Innovative Practice Management

I hailed from a large international accounting firm and like most of my coworkers there I became sick of the long work hours and never ending cycle of stress and emotional guilt tripping that comes with trying to justify going home after just ten or twelve hours.  Searching for another job was difficult, as I rarely had a minute that wasn’t filled by working, commuting or sleeping.  But the most substantial barrier to quitting my big accounting firm job was the myths that circulated concerning small firms. 

Most of my former coworkers whispered to each other about quitting from time to time, but someone always piped up with their own assumptions, or tales they had heard from their friend’s cousin’s ex-boyfriend or some other likekind form of twisted communication.  I address just one common myth (of many) here:

I heard that working at a small firm would stunt your professional growth, as smaller revenue clients do not face complex accounting issues.  HA!  In my experience I have seen there is not much a large revenue client can do that a small revenue one can’t, including going public.  They mimic their bigger brothers in both use of derivatives, usual debt/equity hybrids, and VIE’s as well as bring you back to old-school accounting practices which us newer accountants currently coming out of college were taught but told we would “probably never use” , such as valuing perpetual inventory and related LIFO challenges.  

There are many other myths such as hours, compensation, limited chance for meaningful promotions, etc.  which plague the minds of overworked accountants from the staff to manager level when they think of switching to small firms.  Keep in mind during your search for a new position that “Big 4” or even the slightly smaller international accounting firms don’t hold all the challenging work in the accounting field.  They (and their overworked staff) just like to think they do, which is why they perpetuate such myths.

I’ve posted frequently about the deleterious effect I believe time sheets have on professional knowledge workers and professional knowledge firms. Regardless of the origin, or the use for which they were originally intended they have become at once a measurement of productivity, value, worth and efficiency. And I don’t believe they do any of those things particularly well. Granted they can generate useful and important information for reactive decision making but the costs of that information to the culture of the user far outweigh any marginal benefit derived. They are a very efficient tool for micromanaging. There are other very efficient micromanagement tools as well. There are performance evaluations - which we’ve previously posted about. How about ‘checklists’?

The purpose of using checklists is to ’standardize’. By standardizing our engagements we believe we can reduce risk and simultaneously improve efficiency. Checklists are tools for ‘control’ (micromanagement).

Six years ago during the exit interview for our peer review, the reviewer criticized us for not using ‘canned programs’ in favor of the custom programs we wrote for each client. He agreed our programs were better than canned programs but if we used PPC or Cch or some other canned programs we would by default be considered in compliance with all the professional standards. (I now realize he was just lazy). We immediately converted to canned programs.

In the mid 1970’s we had very few checklists. I recall a reporting checklist, an internal control evaluation guide (ICEG), and a post issuance review checklist (PIRCL). There were probably a couple more. We used them after the fact as a double check. We understood the audit process and the objectives very thoroughly. Today, even the simplest assurance engagement requires no less than a dozen check lists, each with up to 30 pages of single spaced, ubiquitous, multi-part questions, the vast majority of which are answered ‘n/a’ for any specific engagement. And they’ve replaced the necessity to analyze and understand. Correspondingly, I believe audit skills have degenerated as well.

We are evaluating the process necessary to eliminate canned programs and checklists - at least until the engagement is complete, and then using them as a ‘double check’ only. ( I’ll let you know how that goes. I can already hear the crying, moaning and gnashing of teeth by the audit teams at the prospect of losing their security blankets.)

It’s not just the audit process. Look around your firm, at the checklists you use. I’ll bet you lunch, that in most cases your knowledge workers would be more effective after a short period of time if they didn’t rely on them, because they would have to understand what they were doing and why, rather than just being able to check off steps.

You hire and pay for intelligent, motivated, conscientious, creative minds and then smother all those characteristics with a business model based on control and doom your professional knowledge workers to be only as good as the checklist they fill out. Does that make sense?

