Innovative Practice Management

In my recent post, Beware the Jabberwock, I intended to suggest that as practitioners we always question what is the ‘common body of knowledge’ and accepted management philosophy we have been indoctrinated with over the past 50 years.  My comments were not directed specifically at Ric Payne or Principia, but rather at traditional thinking, while I did use one of Ric’s posts as an example.  My comments were apparently interpreted as a personal attack based on Ric’s comment which we have posted.  After again reading my post, I do see it could be interpreted as a personal attack.   That was not my intent, and I sincerely apologize.

Our purpose is to provide a forum where practice management theory and experience can be shared and discussed with the ultimate goal of improving our profession.  Personal attacks, intended or perceived, will not accomplish our goal of providing a forum for the exchange of ideas.   They are not acceptable and will not be published.

 That said, I don’t agree with some of Ric’s thought and it is my singular intention to ‘take him on’ and expose the fallacy and inconsistency in his logic, as I’m hopeful he will attempt to do with mine.  We will start in this space,  and as he has suggested we will continue ‘mano y mano’ in Reno when he returns.     Your participation is welcome, necessary and  encouraged.

“Twas brillig and the slithey toves did gyre and gimble in the wabe,  all mimsy were the borogoves, and the mome raths outgrabe.”

Written by Lewis Carroll, his poem “Jabberwocky’ in “Through the Looking Glass and What Alice Found There” is considered the most famous nonsensical poem in the English language.  It was certainly one of my favorites during my alcoholiclly impaired college years in the 1960’s.  It re-occurred to me today as I read a post by Ric Payne on the Principa blog titled Time Based Billing is Unethical - What Rubbish. 

I wouldn’t recommend reading the entire post.  Payne talks in circles.  He at once advocates advising clients of the proposed fee in advance (which I agree with) but supports using timesheets as a necessary tool in doing so.  He has thoroughly confused the importance of knowing what your resource cost is with the value of the project.   He naively seems to believe that the majority of clients who receive invoices based on time sheets know in advance how much those bills will be and they are “happy with a bill based on hours” because they were some how able to divine how much it would be prior to receiving it.  That is counter intuitive.  He rants on and on trying to justify time sheets, but at the same time advocating ’pricing’ in advance as a superior alternative.  It all seems to make sense, until you realize the methodolgy he is proposing can’t get you to the results he seeks.   That’s my point.  Don’t take everything you read at face value - especially if it comes from a consultant - think about whether or not it makes sense.  Question authority.

Most consultants I’ve met are regurgitating the same tired old garbage they were taught in college 40 years ago.  They wouldn’t recognize a new idea if it bit them.  The practice management methodology they espouse is antiquated and without innovation.  You can’t get better doing the same old thing.  Yes it’s safer, but remember the reward for risk is profit.  People like Ric Payne know there is opportunity for improvement, but they will consistently try to justify old methodology because it is safe, they are cowards and they don’t know any other way. 

Like Jabberwocky it sounds good and seems to make sense.  It just doesn’t work.  Oh, and if anyone wants to debate the specific issues of his post I’m happy to do so.  Just comment.

After writing my first blog post, “Intern’s Corner: The Big Four Push” I began to think about how does one choose the right firm. I am lucky enough to have had to opportunity to experience different firms and different values over the past two years. I have been a member of Beta Alpha Psi (BAP) in that time period. By having those opportunities, I feel that I have been able to explore different options, and I know what is right for me. These are the steps that I took when choosing the firm I choose:

1. How does the office make me feel? BAP has given me the opportunity to tour almost every local firm within the past 2 years. Within the first hour there, I know if that is a place I would be able to work. Some firms feel more comfortable for one person than another. For example, I am a very laid back person, so certain conservative firms are not for me. However, some of my classmates are very conservative, so those firms work out great for them. Know yourself, and what you like.

2. What have you heard about the firm? It is true that you shouldn’t believe everything you hear, but do listen. Talk to people that are current employees there, and talk to employees that no longer work there. That will give you the feel for the office (the good, the bad, and the indifferent). Make sure to ask current and past employees about the overtime required by the firm. This will come back into play in step three and step four.

3. Does the firm support your core values? I know this might take some thinking and looking into, but it is imperative that you find a job that does this. For example, ethics has always been a hot (and grey) topic. Find a firm that has similar ethical values to yours. By finding a firm that supports your core values, hopefully you will not have to get put in a situation where you have to question yourself. Also, if family is a core value, look at activities the firm does. I cannot stress how important this step is. This step is the key to your happiness at a firm.

4. Look at the pay. Just coming out of college (with no experience for some people), $37,440 ($18 an hour) might seem great. But, is that what other qualified candidates getting? I know a girl who graduated last semester that was offered that. She took the job and was happy about the pay. That was until she heard that other graduates were starting at $10,000 more a year than her. That made her feel undervalued. And trust me, you do not want to have a career somewhere you feel undervalued. Also, make sure to find out if the salary offered is strictly for a 40 hour work week, or if it is a normal salary. There are many local firms that may start you out a bit lower than a big four firms, but they will allow you to bank your overtime. Take that into consideration.

5. Don’t quit interviewing after you get one offer. Make the firms work for you. You will not get stuck feeling undervalued if you get more than one offer.

Take these steps into consideration. Accountants are in high demand right now. There is no reason to take a job somewhere you are not 100% happy.

