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September 29, 2023

Consultant Shares Secrets For Milking the Most Out of CPA Firm Staff

It isn't enough that you give your heart and soul or at least most of your billable hours to the firm for which you work, but you are also expected to go above and beyond by bringing in that cash money, son.

The Rosenberg Associates ("Consultants to the CPA Industry") wrote a blog post meant to inspire CPA firm owners to whipcrack a few more pennies out of its indentured servants:

A pet peeve is a particular or recurring source of irritation.

One of mine is CPA firms’ near total lack of interest in formally educating their staff on how their firm works: how it gets clients, how success is measured and how firms make profits.

When the employees of any organization understand how they fit in and how their work impacts the firm’s success, they  work with more enthusiasm and commitment, which increases their productivity.

As we all know, increased productivity means more bang for your billable hour which means more cash money in partners' pockets. No mention of a trickle down effect but who cares, that's not what we're talking about here. We're talking about inspiring staff to go the extra mile:

Here are a two ways that staff can make a direct and substantial impact on the firm’s profits:

Bring in a small client.  Imagine a firm with 8 partners and 36 professional staff.  If only half of the staff brought in one $5,000 client per year, the present value of the profit stream to the firm would be a cool $300,000 (you accountants out there will have to read our monograph How CPA Firms Work: The Business of Public Accounting to see the computation).  Now, I realize that it’s a lot easier to create this $300,000 by doing a “what if” on a spreadsheet than actually procuring the new client.  But it’s done every day and there’s no reason why it can’t happen at your firm.

The cool thing is that firms don’t expect the staff person to close the $5,000 client.  All the staff need to do is identify someone they know with client potential and set up a meeting with a partner to meet the contact.

Lawd, this sounds like a pamphlet distributed to newbie drug dealers tasked with trolling the schoolyard in search of new clients.

Let's see the second way (you know it's going to be even better than the first, right?):

Increase technical knowledge.  One reason partners work way too many billable hours is that often the staff lack the required knowledge to handle technically demanding work. Think about this. Staff typically work 2,250 hours a year with 1,500 billable, so 750 hours are non-billable.  If you back out vacations, holidays, CPE, firm meetings and a little admin time, that still leaves 300-400 hours that could be spent on billable work that goes idle.  But if the staff were trained to do more higher level work, they could be more billable without working more total hours.

So, if staff could identify technical areas in the firm that they would enjoy, and get the training in those areas, they would make themselves more useful to the firm.  If every staff person could utilize this increased knowledge to generate just one more billable hour per week, the firm’s profits would increase by 4%.

Oh those pesky stupid staff and their lack of technical knowledge. IF ONLY entry level grunts could figure out to work with the wisdom and efficiency of partners. CASH KA-CHING!

I know what you're wondering. Why would staff want to make the firm more money? Well, the post answers that question. "Very simply, profitable, growing, successful firms are more fun to work at."

So true. I have totally felt fulfilled and thrilled to make my former boss more money when he was buying himself a new multi-million dollar home and I was trying to decide between eating that week and paying my phone bill (food won, btw). YAY WORK!

What do you guys think? How inspired are you to make more money for your firm?

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