Seems like a simple answer yet we truly have great people who have a passion for what they do. Employees who enjoy coming to work each day, are respected and know they are an integral part of the firm enable us to provide a work environment that sets us apart.

After practicing for over 30 years I can unequivocally say we’ve never had a ‘perfect client’. One who always applied the accounting principles correctly, on time and provided the requisite support. Without exception. (The other assurance partner claims he had one, once, but he drinks heavily.) The only perfect client is the one you are doing a proposal for. He’ll promise to do everything perfectly.

In the proposal process, the Company’s obligation is to get the ‘highest level of service for the lowest possible price’. So of course they are motivated to commit to a course they are entirely incapable of keeping and the assurance team has to endure the shortcomings.  In a time sheet environment this may get passed on to the client, but not likely. And of course if it does the client squeaks that it is not consistent with the original proposal, and you have what my friend and mentor Ron Baker euphemistically refers to as ‘bill and duck’ (and hope they pay). For pricing firms, as we are, it results in scope creep.

My point is that ultimately no client is perfect. Propose based on what they commit to but invoice them for what they actually do or don’t do. Don’t whine because they aren’t perfect. Just implement a system that accommodates that imperfection without penalizing your Firm or creating animosity with your client(s). You might want to try Client Service Agreements. (Oh, and to all you seniors – ‘imperfection’ is why you get paid the big bucks! If all our clients were perfect we wouldn’t need your gray matter. We’d just use checklists. )

One definition of insanity is “Doing the same thing over and over, but expecting different results”.  I have no idea who first said that, but truer words were never written.  And that’s what we seem to be doing too regularly in the accepted approach to practice management in our profession.  So after 25 years we finally recognized the need (and tremendous opportunity) to be innovative.

The catalyst was a presentation by author Ron Baker, on pricing and the Firm of the Future sponsored by CPAmerica and cpaconect.  Ron is a a shameless advocate of trashing the time sheet especially as a tool for measuring the value of the services we provide.  Ultimately, though, for us the derivative (sorry auditors I know you hate that word) benefit was the realization that time sheets are an insidious tool of micromanagement.  And micromanagement creates serious negative repercussions with professional knowledge firms (PKF’s – a Baker term).  This realization, brought about by eliminating time sheets in our firm, led to many positive changes some of which follow:

- a results oriented work environment – team members are ‘invited’ to work on specific engagements and may decline without prejudice; team members have a responsibility to get the job done on schedule, but they decide when, where and how the work will be performed.

- elimination of annual performance evaluations - in favor of a mentoring program.  This improved communication technique provides timely feedback in a non-confrontational manner rather than waiting until the end of the year.

- a true flex time environment - pick your level of commitment and be responsible for your own work/life balance.

- true team work – as a result of eliminating the dysfunctional staff competitive environments found in most firms.

- elimination of turnover – we’re nearly perfect in eliminating voluntary turnover in an industry plagued by the loss of the best and brightest talent.

There is much more.  The obvious result is a healthier professional environment, which has led to better client relationships a happier team and virtually no turnover.  Some of the ‘new’ things we’ve instituted to support this are:

- universal involvement at all levels in the committees that set the direction for the firm, whether it be audit, tax, consulting, pricing, marketing, admin, or social.

- a new pricing model supported by strong proposals, detailed client service agreements, a staffing and scheduling committee, after action reports, budgeting and profit analysis by engagement.

- a mentoring program.

Designing and replacing the system that was time sheet driven  to provide the management tools necessary to have an effective service firm in our current business environment has not been easy, and it’s an ongoing process.  There is much more to say than room on a blog to say it, but the bottom line is ‘we’re not crazy’!  And we have the results to prove it.

When you employ a business model that is predicated on billing by the hour, your alternatives to increasing revenue are basically limited to increasing hourly rates, or working more hours.  The knee jerk reaction in most firms is to ‘work more hours’.  Short term, this may work, but ultimately our young associates realize they have a ‘job’ rather than a career – and they leave. Very few of us ‘live to work’, but rather we ‘work to live’.  When the Firm takes away your time, they take away your life.  Knowledge workers are too savvy to allow that for long.  Carl Sandburg summarizes it nicely.

“Time is the coin of your life.  It is the only coin you have, and only you can determine how it will be spent.  Be careful lest you let other people spend it for you.”

We have addressed this as a firm, but until we address this as a profession we will continue to see the best and brightest leave.

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.

Why did we tolerate it? Simply speaking, there was a shortage of jobs and an abundance of candidates to fill them. If you weren’t willing to make the ‘sacrifice’ there were ten others who were. Did we have a different work ethic, ability or attitude then, than those ‘kids’ of today? I don’t believe so. We didn’t have choices that our employers had to compete with. That has changed.

In the past six years, since the passage of Sarbanes-Oxley, the amount of accounting work for professional firms has, by some estimates, tripled. The corresponding demand in industry has increased proportionately. Simultaneously, many states have stiffened the requirements for certification by implementing a 150 hour standard. So is the answer to increase compensation, improve flexibility or become more efficient as Rick Telberg advocates as our only solutions?

