and why other firms should worry
by 卡塔尔世界杯常规比赛时间 research
if your firm is 10 tears old, its probably getting stale facing intense competition for talent and grade-a clients from newer firms, less than 10 years, according to new research
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it was the youngest firms – those in business for just one to two years – that scored highest. in hindsight, the reason is obvious: they began their firms during the pandemic. they didn’t have to change or adapt to the rigors of remote offices and limited client contact. they built their firms to fit the pandemic context.
the collaborative practice management platform known as karbon has determined four pillars of practice excellence and 12 competencies that influence a firm’s proficiency in those pillars.
and an accounting practice with weak pillars doesn’t have much to stand on.
newest firms scored highest
firms in the two- to five-year tenure seem to have suffered the most. that dip from the excellency of the youngest firms has been typical over time, as the five-year point is when firms “make it or break it.” many are in decline in that period as they get organized for growth, and then, of course, the pandemic made things even more challenging. those that managed to innovate, improve and evolve tended to be the ones that survived.
firms that had passed that crucial five-year breaking point by 2022 are recovering, scoring high in the efficiency, management and growth pillars. they were settled enough to struggle through but not so old that they couldn’t adapt.
those high scores did not continue for firms older than 10 years. their maturity was an asset, but it came with a sclerotic resistance to rapid change.
the pillars:
- strategy
- management
- efficiency
- growth
four competencies sustain each pillar, two of them overlapping other pillars.
the competencies of strategy
- technology
- strategy adoption
- business strategy
- innovation
the competencies of growth
- innovation
- marketing
- sales
- client management
the competencies of management
- client management
- organization management
- talent management
- change management
the competencies of efficiency
- change management
- operations management
- business processes
- technology
to measure the extent to which accounting firms exercise these competencies, karbon conducted a survey of 426 practices on six continents. almost half were in the united states, with 23 percent in australia, 10 percent in canada and most of the rest in europe, uk and new zealand.
the survey found that average proficiencies in all competencies ranged from 40 percent of ideal (in marketing) to 68 percent (in operations management and technology). proficiencies in the overall pillars ranged from 45.8 percent in growth to 56.5 percent in efficiency, with an average of 52.5 percent.
those percentages reveal a lot of room for improvement.
weak in one, weak in all
generally, firms that were weak in one pillar scored low in all four, and likewise for those with high scores. overall average practice excellence was slightly higher in 2022 than in previous years.
using the scores averaged across all four pillars, the survey divided firms into four quartiles:
- traditional (the lowest scores)
- transition (below average)
- expansion (above average)
- leader (the highest scores)
the traditional firms tended to emphasize strategy – no surprise there because less competent firms are often relatively new firms just getting their strategic acts together. transition, expansion and leader firms emphasized efficiency, and the more highly the firms scored, the more they were focusing on the efficiency pillar.
emphasis on the growth pillar also increased with excellency scores, as did the focus on management.
a given firm’s tenure – how long it’s been operating – impacted its practice excellence score, but not as one might expect.