Earlier this week David Maister posted Satisfaction Guaranteed on his website.  You can read it for yourself, but the essence is committing to a service and performance guarantee for the services you provide.  Several years ago we began including this language in our client service agreements:

                 ”Our work is guaranteed to the satisfaction of the customer.  If you are not completely satisfied with the services performed by Mark Bailey and Company, Ltd., we will, at the option of the Company, refund the price or accept a portion of said price that reflects the Company’s level of satisfaction.”

Initially this sentence caused serious concern among my associates, and I’ve have heard numerous ‘warnings’ from peers.  But what is it that we have to be afraid of?  It’s our work, and certainly if we don’t have enough confidence to back it up we shouldn’t be a service provider.  Should we be concerned about the unscrupulous client who arbitrarily decides not to pay, and uses our guarantee as an excuse?  We’ve never run into that problem, and don’t expect to.  We ‘price’ our services in advance so that our client agrees up front and is not ’surprised’ by a bill they didn’t expect.  Realistically you are already giving this guarantee, whether you realize it or not, because it’s usually not worth a lawsuit.

If a client claims to be dissatisfied with your service and refuses to pay your invoice are you really going to pursue it in court?  Hopefully not.  Most lawsuits against accountants are filed as counter claims to collection attempts.  The legal costs, including the wasted efforts, frustration and stress on your part generally just aren’t worth it.  Negotiate a settlement that makes everyone unhappy, and  move on.  (And then fire them.)  Certainly if your service was sub-standard you would already have agreed to negotiate a write-down. 

The confidence our clients gain from receiving our ‘guaranty’ extends not only to the price, but also to the quality of work we are doing for them.   Offering performance guarantees has set us apart, and  has been nothing but positive for us. 

Unquestionably, large mature accounting firms can have some distinct advantages.  As smaller firms can we overcome them and compete on the same level?

When I left the ‘Big 8′ (yes children, before it was the Big 4 it used to be the Big 8 back in the olden days) to practice with several other big firm refugees we were certain of the many opportunities that existed to invoke positive professional change, and do it better.  Like most teenagers, we knew it all - especially everything that was ‘wrong’.  We missed no opportunity to criticize.  And like most teenagers, we somehow missed all the things our former Big 8 employers had done that were ‘right’.  The naivete of youth.  And we were professionally youthful having only been recently emancipated. 

Most things were easily overcome.  Questionnaires, checklists, time and billing, general ledger, due date monitoring and scheduling were all available from multiple vendors.   Continuing professional education which had been so strongly emphasized by the big firms as their special strength was (and is) provided on a far superior basis to small firms through the various state societies and the AICPA.  (The big firms tout their advantage but with few exceptions the programs available and taken advantage of by us little guys are far superior with respect to the quality of the presenters and variety of topics.)    

Anyway, everything was easily overcome - except the depth of technological talent and resources available.  How can you compete with the level of expertise a national firm can assimilate to address a difficult tax or accounting issue, and yet if you are going to be a top tier firm, you must.  We sell knowledge and expertise, (not time).  So we need to find and develop that knowledge and supplement that expertise.

I already mentioned our advantage as small firms with regard to superior cpe.  We also found a tremendous resource in our local university.  We have always had at least one accounting professor retained to assist in technical review,  provide supplemental in-house training, and coordinate recruiting.  They are paid on a contract / hourly basis.  CPE is tailored to our firm needs and client base.  We almost have an unfair advantage when it comes to recruiting.  From the standpoint of technical expertise, no one is more current.   I have two PhD’s available.  Can your local office of Big 4 match that?  (This week we have an in-house seminar on the IFRS for our audit teams and interested clients.)  When we were smaller we shared this cost with other local firms who were also too small to justify the cost.

Finally, what about your competitors?  If you’re honest with yourself you’ll admit you can’t be all things to all clients.  For those engagements we can’t or don’t want to undertake we’ve formed strategic alliances with other firms / practitioners.  There are also some very strong professional associations you can join.  We were previously a member of cpaconnect.  Great folks and a very worthwhile affiliation.  We benefited greatly.  Unfortunately we’ve out grown that, but we’re looking for a new affiliation.

Here’s what we’ve done to not only level the playing field with the Big Firms, but to give us the advantage:

     1.  Take full advantage of the cpe offered by the state societies and the AICPA

     2.  Contracted with local university professors to give us the best technical expertise available, provide unparalleled in-house training and assist with recruiting.

     3.  Affiliated professionally with organizations like CPAmerica and cpaconnect. 

This has worked for us.  We feel we can more than compete with any firm.  What works for you?

Our premise for this blog is that no matter how perfect the practice management model is in accounting, it can be improved by the collective minds, experience and efforts of the members of our profession.  No management model is perfect, and one that hasn’t changed substantially in more than 50 years, such as ours, certainly must have some room for improvement. 

 Change is always difficult if not traumatic.  It’s also inevitable if we want to improve our situation.  We freely admit that some of our theory is just that - theory.  Almost inevitably it flys in the face of what is traditionally accepted practice management philosophy.  To be validated it must first be falsified.  That is precisely the purpose of this forum.  If you want to contribute to our profession challenge the accepted - challenge the proposed.  We will publish all opinions not just those we concur with.  Give us a topic or thought, and we’ll find ‘experts’ to comment and debate with.

If this is your first day in the profession or your 35th anniversary, as it is mine, your thoughts are critical to formulating a positive change.

This is not a forum for our opinions.  It is a forum for an exchange of opinions and theory which will hopefully result in positive change to our profession.