Managing firm strategy is synonymous with change management. Does your firm have a strategic plan? Do you share the plan with everyone in the firm, as well as with clients and vendors?If not, why not?
These questions may not seem that important to you, but your answers provide a good indication of the success that your firm is experiencing with executing its strategies. Without strong leadership in a professional firm, constructive change is not possible. Strategy is formulated at the top of the firm, but executed from the bottom up.
Thus, alignment within the firm is required in order to execute strategy. The majority of firms fail to execute because they do not focus resources on priorities - and in a majority of cases, employees have not been informed of the strategy. They are told to simply work hard and get in the required number of charge hours. The successful execution of strategy requires the alignment of the strategy, the firm, the employees and the management systems.
Another reason firms fail is a lack of management and accountability. Most employees in accounting firms are under-managed simply because management skills are not valued, and people have not been trained to manage. Accountants need effective management, just like other professionals. Generations X and Y want to be managed. Management training programs have become a popular and effective means to meet this need.
While aligning the four areas cited above may sound relatively easy, it is challenging, to say the least. Change management requires a much larger investment than simply maintaining the status quo.
The following points illustrate the eight primary areas of alignment in most firms. Large, multiple-office firms have different challenges than local, one-office firms, but alignment is similar.
Let's review each of the eight areas, and ask a crucial question about each.
1. The firm. Firm leadership and management define strategic guidelines that shape strategies at all levels. Shared-vision firms will succeed in the future, while shared-services firms will continue to have execution problems, because they lack big-picture objectives.
* Does your firm currently have a written strategic plan that is shared with everyone in the firm?
2. The owners or partners. The firm's board or partner group typically reviews and approves the strategy. In well-managed firms, this group holds itself, as well as those at lower levels, accountable. A challenge in many firms is to get everyone within the owner group on the same page. Therefore, the corporate form of governance (rather than a partnership) is becoming more prevalent. Owner compensation must be aligned with firm strategy. Entitlement systems based upon seniority no longer work. Implementing the balanced scorecard system is recommended.
* Is your partner compensation system integrated with your strategic plan?
3. Managers and staff. Quality people want to know the firm's plan and, more importantly, how they fit and if they are significant to the firm's success. They're looking for development and future opportunities. Partners who resist change and growth are a distraction to forward-thinking professionals. Remember that people don't leave firms, they leave partners and managers.
* Do your managers and staff operate from documented 90-day game plans?
4. Practice units. Firm strategies should cascade throughout various practice units and offices (if the firm operates in multiple locations). Each practice unit should have its own strategic plan that integrates with the firm's plan - one that is based upon common vision, mission and values. The firm must provide value to the practice unit, just as the practice unit provides value to the firm.
* Do your practice units each have a one-page game plan that integrates with the firm's strategic plan?
5. Office support. Many in accounting refer to these employees as non-chargeable or non-revenue-producing. You will only achieve alignment with support personnel when you embrace a team approach. These people are valuable and responsible for implementing many of the policies developed from firm strategy. Office support personnel must understand the firm strategy, and firm leadership and management must support these people. They require and deserve training and learning opportunities like everyone else in the firm.
* Are your support personnel viewed as valuable team members, and provided adequate developmental opportunities?
6. Clients. Understanding a client's dangers, opportunities and threats is key to innovation and long-term client relationships. Clients who understand your vision and mission and share your values are generally highly profitable and great sources of referrals. The priorities of the client value proposition should be communicated to key clients and included in client surveys and measurements.
* Do you communicate frequently with key clients regarding their dangers, opportunities and strengths? Do you share your firm's vision and strategy with these clients?
7. Vendors. Vendors are an integrated component of many firms, and are becoming more important as firms source services locally and even around the globe. These external relationships must be based upon the priorities established by the firm. A current trend is application service provider models, which store client data at a secure, remote location. The Internet has enabled firms to integrate their management systems with other organizations such as banks, investment companies, insurance, legal and governmental entities.
* Do you view vendors as key business partners, and communicate your needs to them on a frequent basis?
8. Human resources and information technology. Your first reaction may be to think of HR and IT as office support. In the past, this may have been accurate, because people and technology were viewed as overhead. Today, both must be viewed as strategic assets and managed as such. HR encompasses much more than compliance. Today, it is also about retaining and attracting employees. IT is integrated into both firm management and production systems.
* Web strategy is key to the development of future firm services. HR and IT leaders must understand firm strategies and should be involved in the development of strategy. Strong firms include both on their management team.
* Are HR and IT viewed and managed as strategic assets?
Firms should use these eight checkpoints as a point of reference for alignment. Remember that all progress starts with the truth, so don't project where you would like your firm to be, but where you are today.
If these eight areas are aligned, there's a good chance that your firm has developed strategies that meet its financial, client satisfaction, internal processes and human development goals. Firms that achieve alignment create competitive advantages that are difficult to duplicate, and that protect them against commoditization.
Your firm's readiness factor is determined by:
* Is your human capital trained and aligned with firm strategies?
* Is IT aligned and providing vital infrastructure to support human capital performance?
* Is the ability to change reinforced by the firm's culture, leadership, alignment and teamwork?
Alignment starts with a strategic plan. With the right process and tools, a plan can be developed quickly and for a reasonable investment. Without a documented plan, alignment is impossible.
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
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