high performance cpa firms - cchuc12
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The real danger is not in failure but mediocrity. What separates the best firms from the average firms? What are the critical success factors used in the largest CPA firms that can make even the small firm thrive in this chaotic environment? You will learn about the five R's ROA (return on attention), ROL (learning), ROC (culture) and ROI, ROP (Return on People) and how you can apply them to your firm. This is preso on High Performance CPA Firms presented on Nov 5 & 6, 2012 at the CCH User ConferenceTRANSCRIPT
Building the High Performance CPA Firm How to get a bigger BOUNCE!
Tom Hood, CPA, CITP, CGMA CEO
MACPA Business Learning Institute
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Operating as a shared vision firm versus as a shared services firm. Operating as a one-firm mentality. Most just do not get get it! Getting everyone on the same page. We are in a mature market so the biggest challenge is continuing to grow in this market and expanding into complimentary markets Staffing, net billing per charge hour Finding and hiring top talent Growing top line revenue. Finding and keeping young talent. Motivating staff Achieving a unified strategy among the partner group. Pricing Maintaining a work/life balance. getting all on the same page We have several partners. We all agree on a vision for our firm, we just can't agree on how to get there. We can't seem to jump start the process. Effiency teaching staff analytical thinking Identification and Development of the next generation of leaders Moving from a silo practice to one firm mentality. Upcoming partner retirements, some greed by old group on buy out, some lack of commitment by the new group. Too much self interest, not enough "best interests of the company" thinking. Growth So if you don't have the commitment from the owner group to spend the time (retirement etc). Do you just blow the whole thing up before wasting your own valuable time ? Growth, expanding niches Finding and keeping young talent that are eager to advance within the company Finding time to be strategic. Too much time working in the business and not on the business. Qualified staff Senior/founding partner is retiring in a year. Challenge to keep his client base in firm Significant amount of growth and the decision makers were good at running a small to medium firm. However we are moving to become a large firm, and they don't know how to operate as such. Making a plan. Not having our work product look like a commodity. All of the above Changing partner behavior to align with strategy
What’s your biggest challenge?
The new normal is anything but…
• Change • Complexity • Compliance • Convergence • Compe33on
MANAGING THE SEA CHANGE
Changes in the Profession
55 Firms in T100 Mega-mergers
Counter trends? www.bizlearning.net
What is your
biggest challenge?
AICPA Major Firms Group
www.bizlearning.net
17
Top Ten Issues for MFG 1. Regulatory/Legislative (56) 2. Private Company Leadership (47) 3. Capital Markets Awareness / Recognition (34) 4. Rethinking Business Model (25) 5. Protect Audit/CPA Franchise (20) 6. Risk Management (Audit efficiencies) (20) 7. Leadership Development / Succession Planning
(19) 8. Global / International (Clients / IFRS / Branding)
(17) 9. Leveraging Technology & Social Media (17)
18
2011 AICPS PCPS MAP Issues
www.bizlearning.net
The Three Barriers to Growth 1. Need for Executive Team to grow in
their abilities to delegate & predict (connect & collaborate)
2. Need for systems and structures to handle complexity that comes with growth
3. Need to navigate the increasingly tricky market dynamics of a larger, rapidly changing marketplace
Source: Verne Harnish - Author of Mastering the Rockefeller Habits
What does a high performance firm
look like?
A tale of two firms
• One founded in 1921
• One founded in 1977
• One has 967 staff & $202 million in Revenue
• One is Top 20 and the other is no longer in existence
www.bizlearning.net
A tale of two more firms…
www.bizlearning.net
And two more…
www.bizlearning.net
Foundation of best practices
And
Processes, business management, people and solutions that are
adaptive to change
Being Future Ready Relies On: The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.
CCH Future Ready Research -‐ 2011
• Staffing & Firm Culture
• Workflows & Processes
• Tools & Technology
• Practice Management & Analytics
Future Ready Firm
CCH Future Ready Research -‐ 2011
What sets you apart? How are you different?
The Guru on Firms
“Those people talk about having a strategy with a longer-term view, but the operational reality is vastly different. They want the money right now. In practice, cash is everything… What's missing are whole firms that are built on discipline and strategy.”
David Maister - FastCompany
ROI = ROP
ROP = ROA x ROC x ROL
Return on Investment Cri;cal Areas Investment Return
People 2% 20%
Processes 2% 15%
Organiza3on Structure 2% 10%
Culture 1% 20%
Leadership 1% 10%
Informa3on 10% 15%
Technology 82% 10%
www.bizlearning.net
Source: Informa3on Masters – Secrets of the Customer Race by John McKean
The 5 questions you must answer
• Who are we & why do we exist?