In the past thirty years I’ve reviewed the annual surveys done by numerous organizations, including the AICPA, and I don’t recall even one instance where compensation was the first priority of the respondents at the staff level . (Although it is generally ranked as ‘most important’ by the partner group responding.) So the exodus is not compensation related. Is it flexibility? Most professional firms have adopted flex time, and yet we continue to lose talent.

Efficiency is not the issue. We are certainly more efficient, technologically, today than we were even five years ago, yet the staffing crisis is worse than ever. Logically, with revenue based on hours worked, and time sheets, the more ‘efficient’ we become as service providers, the quicker our fees will drop, the less ability we will have to pay competitive salaries, and the faster we will all go broke. Can you improve your efficiency enough to have an impact?

In our firm we are concerned about ‘effectiveness’ over efficiency. Efficiency is a function of selling time. We sell knowledge. We are focused on the overall quality of the service we provide, rather than how fast we can provide it. So if it’s not compensation, flex time or technology what have we done as a firm that has virtually eliminated turnover; improved team member morale and client satisfaction simultaneously; increased revenue and allowed us to grow at an annual rate of more than 50%? Trust.
Thirty years ago, as a married twenty eight year old ex-Vietnam commanding officer my employer didn’t trust me. They set my schedule, and hours and forced me to report on them. I punched a time clock. Is that necessary with knowledge workers? Do we not trust our professionals to give their best and make every effort to provide quality service? Do we believe that, as management, we are more capable than our knowledge workers, of establishing and enforcing one agenda for everyone that meets the needs of our many clients and varied team members without their input? That would be ridiculous. Yet, as a profession, we have micromanaged our knowledge workers to the point where they are leaving the profession because they can’t stand the ‘job’, not because they don’t love the work. Nothing has changed in the way we were managed as knowledge workers forty years ago, or the way we manage knowledge workers today. We say we trust them, but nonetheless we try to dictate. It did not work then, and it certainly does not work now.

We hire because the desirable candidates are intelligent, committed, hard working, honest, energetic and motivated. And then we smother them with a system of micromanagement that limits all of those qualities. It is not surprising that within a short time they seek other opportunities. We are going to continue to see an exodus from our profession until we make it a desirable career. We have to quit micromanaging, (as hard as that is) and provide our knowledge workers with the opportunities and respect they deserve, if we want them to stay.

After over thirty years in the profession, shackled to a business model predicated on selling time and tracking it on time sheets, we finally realized we weren’t selling time, and abandoned the time sheet – the most insidious micromanagement tool ever employed. The impacts are summarized above. We have adopted a business model, outlined by Ron Baker in his book Firm of the Future. It is a radical departure from the way we had done business for so many years. Sounds frightening? It is, but what we’ve done in the past isn’t working; doing nothing isn’t acceptable; so what choice do we have?

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?

I nearly killed myself in college to get straight A’s. Well, almost straight A’s. I graduated with 37 A’s and 3 B’s for a GPA of 3.921. At the time, I thought I was hot stuff. Now I wonder if it wasn’t a waste of time.”

We are taught that our grades are a reflection our our success. After entering the workforce do we still believe that? This post on Penelope Trunks’s Brazen Careerist by guest poster Jon Morrow hits the nail on the head.

In an article published December 5, by smartpros.com, PricewaterhouseCoopers characterized the results of a recent survey as validating the work schedule requirements of the firm. Seventy-five percent of the respondents to the survey, (some 2793 entry level professionals offered positions by PwC), indicated they expected to work a ‘normal work week’. The survey further indicated that on average each graduate expected to have between 2 and 5 employers in their lifetime. The article and related link to the PwC survey are at http://accounting.smartpros.com/x60006.xml.

Interestingly, neither the article or the survey defined ‘normal work week’. Typically, the normal work week in the United States is considered to be 40 to 45 hours (move to France if you think 30 to 35 is more reasonable and want the government to pay for it). What PwC failed to advise their survey respondents of was that the company typically considers 50 to 60 hours as being ‘normal’, and of course there is no additional compensation over and above the base salary for hours in excess of 40. Once they realized they have been at worst ‘lied to’, or at best ‘intentionally mislead’ by their new employer, is it any surprise that they’ll move on to employer number 2 of 5?

While it is commendable and encouraging that this global professional accounting titan recognizes that “future business models will need to anticipate change and address how they will attract, retain and motivate the people they will need in the future” it is unconscionable that they continue, as does our entire profession, to employ management tenets that were fomented in a different age and are completely and totally unresponsive to the business and social environment of today, simultaneously ignoring the needs of those very same people they will need in the future.

It’s not just PwC. Until we as a profession, make professional accounting attractive as a career opportunity rather than the job that it currently is for most entering it, the exodus of young professionals to industry will continue. What is it going to take? Let us know your thoughts.