the pandemic has accelerated our progress toward the future that was already in the offing.
by terry putney
the pandemic is changing where firms work. and it’s a huge issue.
more: 12 shifts to ensure firm success | how to reinvent the firm for the covid age | why it’s time for an acquisition | three ways the accounting profession has changed | ramping up for the year ahead
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office space is being downsized dramatically. long-term office leases that must be assumed by an acquiring firm are becoming a deal killer in many m&a deals. we are seeing a significant increase in the number of firms that are going almost completely virtual.
the issue of workspace also creates issues and opportunities for staffing. many staff now demand a significant amount of time to work remotely. others are clamoring to get back in the office. firms are finding they need to accommodate both perspectives. firm management, in many cases, is having to learn how to manage virtual workers without physically seeing them do the work.
overall, i believe these changes will create more instability in firms’ workforces. it will be easier for talent to seek opportunities elsewhere in this new environment. finding a way to manage this free movement of talent will be key to the future success of accounting firms.
overall, the substantial changes in the profession in the past year have created the need for firm leaders to think outside the box. the old tried and true ways of doing things won’t necessarily work in the firm of the future. firm leaders need to look not only to their peers in the profession but also outside the profession for insight into what will work in this new operating environment.
this pandemic has not necessarily created a new future. it has accelerated our progress toward the future that was already in the offing. changes that might have occurred otherwise over the course of the next decade have come into being in the past year.
how to best position a firm for future success?
firm leaders need to embrace the changes that are happening in the profession. the new environment is creating opportunities, as long as you see it that way. overall, consider that your competition for clients and talent is no longer just from other accounting firms. you are likely competing against firms outside the profession, whether you are aware of it or not.
college students are choosing careers outside of accounting partially because they can earn a higher starting salary with a four-year finance degree, for example, than a five-year accounting degree.
non-accounting firms are quickly entering the market to compete for clients in everything except attest services.
private equity is poised at the gate to get into the profession in a big way and, in fact, already is here. these outside players won’t be operating with the same business models the accounting profession has been using for the past hundred years.
one specific change many firms need to make is to invest in technology. if your firm isn’t able on its own to access the cutting-edge technology your competitors are using, and that your clients expect, you need to find a way to obtain it otherwise. technology means not only how your firm operates (e.g., cloud-based systems, paperless, portals, etc.), but also the services you offer.
it consulting is a routine offering for the larger firms in the profession, and they no longer see smaller enterprises as poor target clients. smaller accounting firms are going to feel more competition than they are used to.
we see a lot of firms merging in order to gain access to technology platforms and service offerings they can’t create on their own.
i recommend firms rethink their staffing models. flexibility is the key. it is not hard to differentiate yourself from the competition with changes in how and what you pay for talent, the experienced staff have your firm, and their understanding of the career opportunity your firm represents.
think about this: a 10 percent increase in staff salaries in your firm would normally amount to a 3 percent to 4 percent increase in costs.
- yet what would that mean to your ability to attract better talent and retain it?
- what would better talent and retention mean to your productivity and the value you deliver to clients? how much could you differentiate your firm from the competition with a 15 percent increase?
- could you overcome a 5 percent to 6 percent increase in staff cost?
compensation is, of course, not the only way to differentiate yourself but it gets the conversation started.
for example, do your best people have a clear understanding of what their future could be with your firm in five years? ten years? do they know how to achieve long-term success in your firm?