6 part series on Change for Accountants
In my experience, when I sat in a chair like yours, the failure to implement could be explained by a fear of change or failure to change.
This series investigates 5 Key Barriers to Change that are specific to Australian Accountants.
Specific Barriers to Change for Accountants
There are common reasons why we find it hard as Accountants to change what we are doing.
- It’s easier not to change (TA69)
- Established industry patterns don’t support change (TA70)
- Concern about negative reactions from clients (TA71)
- Partners complicate the decision making process (TA72)
- Procrastination (TA73)
Over the course of the series I’ll look at each barrier separately – discussing the nature of the issue and why it occurs, before suggesting action/s to move beyond the barrier.
Let’s be frank, the typical accountant is pretty certain of making a good living, without having to do much different. At the end of the day, the typical accountant’s profit model has not changed much over the last 50 years.
Not changing puts us at risk of going backwards…
In 2006 Rick Payne sketched a disappointing picture of profit within the industry. He noted that the average profitability per partner in 1960 was approx $125,000. In today’s dollars that would be in excess of $378,000. However, in 2006 average profitability was only $250,000.
Working hard is no guarantee that you can change
In my experience, I found that when we first tried to change, we were focused on the wrong indicators. This just made some things harder!
For instance, we consistently worked hard on trying to reduce our ridiculous write-off rate of 12.5%.
These are some of the things we tried (unsuccessfully):
- breaking down timesheets even further
- providing more staff training
- Performance managing people who were not performing to standard
- Putting job budgets in place
- Educating better clients on how to provide their information
- Developing better ways of doing the same things.
Despite our efforts, we could only reduce our write-off rate to 6%.
Eventually we learned that doing the same thing over again really didn’t work for the effort and costs involved. It was then that we realised a major paradigm shift was required for us to achieve our vision of becoming a ‘business specialist firm’.
This actually meant ditching timesheets and moving to value pricing. The result was much more than than we bargained for.
Were we scared? Oh yeah! I spent many sleepless nights thinking we were going to stuff our practice up.
This shift however, was so big that it became the linchpin that drove us to exceed more than we ever thought possible.
The change got us better at articulating value and gave us the courage to charge more for value add activities.
We were able to achieve:
- Higher average fee per team person,
- greater profitability, and
- more cash in our pockets.
You see the real issue at hand, was that we had a cultural problem around the way we priced and charged!
Despite taking this massive risk back in 2003, the benefits were enormous. I’d say the biggest unexpected benefit was that we overcame our fear of changing and evolved to a truly proactive service provider.
When we moved from timesheets to value pricing and timeless culture, …
- could no longer track the same write-offs (as we weren’t keeping track of time)
- ave. fee per team member went up, indicating that for the same amount of time, we billed more. We were getting a better return on hourly rates, when all else remained the same.
Keys to Overcoming a Fear of Change:
You may need to start with a Mindset Change. This can be as simple as acknowledging that way you’re doing something is NOT working.
Also remind yourself that by taking action you are ensuring that you have a choice around what you are changing, instead of being at the mercy of external factors.
The secret is to make a change that’s bigger than your level of resistance. eg. The next time a client asks you to do a project, try scoping it and then doubling the price (assuming that the value delivered is 3-5 times what you charge!)
If that’s too big, try this one…
A firm I am working with just sold $100,000 in lower end clients to a competitor. Within a week of signing on the bottom line they picked up a $50,000 new client who came on board looking for an accountant who worked with bigger clients!
How the change process can be even easier…
You may be wondering what it takes to make these changes, how long the process will take, how to ensure you maintain momentum and take the right action when necessary.
I can tell you that I take my firms through this process, whilst keeping up with existing client demand, within four months. That is, four months before the new Value Add Services model starts to produce effective outcomes and return on investment trickles in.
All it takes is a consistent half day commitment per week from firm partners to take the necessary action and ensure the process continues.
My role is to manage the transition in a way that:
- maintains existing productivity and client delivery,
- ensures momentum towards your end result, and
- is ultimately successful in delivering greater profitability after four months.
What is your experience?
Have you got reluctance to change in your own practice? Where do you notice it? Is it around a process, is it around adopting methodologies, or is it within your people?
I’d love to hear from you about this topic. Feel free to comment below, or email me directly.