Recently I was asked by a former tax partner of an international firm how we measured the productivity of our associates given that we no longer keep time sheets. Ignoring for the moment that Peter Block has already answered that question in his book The Answer to How is Yes, I have more than one issue with this question. » » » more

When Mark first suggested eliminating performance evaluations, I was appalled. How would our aspiring professionals get the feedback that they so desperately needed? Then I started to think back. And being a pack rat, I looked back at my old performance evaluations. And realized that I had been writing rebuttals to performance evaluations since the very beginning of my professional career. » » » more

In a post by Rita Keller on CPA Management she advocates the practice of publishing rankings of the firms associates. It would seem this is a practice of Moss Adams, a large national firm. The post titled Ranking Your Individual Team Members doesn’t provide specifics as to what the criteria that were used in the ranking scheme by Moss Adams. They state that you should rank people by the criteria that are important to your firm. The article goes on to state that the staff felt it was a positive motivator and “no one quit”. (Yet!) » » » more

In virtually every survey of accounting firm managing partners and human resource directors they rate the difficulty in finding and retaining professional staff as their number one challenge. Yet the work environment in most professional accounting firms is the same ’sweat shop’ it was 50 years ago when there was an unlimited labor pool. » » » more

Several months ago I suggested to my management team that we invite engagement team members to participate rather than assign them (Choices). At about the same time I suggested to our Director of Professional Personnel, Dr. Jeanne Yamamura, that we consider eliminating annual performance reviews. » » » more

When I ‘retired’ from Arthur Young and Company a couple of years ago, (1978) it wasn’t because I didn’t love the profession, or the work. It wasn’t because the compensation was inadequate. It was the job. It was my employer. I wasn’t trusted. I was given an annual quota of time to fill, monitored by a semi-monthly report submitted on my time sheet in quarter hours. Annually, there was a summary of my hourly performance in comparison to my peers and to employees that I had never met, who had served before me. We complied with an arbitrary standard we had no input in setting. The majority of my waking hours were planned for me, without my input. » » » more

The keystone of practice management for the accounting profession and most law firms has long been the billable hour. We rely on hours accumulated on time sheets in six minute increments to drive most every aspect of our practices » » » more

I never dreamt of pursuing a career in public accounting. I chose the major because the classes actually challenged me and I thought it would provide the most initial job stability out of college while in search of my “dream job.”

Like many accounting graduates, my first “real” job out of college was as a staff auditor at a Big Four firm. Everything looked good: my paycheck, my resume, my wardrobe. It didn’t feel very good though, and I don’t think there could ever be enough training week “hospitalities” or late night firm-sponsored meals hunched over my laptop in a crowded audit room to ever make it feel good.

When you’re surrounded 12 hours a day by “like-minded,” “career-driven” people all rationalizing that a 60 hour work week makes perfect sense; it becomes hard to think for yourself, or see that there is more out there. As tempting as it was to have $800,000 in annual compensation dangled in front of me as my future earnings potential as a partner in a Big 4 firm, having the message delivered by a 50 year old, overweight man going through a divorce was kind of a deal breaker.

I could see the attempt at creating and marketing “work-life” balance programs dreamt up by HR departments no where to be found after 4:59pm, but there remains so much stigma attached to participating in these programs that they remain little more than propaganda for recruiting purposes.

I don’t believe the purpose of this blog is to criticize the Big Four, but to promote positive change and idea sharing for the entire profession. So rather than encourage additional Big Four alumni to pitch in their two cents on why they left and why they’re glad they left (there’s already enough of those websites out there), I welcome stories of people who have chosen to stay and how they make it work for them, or at least ideas that they think could work in larger firms to retain the talented professionals that these firms hire in the first place.

If the large, public accounting firms took all the time and energy they spend convincing their employees that their firm’s status quo is the greatest bureaucratic creation of all time and threatening that by leaving before being promoted to manager, you were bound to end up in a cardboard box down by the river, or worse, in a cubicle for the rest of your life, and devoted that energy to conducting an open dialogue with their staff on ways to make the culture better, I don’t think we would have quite the “talent shortage”. In some instances I believe people choose to stay not because they are happy, but because they are afraid to leave and then perpetuate the negative culture. In other instances, I fear this “talent shortage” is being worsened by “talent wastage” via the exodus from public accounting to industry where brilliant minds are performing repetitive accounting clerk tasks in exchange for some personal and family time. For the most part, I liked my coworkers, liked my clients, and liked the work in the Big Four … I just didn’t like being labeled lazy or stupid for wanting to enjoy all that life has to offer, so I took my chances with the cardboard box.

I’ve been with my new firm for 5 months now, and have reached the point where I can’t imagine working anywhere else. I can’t imagine finding a place with more flexibility, respect for individuality, and personal freedom combined with the daily tasks and challenges that keep my mind engaged. Public accounting could quite possibly be my “dream job.” Now how do we make it this way for everyone?