It’s that time of year again. You and your team members are beginning to dread the time when you have to deal with certain clients. In the CPA profession, we call them D-level clients.
Maybe some of the following descriptions might apply to those clients you dread:
- Fred, the owner of XYZ Excavating, is always last minute when it comes to providing you information to complete his tax return.
- Betty, the owner of ABC Resort On The Lake, is rude, always complaining, requesting you to do some task but doesn’t want to pay for it. She thinks everything she asks is part of the tax preparation service you provide.
- Barney is the pompous, solo-attorney (and old friend of one of your partners) who walks on the edge of actually harassing your female staff members.
- Ted is the owner of three fast food franchise stores and has to be continually hounded to pay your invoices.
These are “D” level clients and need to be outplaced. In our busy world, time is so valuable and these clients waste your time. Take steps to finally get rid of clients that no longer fit your ideal client profile.
For years, I have heard partner groups discuss these types of clients. Some even designed a process to out-place them. Then, these same partners never followed through.
Times are changing and I am hearing more and more stories from managing partners that their firm is actually eliminating D-level clients from their client list. It makes their staff very happy.
Develop criteria for identifying D-level clients and then carry out the task. Of course, it should be done in a professional manner but don’t procrastinate once the decision is made.
Your winter interns will be arriving soon. I hope that you have attracted some bright, eager beginners. Many of the most successful firms now hire from their pool of interns. Monitor their progress and be sure to make offers to the best ones immediately after the internship ends.
In the accounting profession, CPA firms have been trying to implement unique and creative ways to attract talent for many years. The game is becoming more and more competitive.
Many unique tactics are being used as companies, big and small, try to differentiate themselves in the eyes of talented business students.
CPA firms need to keep pace and develop ways to up their game. Here are some examples via Fortune – The crazy things companies are doing to recruit business school students.
–At recruiting events, General Mills offers students goggles to see a virtual reality tour of the company’s Minnesota campus. The recruits can see everything from the company gym to the executive offices.
–Goldman Sachs is using Snapchat to recruit college students.
–PwC is offering to pay back student loans for its junior employees. (Your firm could do this. The amount would be up to you.)
–General Motors recently parked cars on the campus of Michigan’s Ross School of Business and invited students to take a test drive. Of course, they brought Camaros and Corvettes.
–On Indiana University’s Kelley School of Business campus PwC furnished an ice cream truck. On the University of Michigan campus, they provided a coffee truck (free coffee anytime for all students).
–Land O’ Lakes brought their CEO to campus. It helps students see that they have access to leaders. (Take your partners to campus, not just younger alumni.)
Advice from career services directors:
This generation of students is seeking more connection with their potential employers and the missions of those companies. Today’s students want to be connected with the company’s mission and vision. Have you clearly defined the vision of your accounting firm? I find many firms have not. The partners are not united on where they are going.
The days of attracting top students by passing out cheap stuff – like post-it notes, water bottles, pens, backpacks, lip balm, etc. are over.
Whether you have a very large firm or a very small firm, how you spend your CPE (Continuing Professional Education) budget is something that takes thought and planning. It is a very important activity inside your firm.
Of course, you need to focus on developing the technical skills of your employees, especially the beginners. CPA firms focus on the various “level” training courses for their one, two and three-year team members. Staff level training is offered by state societies and other vendors and is a great benefit to those beginning their careers in public accounting.
After that initial investment, further expenditures for the benefit of staff seems to decline. Dollars are allocated on keeping up with audit and tax issues but not so much for supervisory, management and leadership training. Firms tend to procrastinate on these very important skills that could mean success for the firm in the future.
Many firms hand out titles without the education and training to back it up. In many cases, CPA firm managers have no clue how to manage. They were given the title because of technical expertise and longevity. Maybe a supervisor is encouraged to attend a one-day “supervisory” training course like the ones offered by vendors across the country, not specifically for the CPA profession. Often, it doesn’t go any further than that.
If you send some of your people to the well-known CPA leadership training courses, I urge you to seriously evaluate the effectiveness of the course. After your people complete a leadership course, monitor their progress. Initially, they are excited about the whole experience but does it last? Do they demonstrate the leadership skills they learned or did they attend leadership training just to promote their personal career?
As you prepare your CPE plan for the coming year, balance the technical with the career-enhancing skills and then monitor the performance of the individuals as they build on what they have learned.
Leadership in a CPA firm means being able to get diverse individuals to work together as a team to achieve a common goal. It means that your CPA team will out-perform the competition. To get there you must be generous with your CPE budget. It’s an investment in the future of your firm.
