While the time sheet is an integral part of most accountants' lives, it is not the measurement of performance that many believe it to be. A time sheet is nothing more than an accountability tool.In my opinion, the profession has erred, because the time sheet was never intended to be a measure of value or a pricing tool. Value is defined as the monetary worth of a good or service. The time sheet is simply a historic record of the cost of delivering a service.

Yet many firms don't even utilize their practice management systems to calculate total labor and overhead costs. They simply use them to calculate a standard rate or price. Clients and accountants often value services differently.

An hour of time is simply a measurement of effort. Pricing is a different story, and one area where many accountants often fail to receive (or lack the marketing skills to receive) a fair price for their services.

In today's performance-driven economy, there are many factors that play into the value of one hour of an accountant's time. Some of the more important factors are:

* The level of knowledge and skills;

* Relationships and building confidence;

* Leadership and providing direction;

* Creativity and developing new capability; and,

* The effectiveness of the technology employed.

Using timesheets as a measure of value is counterproductive and based upon the old "effort-based economy." Value is measured by results and perception in the eyes of the client or purchaser of the service. In a commoditized service, value is perceived at a lower level than with a service that is unique, creative and desired by the client (i.e., tax return preparation versus cost segregation).

The client experience is as important as the quality of service. In fact, for many clients it is easier to judge the experience than it is the quality of the service. Firms should improve on the client experience and perception in order to enhance margins and attract quality employees. The days of only rewarding personnel for their technical skills and effort are over. A combination of skills is required on your team in order to provide clients with a highly valued experience.

It is only human nature for accountants to value accounting skills much as engineers value engineering skills. But the market determines the true value of any service.

Does the time sheet actually decrease value? What if everyone in the firm billed clients for their contribution (i.e. marketing, sales, administration and so on)? Would you determine the value of their services based upon effort? Sadly, many accountants and engineers believe the answer is "Yes."

Yet the client only thinks about the total price, and not the length of time that a particular service will require. Often, the contributions of other professionals (non-accountants) are looked at as overhead, and a minimal value is placed upon their contribution to the success of the firm. They can and generally do have a significant impact on the client perception and experience.

Firms that focus only on the time sheet and production quickly lose balance and often lose revenue. In today's market, with a shortage of skilled labor and an increased demand for services, firms should re-evaluate their performance criteria, as well as the skill sets of their team members. Getting the right person in the right job is the challenge.

The balanced score card approach focuses on four primary areas of performance: financial, processes, development of people and client satisfaction. The tendency of all companies is to only focus or value the financial measurements. The other three categories are equally as important if a firm is to maintain balance as well as profitability.

In fact, the analogy is a sports team. You must have talent (your people), fans (your customers) and practice working together (your processes) to produce winning teams. Firms are no different.

In fact, talent has become the No. 1 focal point, with staff placed above clients in order of importance, rather than below them. Firms are also looking to improve their processes and even asking clients if they are satisfied.

This is balance. This can also result in innovation, where costs decrease and value is increased in the eyes of the client. Financial results are much like winning in athletics. If you focus only on the financial results in business or on winning in sports, there is a good chance that your organization will suffer in the long term. You probably will not build a team that will be able to sustain the firm into the next generation.

Today, the opportunities in accounting are the brightest that they have been in years. Yet it is going to take a balanced approach, rather than a time sheet strategy, to capture the opportunities. Without quality people, it is going to be difficult for firms to capture the opportunities. This, coupled with the fact that many partners are reaching retirement, is only going to exacerbate the staffing situation.

Firms should focus on all four factors in order to take advantage of the opportunities. Many are starting to ask, "How does my firm deal with the staffing shortage, retirement and succession, and still take advantage of the opportunities?" This is an excellent and pertinent question. The answer, of course, is, "It depends." It depends upon the investments your firm has made in the past. Has your firm invested, or only focused on maximizing partner income?

Anytime there are opportunities, there are also obstacles and strategies that must be developed in order to overcome the obstacles. Too often, accountants see the obstacles but don't take the time to think through the strategies and plan how to overcome the obstacles and capture the opportunities. This is where planning times people times processes equals performance. We refer to this as the Performance3 Formula.

Review the accompanying table, which may provide some ideas for strategies to overcome the obstacles many firms are facing. The intention of this table is to prompt your thinking. It is not an all-inclusive list.

With these examples, I am sure by now you are getting the picture. Some of you are perhaps excited, while others are paralyzed. Change is difficult and the profession is in constant transformation. Those firms that make the necessary changes in strategy will succeed, while those that only watch the time sheet will continue to be challenged in a commoditized world with a shrinking supply of skilled labor.

Think about your future, plan your growth and grow exponentially.

L. Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.

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