• Where are we going? • How are we going to get there? • How is our progress? • What happens when things
change? www.bizlearning.net
Lessons from the Built to Last: 1. Clock Building, Not Time Telling 2. Embrace the Genius of “AND” 3. Preserve the Core & Stimulate
Progress 4. Seek consistent alignment Source: Built to Last – Jerry Porras & Jim Collins
Why Reassess & Renew
Where are we going
Link & Leverage
How are we going to
get there
Why we do what we do. Purpose &
Values
Our strategic Initiatives and priorities
How are our day to day activities
connected to our purpose & strategy
What did we learn? How is the world changing?
Critical Turning Point The
Bounce
Copyright 2012 – Business Learning Institute
Our envisioned future. What do we want to be, do, create, experience,
and have?
High Performance Organiza3ons – Strategic & Systema3c
Start with why?
www.bizlearning.net
People don’t buy what you do, they buy why you do it!
Lessons from Steve Jobs
www.bizlearning.net
Steve Jobs returns to Apple aSer being away for 13 years on Jan 8, 1999, $1 billion in red.
Sinek’s Golden Circle
www.bizlearning.net
Conven3onal Remarkable
Strategy as Process: Our i2a Framework
www.bizlearning.net
Turn the Flywheel with Alignment “Alignment is a mode of belonging that is not confined to mutual engagement. The process of alignment bridges time & space to form broader enterprises so that participants become connected through the coordination of their energies, actions, and practices. Through alignment, we become part of something big because we do what it takes to play our part."
- Etienne Wenger Communities of Practice
www.bizlearning.net
Alignment focuses on the future and builds trust.
Alignment is about getting their discretionary effort.
Why executives should care about Employee Engagement
www.bizlearning.net
Gallup studies proved that corporations with higher engagement levels generated: • 27% higher profits • 50% higher sales • 50% higher customer loyalty • 38% above average productivity “Employee Engagement is an outcome-based concept. It is the term which is used to describe the degree to which employees can be ascribed as aligned and committed to their organization such that they are at the most productive.”
-The International School of Human Capital Management
Example of Strategic Plan on a Page
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Produced for AICPA
Example of Strategic Plan on a Page
www.bizlearning.net
Strategic Thinking – not episodic strategic planning
What happens when things are changing
fast?
www.bizlearning.net
The Cameron Paradox
www.bizlearning.net
The faster things change, the more important it is to look ahead. Kim Cameron -‐ Associate Dean, Execu9ve
Educa9on, the Ross School at University of Michigan
30 Future Forums 1,000 CPAs Identified these top trends
What CPAs think about the future
http://www.bizlearning.net/live/i2afutureforums
Use your scouts
i2a Process Map for Accelerated Strategic Growth
INSURE YOUR STRATEGIC CHOICES AND DIRECTION BY COLLECTIVELY CONSIDERING
YOUR PAST, PRESENT AND FUTURE CONTEXTS ANNUALLY.
What do I know?
Find the edges of what you know and
expand them.
FIRM
LEV
EL
Share with others and
Inspire to action
OFF
ICE
& IN
DU
STRY
/SER
VIC
E G
ROU
P LE
VEL
So what? Seek the
insight past the obvious.
Imagine the
possibilities and create your desired future.
Develop Firm-wide Strategies
IMPLEMENTATION OF STRATEGIC PLAN
EC = Executive Committee OMP = Office Managing Partners
GL – Group Leaders PTR = All Partners
MGR = Managers S&A = Staff and Admin
www.bizlearning.net
Feedback From a Session 250 partners of a top 15 firm
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Can you pivot?
Pivot = A Change in STRATEGY without a change in VISION
www.bizlearning.net
Eric Ries – author of the Lean Startup
Training as a Competitive Edge
In a world of unrelenting change, about the only sustainable advantage is learning. Competitors can copy your products, duplicate your technology, and replicate your processes, but as long as your organization is learning faster than theirs, you will always remain ahead.”
