Some of the key findings included:
• A fall of 8.9 per cent in average revenue per partner
• A fall in average client fee of 8.0 per cent
• A decline in business advisory services as a percentage of revenue of 12.1 per cent
Certainly, there were a number of potential reasons for these results, including an increase in the number of smaller firms participating in the benchmark survey. However, it’s likely that these figures also reflect the significant changes many firms are experiencing as both the cost and value of compliance decreases. Simply, it’s not an easy process to go through!
Those leaders and managers familiar with the ‘J Curve Of Change’ will recognise the symptoms of the ‘Valley of Death’ where change initiatives go to die simply because it gets too hard to push forward. It’s important to understand that this disconnect is simply a result of the process of learning and implementing something new.
The bigger the change, the more the disruption we’ll experience, leading to the feeling that things are getting worse, not better. For many firms, this ride through the Valley of Death is a very difficult one and it’s important to continually focus on the end goal. Clear leadership is required.
So, what should progressive firms be doing to keep pushing forward?
Just because things are difficult doesn’t mean that the direction and initiatives are incorrect. There’s no doubt that accounting firms need to look for ways to add more value to the services they provide clients and this simply won’t happen through a focus on tax compliance in the long run. An increasing focus on advisory services is important.
The challenge is how to create the capacity for this work and equip the right people with the skills to be able to provide these services to clients. Strong leaders recognise that within their teams lie people who have specific capabilities in relation to workflow, client management and business development. What are you doing to put the right people in the right roles for the future of your firm?
A more formal approach to business development is essential. In our experience, the leaders and managers of accounting firms are still struggling to come to terms with what sales and marketing actually means for them and their marketplace. We know that firms are less engaged in discussions about sales and marketing than they are about systems and workflow management. The preoccupation with timesheets and productivity, while understandable, is potentially unhealthy in changing the direction of our firms. Strong leaders should be focusing instead on service value and delivery to clients.
When times get difficult, it’s critical that the leaders of accounting firms step up and actually engage with the people in their teams about the future. Without this, staff are unlikely to show interest or may even become disengaged. Get your staff involved in discussions about the firm’s purpose and values. Ask them what skills and behaviours are necessary for the firm to achieve their objectives. Involve them in developing the future of your firm which really belongs to them in any case.
Finally, it’s critical to talk with your clients about the type of relationship you want with them. It’s all a matter of reframing the relationship. You shouldn’t be afraid of explaining the new direction to your clients and marketplace. Develop your own value proposition and script, which might go along the lines of ‘What we have done in the past is good. However, in moving forward, we intend to align our business more closely with your financial needs. We’ll ask you questions we haven’t asked before. We’ll challenge you in ways we haven’t done before. We’ll offer support and solutions we haven’t provided before. All this is intended to ensure that, with our support, you will achieve your financial goals.’
Don’t assume that because it’s difficult to implement the changes you want to make that the changes are not achievable. Stay true to your vision of the firm of the future. Engage both staff and clients in discussions about what this means to them. Always remember the J Curve of Change – short-term pain will be replaced by long-term gain as you actually start to achieve the results you are looking for.