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Archive for February, 2008

Stress and the talent shortage: Attack the cause don’t treat the symptoms

February 28th, 2008

I was talking with a member the other day and she promised to send me a document by the end of the week. A short time later she said “you’ll have it by am Saturday.” I said, “is Saturday the end of your week?” to which she replied, “it is during tax season!”

Rick Telberg, who writes a great newsletter for the AICPA, reports in the February 4, 2008 edition that 98% of CPAs he surveyed report some level of stress and a very significant 57% admitted to being frequently stressed or at crisis point. The US may have a worse “busy season” than most other countries but accountants I talk to around the world tell me that they are working harder and feel a lot more stressed than they have in the past.

More than 90% of CPAs work more than 50 hours a week during busy season and a staggering 30% are working more than 70 hours. Equally importantly, 58% are working more than 50 hours over the full year! During tax season, a 6–day week is the norm for most firms. If nothing else this gives meaning to the phrase “…for goodness sake get a life.” It also explains why young talented people are looking for a better way to earn a living than a career in public practice.

For the past several years the top challenge faced by accounting firms has been the attraction and retention of talent. Various reasons are commonly advanced for this including: the buoyant economy (until recently anyway), more legislation-driven compliance e.g. SOX, a shortage of graduates (that is now changing) and I’ve even seen time sheets being blamed for the high attrition rate.

This situation seems to be accepted as the “given” and the solution I see most often has been to try to change the environment. For example, let’s bring in pizza, have fun breaks, close at noon on Friday’s after busy season is over.

But it’s not an environmental problem. I firmly believe the problem is that leaders of firms that are suffering have lost sight of their own and their firm’s purpose. Is that purpose to create value for clients and capture a reasonable share of that value for the firm? Or is it to be all things to all people and to provide a service that is as cheap and fast as possible to as many clients as can be accommodated?

Ron Baker, of the Verasage Institute, says “bad clients drive out good ones” — he considers it to be so important he refers to it as Baker’s Law. I agree with him and think we should add an extension to define Baker’s Law 2.0 as “bad clients drive out good clients and good team members and in the process, drive down the capacity of the firm to create value for its clients, its team members and its owners.”

There is one over-riding characteristics of a good client and that is someone who is willing and able to benefit from the work you do. If the client is too small (or too large for that matter) to really benefit from a professional relationship with you then you’ll be unable to create much value and therefore you’ll be unable to capture much value. Your effort, in other words will be wasted.

I would also add a few other criteria that I consider to be important. Is the client pleasant to deal with (life is too short to put up with arrogance and rudeness)? Does the client have a positive disposition (beliefs become outcomes)? Is the client organized and willing to do his/her part to ensure that a mutually beneficial relationship exists (this includes being willing to work with the delegates)? Is the client growth-orientated (when your clients grow you grow)? Is the client in an industry that has a bright future (you can help turn a client around, you can’t generally do much to save an industry)? Is the client receptive to your advice and assistance (for advice to have value it must be acted upon)?

You’ll notice I haven’t said anything about the client’s value as a referral source or his/her promptness in paying your bill. My reason is these outcomes generally follow when you have clients who meet the criteria I have described. Delighted clients are those who recognize the value you have created, they are therefore willing and able to pay you, they are also willing to refer you (to like minded people) because they’re confident that you will not let them down.

I believe poor client selection (and retention) is the root cause of work-related stress, mediocre financial performance and the inability to attract and retain talented people (which in turn leads to stress and under-performance.) Sadly, most firms have way too many “poor” clients. These are not necessarily bad people but they are consuming the firm’s resources that could be much better deployed.

Tom Vermeulen, a member of the Principa Alliance who has a practice in Ripon, California, was diagnosed with a terminal condition several years ago. Fortunately, the diagnosis was subsequently found to be incorrect but it caused him to re-think what he was doing with his personal and professional life. After he recovered from this traumatic experience he attended a Boot Camp and proceeded to implement change in his firm.

Tom truly understands the meaning of the phrase “I choose to work with clients who will benefit from the work I can do.” In fact in the past year, he has been engaged by 20 clients to provide monthly or quarterly monitoring as part of a Management Control Plan. His total fee from this group of clients exceeds $100,000 but not only that, he’s enjoying the time he spends with them and both he and they know he’s making a difference. I should also add that he is amongst the top 5% of income earners for firms of his size (11–12 team members) in California.

I believe there is no excuse for being stressed in busy season. Purge yourself of work that is low value and use the time that would otherwise be invested with those clients in a much more productive way. That might even involve taking some time off to reflect on what you want your business to do for you and to do so while remembering that if you continue to do what you have done in the past you will continue to get the same results. The stress will not get less.