succession, underperforming partners also issues.
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by michelle golden
the rosenberg map survey
it’s been a major eye-opener for firms. reality is hitting home about the true implications of technology advances, global standards, tax reform, and talent transition.
more from the map survey: 2019: appetite for growth unabated | 2019: doing more with less | 2019: tech isn’t the problem. it’s the solution | 2019: using m&a to launch consulting | 2019 trends: client service changes
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overall, i’m impressed by the grace our profession’s leaders (across the top 200) are showing as they embrace these huge changes as opportunities vs. threats.
they want to help team members realize their potential as business advisors when they’ve chronically undervalued their roles in clients’ successes. they seek to be more anticipatory about customers’ needs to innovate with new solutions, building more robust practices that affect non-finance areas of a client’s business: talent, it/security/commerce, governance/leadership continuity, supply chain/sourcing, and growth strategy. and they look outside for ideas, structure and guidance.
firms are grappling with m&a effects long after the deal. while firms are making better choices about cultural fit, they still underestimate how the first few post-merger years impact profit, growth, and people. because consolidation isn’t slowing, merger integration merits more attention. with process and systems integration, more meetings and training, reassuring the team and clients, and dealing with predictable turnover – all on top of client work – there’s little energy for growth.
most firms also find that silos are exacerbated with mergers. for example, take outsourced accounting/cfo services where each firm (or each office, really) pretty much has its own m.o. (and some territorialism), so it’s rare to get enough approach consistency to share work between locations. this cripples growth in what is otherwise one of the fastest-growing areas (per aicpa) in our profession right now.
in 2018, cpa-firm ceos became suddenly very interested in alternative-pricing models. they’re motivated to increase non-traditional service offerings that can justify higher prices – they see themselves leaving money on the table pricing this work by the hour. and they want to insulate themselves against the anticipated dip in hours-based revenue as automation speeds up audit and tax work.
ongoing challenges include low margins and misalignments between firms’ incentives, activities and revenue goals – even subtle misalignments drive firms off course. too much compliance focus and too many clients who buy just one thing (that silo problem again – too little cross-selling) still prevail. firms are fixing this, understanding that they need to serve clients more holistically for their value proposition to improve and to be more than “just a vendor.”
lastly, we’re seeing firms get wiser about succession following the first rounds of boomer retirements. some firms are using retirement counselors. and to safeguard against client defection, whether transitions are retirement-driven or just shuffling work internally, firms are ensuring that multiple people have relationships with all significant clients. smart firms do this at the start of new relationships!
recognizing that comfort breeds complacency, firms say they’re hitting partner comp pretty hard to drive action. other firms are actively exiting partners who aren’t behaving in accordance with the firm’s long-term needs – even when those partners have sizable books. change is in the air.