We’ve already pulled back the curtain on trends and opportunities to innovate by visiting strategies of Top 100 CPA firms as well as industry thought leaders. Now, let’s pull back the curtain on what appears to be the primary growth strategy for large firms and certainly for our profession. As we will soon see, there will be no surprises behind this curtain but we may be surprised at the opportunities and challenges hidden behind this strategy.
I began the introduction to this blog series by quoting Barry Melancon at the AICPA Women’s Global Leadership Summit, when he stated that today is the slowest pace of change we will experience in our profession for the next five years. I also stated that during these next few years we will see our services, how we market, how we audit, how we provide consulting and even how we work being completely transformed. The status quo will not survive this exponential change. That hard trend is not intended to create fear, although it certainly will for some who are not aware and do not predict or adapt. To be #FutureReady, it requires a realistic look at the hard trends and opportunities we have, if we also transform. Yes, I know transformation is a big word in some respects but I think it accurately reflects what we are going to experience and we are already seeing it.
The economy and business climate have been very favorable the last two years and we have experienced growth overall for our profession as a result. We have also seen margins squeezed tighter and tighter especially on traditional compliance services. This fee compression has also offset some of the overall revenue growth.
This provides a situation behind the curtain where CPA firms are hungry for higher growth and increased profitability. Comparing notes from over 20 Top 100 managing partners and COOs, it’s apparent that everyone is seeking higher value work and a more relevant position as advisors for their clients. No surprises, right?
You hear it and read about it everywhere. CPA firms need to provide more advisory services and I believe this is the primary strategy for growth for almost all of the major firms.
Some firms are setting a target of a higher percentage of revenues for advisory services to overall firm revenues. It’s not rocket science, but it is easier said than done. So let’s pull the curtains all the way back and focus on probing questions, challenges or initiatives that might enable firms to successfully grow advisory services.
How do we become significantly deeper in industry knowledge and focus? Firms that have driven profitability by geographical offices are searching for ways to leverage industry expertise to provide opportunities for more consulting work. Some of these firms are reorganizing internally to align industry leaders as the drivers of growth strategy versus geographical leaders. Firms are recruiting, acquiring and merging in industry expertise and consultants. Firms are implementing recruiting strategies which are designed to identify and recruit key industry knowledge players.
Overall strategies include developing a more collaborative team approach to client service which is more consultative in nature. Today, clients’ needs are more complex and collaborative teams can solve complex challenges. Some initiatives include setting individual partner goals that align with more team member relationships, more services and targeted client service meetings. Firms are being more intentional in reviewing client relationships and setting priorities for team planning sessions on the client service plan and evolving needs. Team members serving top clients for firms are being required to have a written service plan which includes collaboration with subject matter experts (SMEs).
A challenge for all firms and our profession is to jump on the steep hill of learning. In fact, we must learn, unlearn and relearn in many cases. Firms are training on anticipatory skills like those taught by Tom Hood and his teams at Business Learning Institute and the Maryland Association of CPAs. Team members are being trained on asking probing questions. Fears of performing consulting work are being addressed. Overall, firms are taking an aggressive approach to build soft skills like emotional intelligence, communication, collaboration and critical thinking. The exponential growth in technology, systems and system controls require that our team members are tech savvy to assist clients.
Certainly, the hard trends for automation of compliance services and bookkeeping tasks point us in the direction of being more advisory. Many of the firm surveys show that firms are finding their most robust growth in advisory services. What tactics are working for your firm? What are we doing as individual professionals to be future ready for an advisory role? Based on the opportunities behind the curtain, what skills should we be working on? Aware, Predict and Adapt! #FutureReady