CPA Practice Advisor

AUG 2018

Today's Technology for Tomorrow's Firm.

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38 AUGUST 2018 ■ THE FIRM MANAGEMENT CHANNEL Is Yours a Best-in-Class Firm? By Marc Rosenberg, CPA I recently spoke at a BDO Alliance conference where the theme was identifying traits of high performing firms and their leaders. One speaker used a bell curve to describe ‘best in class’ firms, with the majority of firms falling in the middle or “bell” part of the curve and a small percentage representing firms substantially above or below the average. I would suggest that the percentage of typical local firms (revenue below $15M – 99% of all multi-partner firms) that fall on the right-hand side of the bell curve is well under 5%. What IS a Best In Class Firm? Presentations by Sam Allred, Allan Koltin together with my own material suggests these traits: ■ Strong partner unity. The partners really like each other and live and breathe the firm’s core values every day. Little unresolved partner conflict. ■ Culture is everything. There is a shared belief that culture trumps strategy. ■ A premium is placed on firm members collaborating and helping each other out. ■ Firm members are highly engaged every day. They feel excited about the firm. ■ The goal of every engagement is to make clients better, not just getting the work done. ■ A common belief that in order to be highly successful, the firm must continuously change and evolve. They regularly challenge the status quo, even when successful and profitable. ■ Leadership (not limited to the MP or the Board, but leadership by all partners) is compensated and valued higher than origination, billable hours and book of business. ■ High performing partners are rarely seen alone, especially on sales calls. ■ Client satisfaction is linked with partner compensation. ■ A commitment to increasing consulting services to meet clients’ needs. ■ Partners who are the better business developers and/or have the biggest client bases are committed to delegating clients to others so this revenue can be replenished. ■ They have a succession plan in writing. ■ They understand that the best succession plan equals solid practice management, which is characterized by terrific leadership, growth and great staff. Observation #1 What’s the obvious thing missing from the above? No metrics are stated, especially average income per partner. I’m sure that the speakers would agree that achievement of best in class traits while posting below average profitability would not qualify a firm as best in class. The great baseball movie, Field of Dreams is famous for the iconic refrain, “If you build it, they will come” – implement a great idea and success will follow. That’s the message that the speakers were sending: Embrace and adopt these high performing traits and your firm will become a best in class firm, which will lead to enviable profitability. Observation #2 There isn’t one firm in the country that would reject any of these best in class traits as desirable. But if less than 5% of all typical local firms are best in class, what holds back the other 95%? First, most CPA firms adopt a flawed organizational model. Firm leadership usually plays second fiddle to client and staff issues and is not valued highly when it comes to partner compensation. ■ Marc Rosenberg is a consultant, author and speaker on CPA firm management, strategy and partner issues. Continued online at Latest FIRM MANAGEMENT News What Referral Sources Expect From You. If you are completing a client project with a referral source be sure to let them know of your interest in collaborating again. Businesses that Outsource Accounting are Likely to Refer Their Accountant. The survey pinpoints the accounting services businesses are most interested in outsourcing. Clients Want CPA Advice on Tech and Revenue Recognition. There are three new accounting standards dealing with revenue recognition, lease accounting and credit loss reporting. What is GDPR and Why Do U.S. Firms Need to Know? GDPR protects the privacy of information of individuals residing in or maintaining citizenship in the 28 E.U. member countries. Will AI and Automation Take Your Job? What once was the conjecture of futurologists, academics and intelligentsia, has now become a widespread concern for the man on the street. THIS MONTH'S TOP FIRM MANAGEMENT SOCIAL MEDIA POSTS ■ 5 Tools to Help Your Firm Operate Effectively. Mark Koziel via AICPA Insights. ■ How to Beat Mid-Career Malaise. Rebecca Knight via the Harvard Business Review. ■ 7 Apps that Will Make Clients Love You. Xero Accountant & Booker Guides. ■ 5 Things to Do when Feeling Overwhelmed by Work. Alice Boyes via Harvard Business Review. ■ Retraining Clients. Michelle (Golden) River via the Fore What It's Worth blog.

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