If you haven’t had a partner planning retreat this year, you are not alone. Many firms procrastinate when it comes to planning this annual session.
Often when I am talking with a managing partner about their upcoming retreat, they tell me, “We used to have them every year but we haven’t had a planning retreat for several years now.” It seems everyone is too busy or other firm initiatives or challenges have taken precedence. If you allow this to happen, partner communication will suffer greatly along with partner unity. It also leads to a culture of constantly putting out fires.
Even though it is late in the year, I urge you to schedule and conduct a partner planning retreat this year. There is still time to identify important issues and begin on an action plan even though November is quickly approaching.
More importantly, I urge you to plan ahead for next year – 2017. Here are some ideas, tips, and considerations for a successful retreat:
Identify dates in late April, May or June for your 2017 retreat. Make sure that every partner makes it a high priority on their calendar now. A retreat that happens earlier in the year allows time for the initiatives to be researched, outlined and completed before another year rolls around.
Contact a qualified CPA firm management consultant to facilitate the retreat and get the dates booked on their calendar (their calendars fill up fast after April 15).
Before the retreat contemplate, discuss and define the purpose of the retreat. If you get together every year just because you have always done it without a specific purpose in mind, time (and money) will be wasted.
Plan the agenda. It will be your roadmap for the retreat and prohibit people from getting “lost” along the way. The facilitator will usually survey your group or do telephone interviews to gain insight that will help you design the agenda.
Adopt a partner retreat commitment statement. This is a short list of rules and regulations governing retreat behavior. Some examples might be that all participants will set aside the uninterrupted time (mobile device activity only happens at breaks), participants will stay on topic, participants will not interrupt when someone else is speaking, etc.
Document the action steps. Focus on fewer initiatives and shorter timeframes. Change is happening so quickly in our profession. Accomplishing two or three things is more important than focusing on six or seven and accomplishing none.
Assign a champion for each initiative. Someone has to be responsible and take ownership. If everyone is responsible, nothing will happen.
The most important activity is not the actual retreat; it is the implementation of the agreed-upon initiatives.
We are seeing a transition right now. More and more firms are finally making the switch from the long-time, baby boomer managing partner to a younger, less experienced managing partner.
It is a very difficult time for both of the people involved, and the firm, in general.
The outgoing MP struggles with relevancy and a long list of other important decisions about what to do with their remaining working years. But don’t ignore the challenges being faced by the new guy/gal.
One thing to remember is, as the managing partner of a growing, profitable firm, it is important to always be thinking of how you are spending your time.
One dilemma the new managing partner faces is how much time to continue to spend on client work and how much time do they really need to devote to actually managing the firm.
The MP should definitely keep a reasonable amount of client service work. How much varies. Much of this decision relates to the size of the firm.
Smaller firms require less management time and the MP should utilize a qualified office manager. Midsize and larger firms, of course, should have a professional firm administrator or COO who handles all administration and daily operations so that the managing partner can focus on coaching the other partners, being the community face and voice of the firm, and bringing new business to the firm.
For all firm partners, it is important to always focus on the important work. For line partners that means client relationships, nurturing team members and bringing new business to the firm.
Partners should not be doing manager work. Managers should not be doing senior and staff work. And, seniors and staff should not be looking for work.
Something at the firm is not going very well.
It could be one or more of numerous processes you follow. It could be non-stellar results in hiring the best students. It could be a significant increase in turnover. It could be a lack of timely financial information flowing to the partner group. It could be poor realization or poor utilization. It could be poor performance in attracting clients to one of your niches.
When something is not going well, the leadership group unites and begins asking probing questions of the managing partner, the COO, the director of audit, the director of tax or that high-profile niche leader. Often it turns into a finger-pointing, blame game frenzy with several people attempting to dodge the bullet and deflect the blame on others. The managing partner is overwhelmed with questions and maybe even accusations of poor leadership. It seems many people enjoy jumping on the bandwagon of doubt and uneasiness.
How much feedback happens when things at the firm are going really well? – – Not much
Do you reward your managing partner and other leaders when things are going really well? Probably not because you expect things to go well. After all, isn’t that why you pay the MP lots of money?
It’s not all about money. Try paying your firm management leaders lots of compliments.
We tend to blame leadership when things go awry but we forget to thank them, reward them or acknowledge them when the firm is successful, profitable, and recognized locally, regionally or nationally.
At some firms, when things are going well, the partner group thinks and says it’s all about “us”. When hiccups arise or the new idea is not implemented well, it’s “his/her” fault.
