February 3, 2011

10 Ways to Recruit & Retain Valuable Employees

Does your firm have a consistent hiring message and formalized training program for new hires?

Many CPA firms hire for skills and pay scant attention to how an individual will fit with the firm. We often hire an individual and then think that we can change the firm to meet their needs rather than insisting that the individual adjust their behavior and actions to the needs of the firm. I have seen firms with more than ten owners add one individual who completely upset and divided the firm. As the old saying goes “one bad apple”… you know the results. Stay tuned for our next post on Hiring Right, or Right now?

In the meantime, right now, RETENTION is paramount. Retention starts with attracting the right people, and finishes with treating them well.

Here are 10 tips to help YOUR firm achieve your hiring and retention goals.
  1. Increase focus and efforts. Make recruiting a year-round focus, engaging both partners and employees in the process.
  2. Build an employee referral network. Use it to find employees and offer your expertise to other accountants while spreading the word about the profession through speaking and writing engagements. Focus on reciprocity--make referrals for other firms and don't burn bridges.
  3. Differentiate your firm. Build firm unity through consistent messages and a clear focus on external and internal service strategies--become an employer of choice in your market.
  4. Work on the "good" clients. Evaluate your clients--employees want to do valuable work and be associated with successful clients.
  5. Create a culture of success. It is not about work/life balance, but about work/life success. Find a way to make your employees feel more successful.
  6. Turn good intentions into performance. Consistent communication that results in mutual benefits for everyone will create a culture of trust within a firm.
  7. Define success for every member of the firm. Ensure that everyone understands where the firm is going and how they fit into the plans.
  8. Set up a reverse mentoring program. Take the initiative as a leader to get feedback from those you supervise.
  9. Reduce internal competition for resources. Create a system of governance to efficiently schedule and manage your people, and ultimately, better serve clients.
  10. Eliminate negative talk. Move past the limiting negative attitudes by using a positive approach to solve the profession's staffing issues.

January 18, 2011

Profit Point #3 - Stop extending excessive credit.

Your great clients don’t need it, while your not so great clients will readily take advantage of the credit, often leading to slow payment or no payment.

Remember for every dollar of accounts receivable written off, it takes three dollars of additional revenue to recoup your loss.

Instead of offering all of your clients credit, use scheduled payments for larger jobs (i.e. 30% each for three payments with the 10% final payment upon delivery of the financial statements) and offer budget payment plans to clients ("as a benefit to our clients we are now offering a budget payment plan").

Start the payments in the off season and offer a discount for participation (3%-5%). Of course these plans have to have the covenant that the budget plan is based upon the prior year’s fees and additional work required will be billed separately.

These steps will speed up cash flow and result in lower capital requirements for your partners while at the same time improving profitability.

December 30, 2010

Profit Points #2 - Handling Scope Creep

Are you subscribed to Profit Points yet? It's a short, easy, 1-tip read that can help you, the partners & employees get the most out of your firm.

Profit Point # 2 - Handling Scope Creep
During this great recession it has never been more important to manage client expectations.

Remember you get to set your fees.

Unfortunately out of scope work very often becomes a negotiation with the client when it should be a simple change order.

Change the wording in your engagement letters
from “If any matters come to our attention that will increase the scope of our work…”
to “When we discover matters that require us to increase the scope of our work we will discuss the situation with you, amend our engagement letter and increase our fees accordingly.”
Then act promptly when these situations arise.

Standardize your change order process and have materials readily available for everyone’s use.

Realization and profitability will increase... guaranteed.

We recommend having all of your employees and partners sign up for the weekly blast and start your firm profit improvement efforts now!

December 13, 2010

Profit Points #1 - Stop quoting in ranges...

We've got a new weekly, 1-minute profit tip you can subscribe to!

Get useful tips that you and your entire team can start implementing right away to improve your overall profitability. They'll be posted here over time, but you can get them each week, in order, free!

Here's the first Profit Point:

Stop quoting a range of fees when clients ask about your fee, as the bottom of the range is irrelevant.

You seldom bill the lesser amount and lock yourself into a cap on your fees.

Rather than telling you clients that you estimate the fee to be $12K to $15K, tell them that your fee could be $15K or more and that you will keep them informed about the fees as the engagement progresses.

We recommend having all of your employees and partners sign up for the weekly blast and start your firm profit improvement efforts now!

We have also now completed our 2010 EMPLOYEE CAREER DEVELOPMENT SURVEY and the results are now available to the public... get yours, free, today!

We hope you'll subscribe to Profit Points! They are delivered on Tuesdays at 11am EST, allowing plenty of time during the week to share them with your teams and mobilize the troops to start improving profitability right away!

>>> Subscribe now!

October 13, 2010

The Current Economic Reality for Accounting Firms

A message you must share with your staff!

