Based on the feedback I have received, I know that this has been a series of articles that has been well received. My thanks for the insights and experiences you have already uncovered go to Ahmad, Gillian, Jeremy, Damien, Dalyrush and a few others. I have been struck by how you have all held open meetings with your managers allowing them to share their own insights. All of this is encouraging given that I sit in front of my screen every two weeks contemplating how I can help you progress this journey of improving management skills and profitability.
LIVE AND PRE-RECORDED ONLINE WORKSHOPS
Last week saw me conducting three online workshops. One moment in Africa then back to Europe and then Australisia. Topics have been varied. The 2022 Zambia Institute of Chartered Accountants Online Practice Management Conference was a presentation on “Managing The Accountancy Business Post Covid”. After more than two years most firms have an established modus operandi when it comes to adapting to this ever-changing world. Can management be improved? Yes, always. Viewers of my online IGNITE Practice Management have expressed thanks not only for the insightful training but also for the high quality and informative manuals. Dilip, simply tells me that he found them, “Awesome, to say the least.”
KEY POINT: Inflation in Zambia is approaching 20%. Elsewhere, rates might not be quite this high but generally inflation is increasing faster than most of us have become accustomed to. It goes without saying that charge rates and invoice values must reflect inflation rates in your country. With all of the issues we face with supply chains and inflation – this is essential.
CONSULTANTS FORUM
I will wrap up this introduction by sharing one story from a Consultants Forum I attended last week. One consultant reported that he knew of a number of firms who are struggling to have their staff return to work. Some of them have conducted surveys to find out what it would take to have their staff return to work. One firm reported that a good number of their staff asked the firm to cover the cost of their “doggy carers” for the dogs they bought during lock down. And did they agree? You bet they did!
Partner and Manager Review Time and The Ego Trip
How long does it take from the time that a job is finished to the point when it is completed (reviewed and billed)?
KEY ISSUE: I may only have anecdotal evidence that this occurs, but I rarely see frowns when I mention this in my workshops. On the contrary, I usually see smiles. Smiles that tell me that some things don’t change. So, what is the issue? No comment!
CASE: Let’s take an example of a job that from the time it starts to the time of completion it takes 40 days. I often suggest that the first part of doing the job sometimes occupies about 20 per cent of the time (in this case 8 days of time on) while reviewing the job (manager and partner) and finally completing it can occupy as much of 80 per cent (in this case 32 days) of the time. Given that timeliness is key, time on job reviews is increasingly important and an area where job profitability can be improved.
KEY THOUGHT: I do recognise that this application of Pareto (80:20 rule) might be slightly flawed – but the principle and its effect maybe aren’t.
MY OWN EXPERIENCE
I was once the manager of an audit team of 12 who were engaged in the audit of a major UK footwear manufacturer/retailer. The staff were on site with me for five weeks and by the time they left I had not only reviewed all the audit work but also attended to all the partner review notes. As we all left the job was complete – even the London based tax manager had been on site finalising the tax provisions.
KEY QUESTIONS TO CONSIDER:
- What is the average length of time (in days) from the time a job is finished to the time it is completed and billed? Maybe select a cross selection of types of job to answer this question.
- How many hours are charged to finish the job off?
THE EGO TRIP EXPLAINED
- The audit team complete the job and the manager comes in to review. Many managers regard their review notes as a demonstration of their technical prowess and expertise – which is of course greater than their team members – maybe!
- Review points cleared the file passes to the partner. Out comes the review paper who also demonstrates their expertise – and more review notes.
Managers and partners demonstrate their expertise, and this all takes time. On my Margin Mastery workshops I sometimes refer to this as “the ego trip” in that partners and managers sometimes use their review to evidence their expertise. Please don’t take offence…
FIRM FINANCIAL RESOURCES
While you could look at the cost of manager partner review in total, I think that for the purposes of establishing the cost of the ego trip it is important to look at the chargeable cost of the reviews that exceeds the budgeted cost of those reviews. Note: partners should have a budget for review which is separate from meetings with the client to discuss the financial statement.
The file review by both managers and partners is an essential aspect of professional practice quality but the accumulation of review points is evidence of work perceived to be incomplete by staff in the pursuance of their duty. The raising of a review note takes time, answering it takes time and reviewing the action to clear takes time.
Can this review time be reduced? I believe it can and in so doing the overall length of time to complete will also be reduced.
How?
First of all, it is important to establish your recurring review points (RRPs). You may need to review 10 to 15 files in order to establish a firm-wide picture of RRPs. These should include both manager and partner RRPs.
A goal needs to be established to work toward eliminating these review points.
There are a number of steps to take – I will outline them here and that should enable you to determine your own preferred strategy.
TRAINING
Hold a training session and discuss with the staff the RRPs so they know why each review point is raised and what they need to do to ensure that these RRPs do not appear in future reviews. This should include all manager RRPs and as many of the partner RRPs that staff can be held accountable for.
It is probably better not to cover more than 10 RRPs in any one session so select those that recur regularly.
Next step: this needs to be reinforced; here are some options:
- Include a RRP check list on each file (possible, but not recommended – I am not seeking to see you introduce too many new forms).
- Include your RRP checklist together with any additional commentary on your intranet (maybe a good idea).
- Have a designer create an A1 poster of these RRPs. I have clients who have done this – the poster has been attractively designed and is on the walls of staff areas. Personally, I like this approach as it is creative and reinforces good practice. While the first two work they are more traditional (My preferred approach is this one as I am believer in what I call vision navigation).
The key then is to hold each staff person accountable for ensuring they do not see these RRPs arise on any of their jobs.
PARTNER RRPS
Now onto partner RRPs. The first ask is for partners to move on from being nit pickers. Ouch! Nit picking review points should be included on the list for staff by managers.
Now there are the important ones. Often managers have the same qualification as partners or at least are qualified by experience. What are the partner RRPs? As with the staff managers need to take steps to eliminate partner RRPs.
CONCLUSION
In this series of articles, we have looked at a range of areas concerning improving efficiency. This has covered topics such as pricing, budgeting, time management, client caused extras and regular recurring review points.
How to implement and ensure success – that will be the subject of my Job Margin Improvement Bonus Issue in my next May article. Watch this space…
