Forget about LIFO and FIFO. Your new job is NIFO
I know what you’re thinking. “Ugh. Yet another inventory accounting method I have to know.” But when I say “NIFO,” I’m not talking about Next In First Out. I’m talking about Nose In, Fingers Out.
Where does NIFO come from?
The term “NIFO” was originated by John Nash, founder of the National Association of Corporate Directors. He used NIFO to describe how an effective board of directors should work with an organization’s management team. Basically, NIFO means lean in and be helpful (nose in); be a mentor, not a micromanager (fingers out).
Why am I bringing this up? As a CPA, you are effectively on the board of advisors for your best clients. It is the board's responsibility to provide perspective and to ask the management team insightful questions to help the organization solve its own problems. You are not supposed to interfere with day-to-day operations.
In their book How Google Works, Eric Schmidt and Jonathan Rosenberg talk about managing “smart creatives” with a Nose In, Fingers Out approach. I realize “smart-creative” is not a term many of you use around the office, but maybe you should. Fifteen years ago, a CPA’s job was all about matching numbers and columns. Now computers do that better than most humans do. Your job has evolved into being The Personal CFO for your clients — the master coordinator who helps them solve complex problems. That’s pretty creative if you ask me.
Most CPAs I know don’t think of themselves as being on their clients’ advisory board, but they are. Clients are always bringing up problems about their businesses. They’re essentially pleading with their CPA to help them come up with solutions. Isn’t that what an advisory board does for a company?
How is NIFO different from delegating?
Delegating means pushing off tasks and responsibilities to someone else. NIFO is about providing guidance so a client (or member of our team) can make their own decisions about how to solve a problem or get things done.
In his book No Rules Rules, Netflix founder Reed Hastings argues that if you can’t trust someone on your team to make decisions on their own, then they probably shouldn’t be on your team. If you’re still operating on the “everything goes through me” mindset, you’re essentially creating your own bottleneck. You’ve disempowered your team, and they’ll never have the confidence to solve problems on their own. In order for learning to take place, a mistake has to be made. Otherwise, the experience won’t sink in. The key is to make sure your team member’s mistake doesn’t cost you a client — or cost your client a lot of money. As a leader, your job is to cultivate great decision makers, not to punish people for making mistakes.
Same goes for your clients.
NIFO in action with clients
How would your conversation with a client change if you really were on their advisory board? How could you change the quality of your questions? How could you increase the value of what you’re bringing to your client? Would it change the way you bill them? Does it change the way you talk about their business?
Your job as a leader is to lean in and help people work through a problem without sticking your fingers all over their business. I know that can be hard because we’re in a very technical, detail-oriented profession. I’m sure many of you were micromanaged to death early in your career. But isn’t teaching a hungry person to fish much better than buying them a fish to eat?
Using NIFO with your team
As I wrote in 50 shades of (CPA) gray, we need to change our training. I’m not talking about being QuickBooks certified or taking all the Thomson Reuters Synergy courses. I’m talking about a whole new level of training you need to master — strategic decision making and strategic problem solving. I know those are messy terms that don’t have codified standards and statutes. But these are the issues of the future, not the latest tax updates. Your software can handle all the new tax updates.
Many CPAs stop their training after mastering the technical material — i.e., tax expertise. Being great at the technical side is important, but that’s just the beginning. You need to become great at asking clients and team members, “What does this mean for you and what are you going to do about it?”
As a leader at your firm, NIFO means helping your team members become problem solvers. You’re helping them think through problems. What is the issue we’re trying to solve? What are the right questions we should be asking? Don’t just give them the answer the way a micromanager does; make them come up with the answer.
This mindset is more important than ever in today’s work-from-home era when managers are rarely in the same office as the people they supervise. The NIFO approach may take some getting used to — both for managers and for team members. But in the long run, you will attract and retain more of the right kinds of people at your firm and encourage the wrong type of people to move on.
How many of your total billable hours do you spend on truly consultative, high-value conversations with your clients? Not too many, I bet. That’s the number you need to improve. And the only way you can do that is by freeing yourself up from the routine low-value work (and issues) that eat up all your time — stuff your team should be taking care of without constantly coming to you for instructions and approval. That’s what good NIFO managers do.
LIFO and FIFO can be handled by computers these days. Your new job is NIFO.
What’s your take? I’d love to hear from you.