During my speaking and consulting travels this year, partners and managing partners say they are frustrated with their staff’s expectations in spite of the effects the “Great Recession” has had on their accounting firms. Prior to the past two years, staff members became accustomed to receiving automatic annual salary increases while the economy was booming and are now having some difficulty adjusting as the economy has deteriorated. Unfortunately the market values for goods and services have declined and all of us must now deal with this new reality.

These challenging times require diligence, increased efforts and sacrifice by everyone in order to retain your current clients and remain competitive. Failure to do so could result in losses far greater than those experienced to date in this recession. None of us have ever experienced anything like this so now is the time to communicate clearly to your staff and then ask for their help and understanding.

Team Members: How you can help us build for the future and for your long-term success.

Since 2008 the accounting profession has experienced events that have had a profound impact on how firms must operate. The “Great Recession” has reduced the spending of countless millions which has a negative impact on the clients we serve. As a result, our revenues have been relatively flat or decreasing while our costs have continued to rise. This trend will have to be reversed if we are to remain viable and able to serve our clients successfully. Here are some of these major trends:

• Pricing has moved substantially from a cost-plus model, where a multiple of a person’s hourly salary was charged for services, to a fixed fee for many of the services we provide at a time when regulatory agencies are imposing ever increasing requirements and standards. As a result, our realization has decreased on many engagements due to budget overruns that cannot be billed to our clients. Since our clients are also experiencing the downturn in the economy many have requested fee decreases from us.

• Competition for off-peak seasonal work has become extremely intense as firms vie for those few engagements where work can be done over the summer and fall months to keep their staff busy which has resulted in net realized fees that are extremely low during this time of the year. Staff utilization rates continue to be a concern within the entire profession due to the seasonality of our work and our inability to keep everyone fully utilized during the June to December time period.

• Employee costs and benefits have increased over the years and now in many firms exceed 50% of net revenues which is an historic high. As a result of the down economy and client fee pressures we have been very limited in our ability to give pay increases to our employees for several years and in some cases we have had to adjust our staffing levels and salaries. Dealing with the effects of the recession has not been pleasant or easy. Our objective has been to keep as many people working as possible.

• Our need for technology has continued to increase requiring substantial investment by the partners of the firm not only for equipment but also software, training and the loss of efficiency while employees are learning how to apply the new technology. Software vendors continue to look for ways to increase their revenues from their software which has put further pressure on our cost structures.

• The aging demographics of our profession and our society. Baby Boomers represent approximately 25% of our population and they are just now starting to retire. This is having a direct impact on the services required by clients and our ability to provide those services as many CPAs, 50% of which are baby boomers, begin to retire. The resulting “brain drain” is concerning as we want to give our clients the very best advice and service possible while creating opportunities for everyone to grow professionally.

The good news from all of this is that there will be an ever increasing need for certified public accountants in the future. As the economy picks up there should be many opportunities for growth. There are many ways you can assist us during this time of change and uncertainty. Following are a few ways for you to help and at the same time enhance your career in public accounting:

• Have a great attitude and be a person that others want to be around. Negativity is not helpful or productive and we need to be in a positive state of mind to be creative and provide solutions to our clients. Take responsibility for your own career satisfaction by consulting with mentors and getting the information you need to be successful in your career. As you experience greater feelings of success you will be more positive and our clients will receive better service which will benefit all of us.

• Take responsibility for your assigned engagements and tasks and be accountable for successful outcomes. The key idea here is to communicate timely and effectively so that everyone involved in an engagement knows exactly where the job stands. This will allow for collaboration and timely problem solving by your engagement team which will be helpful in limiting cost overruns and client write downs.

• Manage your time. Email, voice mail, social networking all take time and can be disruptive when trying to do work requiring critical thinking skills. Block out time to devote to your client work exclusively. While at the office work with intensity and then go home on time to be with your family. In the long run this approach will make you happier in your career and also at home.

• Talk positively about our clients. They need our services and we have an obligation to provide those services in the most professional manner possible. Clients are not a burden. They are the life blood of our firm and allow each of us to provide for our families. We have the responsibility to communicate our needs and manage their expectations for a great outcome every time.

• Leverage your knowledge. In this way you become much more valuable to the firm and will assist in the “institutionalization” of our clients. Holding on and hoarding work that is beneath your level of expertise will limit your ability to grow at some point in the future. If you really want job satisfaction make sure you are doing work that is commensurate with your experience and value.

• Help us get the word out in the community about our firm. Everyone has an opportunity to participate at this level and should choose to do so in order to get new clients and achieve our mutual goals. If you belong to an organization participate actively. It will not only be more personally satisfying, it will also show everyone else that you approach your work with purpose and dedication which clients see as great qualities for an accountant.

Working together we will get through these times, serve our clients more effectively and make our firm a satisfying and rewarding place to work. We must be prudent in our business practices while at the same time be innovative and creative in serving our clients. Help us make our firm and our profession even better. We need you! Hopefully with these efforts we will all benefit economically and personally in the future. Thanks for all of your hard work and understanding.
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