Today, a bright and talented tax manager at
a public accounting firm called to let me know that he had accepted a
position in private industry. Why? The negative work environment and stress
finally pushed him over the edge. Last week, a former managing partner
lamented the scheduling decisions to which he attributed his firm’s
merger. His comment summed up the biggest problem our industry is facing:
“I have to accept responsibility for the fact that I drove our best senior
into private industry because of the hours she had to put in.”
Every partner I’ve ever met has a similar
story to tell. The revolving door is spinning so fast that we can’t take
time to think about other options. Consequently, we try to be more creative
in our recruiting and expend even more effort in doing so. First, we
developed college recruiting and internship programs. Now, we’re convinced
that college is too far down the educational line. So we’re talking to
high school students, trying to influence these kids before their career
decisions are made. Recruiting has gone from a part time job to a
department, and yet, retention and recruiting remain the number one concern
in professional services.
Maybe recruiting and retention aren't the
problem. Maybe we need to look at this from the flip side. Firms expect
growth to continue at a rate of 10% or more each year. The majority of firms
still see their target market as privately held mid-size companies for which
they provide a wide array of services. For this reason, firms continue to
reactively accept most clients that come through the door. We’ve had a
booming year. Partners say they have experienced record growth despite
making little effort to market their services. But partners also tell me
that recruiting cannot keep up with the growth rate. In other words, firms
are continuing to allow clients to come through the door knowing that
service to existing clients is suffering AND that recruiting and retention
is worse than ever. To put it another way, we’re bringing in $5 million in
business but we only have a $4 million delivery capability and the gap is
widening.
Let’s step away from the staffing problem
a minute and look at what’s going on earlier in the chain. What’s
happening within the 10-20 hours a month each partner logs on the timesheet
under the marketing and/or business development categories? I often ask
partners and marketers what percentage of their professionals conduct
marketing and selling in a random versus focused method. The initial
response is usually an immediate transference of the issue: “We have all
the business we can handle. What we need is staff.” Probe the operational
and executional efficiencies, however, and the percentage of partners and
managers who engage in random marketing and selling activities is over 95%.
Enormous amounts of time are being spent
with no real focus. There are many partners who randomly attend functions
and networking lunches, serve on committees and boards and give seminars and
speeches. How many can talk about the specific goals for each of these
activities? Of firms with formalized marketing programs, a rare few are
successfully tracking the results of these efforts. Without even realizing
it, partners and managers waste time pursuing nonqualified
“opportunities” that have no chance of conversion. As a result of this
lack of focus, a significant percentage of the business that does come in
the door is undesirable work in the context of the big picture. These
undesirable clients fuel the staffing problem without adding to the value of
the workday. Billable hours have to be made up by others in the firm. The
tensions and resentments increase the stress in the firm environment.
Managers and staff decide they want more enjoyable work, turn in their
notice and go into private industry. The recruiting cycle continues.
Chuck Snead, International Director of CPA
Firm Association, Midsnell Group International states, “Some firms see the
Big Five laying off and think that the staffing problems will improve at the
lower levels. I don’t believe it. Private industry’s staffing demands
are going up, too. Our competition isn’t just public firms anymore.”
So why do we waste precious time and
resources on 1) random marketing activities that have no evidence of success
and 2) the subsequent investments our firms are making in undesirable
clients? How can we blame the entire problem on the staffing shortage?
Einstein’s definition of insanity is
repeating the same action and expecting a different result. It’s time to
break the cycle. There is no evidence to support the idea that this staffing
problem will go away. During a recent speech in Toronto, Canada, industry
change consultant, Ira Blumenthal emphasized, “If you want to change the
future, create it.” We need to find a better, more efficient way to handle
things.
What if partners and managers had a focused
plan that excluded activities that didn’t advance their purpose? What if
these individuals could assess the value of activities and
“opportunities” before they made the conscious decision to invest the
hours? How many hours could be gained annually by focusing these efforts?
What if the focus shifted from “D” clients to “A” clients using the
existing staffing levels? An accounting firm in the Midwest answered these
questions. This firm now generates over $10 million a year with three
partners and little to no staff.
What we’re talking about is taking
control of the situation, narrowing the beam and focusing marketing and
sales efforts on a higher value. For example, let’s say your firm’s
gross profits are 20% right now. Out of that $5 million previously
mentioned, we really only care about our $1 million. That’s the number
that needs to be protected. What if your partners focused on high margin
selling, instead of adding to the firm’s staffing burden by taking on more
of the same mix of poor realization business, high risk business, small
start up business, and so on?
By selling smarter, your partners get paid
a premium and the firm can generate that $1 million in distributable profit
out of a $4 million delivery. You don’t need the same number of people to
do the work, so the recruiting problem is eased. The work becomes more
interesting so your retention improves. The quality of life for everyone in
the firm goes up and the work is more enjoyable. You’ve saved a ton on
recruiting costs and you can nix your plans for adding a sauna to the staff
gym as an added incentive.
So, the options are simple: 1) do nothing,
2) put more pressure on everyone in the firm, or 3) make an investment in a
credible, focused plan. Which option makes the most sense to you? How this
shrinking pool of talent gets distributed will be determined by your choice.
By Terri M. Sommella