David Garvin – Harvard Professor
Find your Edge In a period of rapid
change and increasing complexity, the winners
are going to be the people who can learn faster than
the rate of change and faster than your
competition. - Tom Hood, CPA,
CITP,CGMA CEO of the MACPA & the
Business Learning Institute
49
50
Superior Talent Generates Results"
& Superior Learning Strategy Generates Superior Talent
ü 26% higher revenue per employee ü 40% lower turnover among high
performers and 17% overall ü 29% higher level of engagement ü 36% higher readiness in leadership
and management
ROP = Return on People
What today’s workers want
Think A M P • Autonomy • Mastery • Purpose
• Engage your top performers • Coach tomorrow’s leaders • Manage your Millennials
52
Training and development is the most highly valued employee benefit. The number choosing training and development as their first choice of benefit is three times higher than those who chose cash bonuses.
PWC Report - Managing tomorrow's people: Millennials at work: Perspectives from a new generation
Benefits to organizations
www.bizlearning.net
h[p://cpa.tc/bounce
www.macpa.org
Customized to meet your firm Competencies and aligned with your strategy
Training aligned to strategy creates employee engagement
www.bizlearning.net
Gallup studies proved that corporations with higher engagement levels generated: • 27% higher profits • 50% higher sales • 50% higher customer loyalty • 38% above average productivity “Employee Engagement is an outcome-based concept. It is the term which is used to describe the degree to which employees can be ascribed as aligned and committed to their organization such that they are at the most productive.”
-The International School of Human Capital Management
How do you tip the odds in your favor?
• Engagement • Alignment • Commitment • Accountability
www.bizlearning.net
Strategy as Process using a simple framework that can be repeated
And cascaded throughout your organization
Rocket fuel for strategy
Cascading Alignment throughout the organization creates Commitment
Firm-‐wide
Regional & Prac3ce Levels
Office Level
Individuals Align Their Goals to the Firm
Cascading by understanding the top level goals and linking the next level down through the organization
Sample alignment worksheet from
MACPA
www.bizlearning.net
The Opportunity – Be the House
• 15 X – ROI on Strategy as Process & Alignment (Jim Collins – Built to Last)
• 8 X – Engagement & Trust (Gallup)
• 10X – Return on Leadership (Information Masters)
• 20 X – Return on Culture (Information Masters)
• 3 X - Return on Positivity (Dr. Barbara Frederickson)
“In order to buy-in, I have to weigh in.” – Pat Lencioni www.bizlearning.net
Inner Circle Bought-in
Informed Leaders I support it
Pragmatists I’ll wait & see
Skeptics Prove it to me
No-Nos I don’t like this
Tipping point which way will they go?
This is your risk point!
What can you do to boost your odds?
www.bizlearning.net
Where do you start?
• Identifying & Correcting Misalignments • If this is our purpose and values and these are
our strategies, what are the obstacles that get in our way?
• Creating new Alignments • What mechanisms do you have that reinforce
your most important initiatives? • Granite Rock – short pay • Onboarding? • Innovating?
www.bizlearning.net
Where do you start?
• Build on Strengths • Seek High Leverage
Opportunities • Involve your whole firm • Leverage Technology
www.bizlearning.net
It is more important to have your team:
• Thinking strategically than having a strategic plan. • Understanding the direction and foundation (vision, values
& strategic intent) of the firm than having a detailed five-year plan.
• Engaging in the firm’s future as a whole organization, not just the partners.
• Aligning and on the same page than working independently in their own silos.
• Engaging and participating than being idle observers. • Focusing on the future than questioning the past. You need a framework that allows you to engage and align your firm and engage your people in the meaningful work of your organization. This increases buy-in and discretionary effort that defines high performing organizations.
www.bizlearning.net
• When it comes to retention, employees are telling us that leadership matters:
• A workforce is far more engaged and committed when it trusts its leadership, receives clear communications about corporate strategy, and believes its leaders have the ability to execute on that strategy. In other words, employee retention is not simply an HR function; it should be driven by business leaders.
www.bizlearning.net
Setting context & defining reality
The four most important words for organiza3ons are, “what do you
think?” -‐ Tom Peters
We often attribute success, or lack thereof, to inanimate objects like systems, processes, infrastructure, and strategic plans. The reality, however, is that nothing NEW happens unless we set in motion. We must put our shoulder to the flywheel of positive change and use our network to exponentially increase our impact. This is leadership in the new normal!
Tom Hood, CPA.CITP CEO
Maryland Associa;on of CPAs Business Learning Ins;tute
(443) 632-‐2301 E-‐mail [email protected]
Web hUp://www.macpa.org Blog hUp://www.cpasuccess.com hUp://www,bizlearningblog.com
www.cpasuccess.com
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