICPA's independence interpretations. We are seeing more government-regulated and public companies seek out RSM McGladrey's services for tax, internal controls, technology -- services previously provided by one of the Big Four.
As for our alternative practice structure with McGladrey & Pullen, leaders from both McGladrey & Pullen and RSM McGladrey have had ongoing conversations with the top leaders of the Securities and Exchange Commission, the Public Company Accounting Oversight Board and other regulators to ensure that we stay in strictest compliance with independence rules and regulations. We value our relationships with the SEC, the PCAOB and the AICPA, and work diligently to maintain their trust and support for our two-company structure.
What changes can you predict for RSM McGladrey Business Services over the next five years, especially with regard to the services for which you expect a greater demand?
ST: Our core services of accounting, tax and consulting have been the "heart and soul" of our business for many years, and I don't see that changing anytime soon. Even so, our emerging services have started to gain some traction in the marketplace. I can see a day when they could be as successful as our core services.
Case in point, one recent study predicted that the global human resource business process outsourcing market is expected to increase 27 percent this year, and continue growing at a compounded annual rate in excess of 30 percent through 2009.
RSM McGladrey Employer Services is uniquely positioned to provide HR benefits to midsized companies. With the recent acquisition of Ceridian SourceWeb last January, our client base for employer benefits and payroll services has doubled. Not only are we adding new clients, our client retention rate is now one of the best in the industry.
There's tremendous potential in our emerging businesses. Our challenge is to find the right opportunities to make these value chain linkages with clients and prospective clients who could potentially benefit from them.
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