Innovative Practice Management

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?

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

Recently, Bob Nugent the Chief Financial Officer for Scolari’s Markets, a chain retail grocer in Northern Nevada and one of our favorite and most valued clients, gave our firm a compliment that created a HSD for me. (HSD is the acronym for High Satisfaction Day - a phrase I first heard from author Ron Baker.) We had recently completed several projects for Scolari’s, which had involved several of our team members. Bob, not known for lavishing unsolicited praise in the thirty years I’ve known him, told me how impressed he was with the knowledge, professionalism and service level he had received from our associates. » » » 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

Coming from the marketing side of our firm I spend some of my time browsing other firms sites to see what they are doing different, what information they have put on their sites, how they update them, etc. What is very interesting is that almost all of them have one thing in common, “They are different!” Different from the typical accounting firm. » » » more

One of my sincerest hopes for this blog is that it will provide a forum for a discussion of alternatives to traditional practice management philosophy and practices by service firms in the United States. One such debate compares the relative merits and shortcomings of the billable hour. We have written much about this subject. For whatever reason, likely cultural in nature, our Australian and British counterparts seem to be much more engaged and progressive. » » » 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