{"id":79159,"date":"2020-09-08t12:00:57","date_gmt":"2020-09-08t16:00:57","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=79159"},"modified":"2020-09-08t17:50:25","modified_gmt":"2020-09-08t21:50:25","slug":"the-fool-in-the-room","status":"publish","type":"post","link":"\/\/www.g005e.com\/2020\/09\/08\/the-fool-in-the-room\/","title":{"rendered":"the fool in the room"},"content":{"rendered":"

\"\"<\/a>which employee is most valuable? you might be surprised.
\n<\/strong><\/p>\n

by frank stitely<\/i>
\nthe relentless cpa<\/i><\/a><\/p>\n

we have been heavily in the numbers so far. let\u2019s take a break from that to discuss a factor that, while not heavily numeric, plays a big factor in managing wip \u2013 employee productivity. because capacity is the denominator in the lean six sigma equation, and employee productivity is a big factor in capacity, employee productivity becomes a big factor in determining turnaround time.<\/p>\n

more:<\/b> calculating and cutting turnaround time<\/a> | there are no easy answers<\/a> | how to thrive as a 21st-century firm<\/a> | farm-aid for accountants?<\/a> | whittle down wip<\/a> | the tax practice traffic cop<\/a> | how to coach your staff<\/a> | how to create good managers<\/a>
\n\"goprocpa.com\"exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n

first, let\u2019s dismiss from the room all the consultants, who tell us that time tracking and productivity metrics don\u2019t matter. for the most part, these consultants have never managed or owned cpa firms. rarely have they worked in firms for any length of time.
\n
\nthey have never known the struggles of meeting payroll the first pay period in february, when employee hours are up, but the tax season money is not rolling in yet. goodbye. don\u2019t let the door hit you in the butt on the way out \u2013 or do let it hit you. that\u2019s up to you. i hope it\u2019s a heavy door.<\/p>\n

here\u2019s an example that shows why time tracking and productivity metrics matter. let\u2019s assume you buy a cpa firm from a retiring owner. you know going in that the firm\u2019s profitability isn\u2019t very good. the firm is just breaking even after the owner\u2019s compensation. how do you determine why profitability is bad and how you can fix it?<\/p>\n

this firm has three employees and no time tracking or individual billing data. the following employees are not actual former or current employees of my firm, but represent amalgams of many of the people who have graced my firm with their presence over 30+ years. some of them caused my mental health issues.<\/p>\n

tammy:<\/strong> tammy has worked in the cpa profession for over 20 years. she has worked with this firm for three years. her hiring was a breath of fresh air for the old owner. tammy shouts a bright \u201chello\u201d every morning to each person in the office. she knows the names of everyone\u2019s family members, and always asks about their welfare. she never leaves the coffee pot on.<\/p>\n

she primarily prepares personal tax returns, because she has never really \u201cconnected\u201d with business returns. her work is pretty good but almost always requires at least a few fixes before delivery to clients. clients love talking to her.<\/p>\n

tammy makes $75,000 per year.<\/p>\n

edward:<\/strong> edward is the scholarly sort. he doesn\u2019t talk a lot and just keeps to his business of preparing mostly business tax returns. personal returns bore him. when edward doesn\u2019t know something, he has no problem rolling up his sleeves and doing the research, even in march and april. he\u2019ll spare no effort to get to the bottom of a tricky question about the deductibility of pet health insurance.<\/p>\n

even though edward has the personality of a dead earthworm, his coworkers like and respect him for his diligence. clients not so much. they find him brusque and aloof. nonetheless, clients don\u2019t mind working with him as he seems very knowledgeable. edward has been in the cpa profession for 10 years, four with his current firm.<\/p>\n

edward makes $85,000 per year.<\/p>\n

gregory:<\/strong> by the way, who names their kids gregory anymore? if this firm were a season of \u201csurvivor,\u201d gregory would have been voted off the island in the first episode. he has been a cpa for a whopping three years, but he knows absolutely everything \u2013 or at least thinks he does. he follows firm procedures up to a point \u2013 the point where you become annoyed that he can\u2019t just do what everyone else does.<\/p>\n

gregory doesn\u2019t connect well with the firm\u2019s client base of mostly baby boomer clients. they don\u2019t like taking advice from a kid. gregory does bring in a lot of millennial clients, but most of them can\u2019t afford the firm\u2019s prices. gregory was fired from his last job for privately serving clients his old firm had declined. everyone is worried that he\u2019s doing the same thing now.<\/p>\n

gregory refuses weekend hours. he\u2019ll come in on a saturday, but only stays for a couple of hours and is gone. he tells the boss that he works until 11 p.m. each weeknight. he has important stuff to do on weekends.<\/p>\n

gregory has lots of \u201cimprovement\u201d ideas. he wants to take a new approach to financial planning, where he could serve younger clients with few assets. that\u2019s just stupid, of course. you can\u2019t make money in financial planning on people with no assets.<\/p>\n

gregory makes $65,000 per year and no one can figure out how he still has a job. he\u2019ll be gone after tax season like you-know-what through a goose. everyone agrees on that.<\/p>\n

who is causing our productivity problem?<\/p>\n

the answer is that you have absolutely no clue. if you think you do, you are mistaken. you know the saying that goes, \u201cwhen you don\u2019t know who the fool in the room is, the fool is you.\u201d well, look in the mirror if you think you know who to fire in the above example.<\/p>\n

the consultants, whom we kicked out of the room, tell you to believe that you don\u2019t need time tracking and productivity metrics to run a firm. you just \u201cknow\u201d who is good and who isn\u2019t. they mumble nonsense about \u201cforward-looking\u201d metrics, which are merely an excuse for not knowing how your firm operates. the technical term is management by ignorance (mbi). i own the trademark to that. i\u2019ll be running certification courses soon. they\u2019ll be short courses. the aicpa calls them micro learning, which means you\u2019ll spend five minutes learning nothing.<\/p>\n

i suffered through a conference session where the session leader told us he knows that he needs another employee when he has about $180,000 of annual billing to get done. that would be great except that he gave us too much information about his firm. i calculated that his real billings per employee were about $120,000. he had no billing metrics to know his real number. he also had no information to fix his numbers. he couldn\u2019t tell productive employees from chair warmers.<\/p>\n

let\u2019s introduce a really basic metric to our example \u2013 annual billings per employee. no, it\u2019s not a perfect metric. in the real world, you need a lot more than just this. if you\u2019re nice to me, i\u2019ll give you some of these measures later. but let\u2019s see how just this basic piece of information can open your eyes.<\/p>\n