In these times of focusing intently on the people we employ, never forget that you wouldn’t need your staff members if you didn’t have clients.
I believe that many clients are at risk right now at the majority of CPA firms across the nation. Why? It is very simple, because so many partners are beginning to retire and these more senior partners have not wholeheartedly bought-in to a formalized client transition process.
The concept of finding and retaining applies to both employees and clients. You must find, hire and retain top talent. You must find, obtain and keep great clients.
Some of the same activities to accomplish these “musts” apply to both.
Recruiting and retaining, or as Tom Hood puts it, attracting and developing, the most talented young professionals begins by being visible to them. Consider how visible the large national firms are on college campuses. You can’t be that visible on as many campuses but you can certainly establish relationships with professors and participate in activities in the business school of the universities in your market.
You must have established a great culture that helps you build your brand. If you truly are a great place to work, that reputation will spread.
Attracting the best clients begins by being visible to them. Being visible in your business community and being active in charitable and civic organizations is still a major factor in attracting great clients. You build the relationship first, then you pursue the business. You and your firm must also be active and visible in social media. Your website is key. A prospective client will look at your website and assess your credibility before they ever have a serious talk with you about their business.
You must have established a great culture that attracts highly technical CPAs that can serve the needs of sophisticated business owners. You must build a brand that convinces clients and prospective clients that…. “we pay them a lot but they are definitely worth it.”
Inside many multi-partner CPA firms, there are usually some troubling issues. I have heard about these issues first-hand, as I network with partners from various firms. I also uncover many of these issues as I survey firm partners prior to a planning retreat.
Here are just a few of the more common CPA firm partner laments:
I rarely have any collection problem with MY clients BUT the other partners are always permitting clients to delay paying us. We have way too many accounts over 90 or 120 days. Some clients don’t pay us until we are ready to begin work on their account the following year!
We have never been able to establish a clear, long-term plan or vision for the firm that all partners can get behind. So, we have not focused on succession.
We have a fractured partner group. There is not enough collaboration and too much dissension between offices.
We need to get rid of some of our clients. My clients are fine but my partners hang on to some very unprofitable, troublesome, slow-paying clients.
We are having an increased amount of turnover and need to give more attention to retention.
Do any of these sound familiar? It’s time to stop lamenting and start doing something about the issues. One of the biggest roadblocks is communication. Bringing more open and honest conversations into your partner meetings is the first step.
I have worked through many merger negotiations, several as managing partner of my own firm, and even more during consulting engagements.
As an acquirer, there is one question I have always asked. I suggest that you should ask the same question as you approach any merger/acquisition situation.
Here’s the question: Do you have any sacred cows?
A “sacred cow” can be described as one that is often unreasonably immune from criticism or opposition. Someone or something that has been accepted or respected for a long time and that people are afraid or unwilling to criticize or question.
Often the topic of sacred cows does not come up when the two firms are in the discussion stage. However, if not talked about up front the sacred cow situation will undoubtedly surface once the two firms are living together. It is also wise for the firm being acquired to ask the same question of the acquirer.
Most often the situation is a long-time employee that cannot be terminated (for any reason). Sometimes, it is even a partner whose performance hasn’t been up to par for years.
Another example is software. I have heard many firm leaders say, “We will not change our tax package.” To me, that is a deal breaker. For optimum efficiency, the entire firm should be using the same software packages. Develop the entire technology plan (hardware and software) up front and document how the conversion will be implemented.
Before you sign on the dotted line, be sure you can live with the sacred cows.
I facilitate a lot of partner retreats. Yes, it is often like herding cats.
I find that some firms are disciplined about their retreats. They have 100% attendance, they stay focused on the agenda topics and everyone participates. I also find that some firms struggle with these concepts.
If you are planning a strategic planning session this year, here are a few reminders:
Set the strategic planning meeting or retreat dates with plenty of advance notice and get a firm commitment from stakeholders to attend.
Plan the agenda carefully to make sure you are using the time wisely.
Send out the agenda and other special reading well before the meeting date so that attendees can be informed and prepared.
Expectations matter. Clarify expectations in advance of the meeting and again at the start of the session.
Logistic details are very important. Make sure everything is in place and confirmed so that valuable time is not wasted.
Begin and end on time. If a topic needs further discussion, ask permission to extend the discussion time.
After the session, summarize the discussions and document action items. Send these to participants in a timely manner.
The most important step…. don’t procrastinate with implementation of the agreed upon action steps.