Capacity, The Great Resignation, and Strategic Growth
We are kicking off this inaugural Managing Partner Minute where we’ll pause to share the top trends, leadership ideas, and musings ConvergenceCoaching Partners want to share with our Managing Partner clients and friends. Our goal will be to include a Managing Partner Minute blog once a trimester with these highlights and include strategies and actions you can implement to address them. Please pass this blog along to other partners and leaders in your firm so they are on the same page and can assist in implementing the ideas you agree to tackle.
Today, the #1 priority for every Managing Partner should be YOUR PEOPLE. You know – or at least have probably heard – that your team members are your number one asset – even above clients. Without your team members, you wouldn’t be able to serve all your great clients, innovate new solutions and services, keep up on the volume of change and pace at which it is coming, and more. So, our top three people strategies for you are:
- Capacity – no matter your firm size, the number one challenge for firms across the country is capacity. We were experiencing capacity challenges in 2019 prior to the pandemic, and when the pandemic hit some firms got concerned and reduced staffing. Soon, though, it was apparent that clients needed more services than ever, and the extensions, rapid new legislation releases, and more, put an enormous strain on your team. Add to that, the struggle to find and retain top talent is REAL. Address the capacity challenge in your firm by taking immediate action now, perhaps with some innovation or investments, such as:
- Incorporating non-traditional staffing into your mix, including fractional employees, outsourcing, offshoring and hiring non-CPAs in new roles where you don’t need a CPA to do the work. You can read more about these options in my recent blog: Solve the Capacity Challenge with Non-Traditional Hires.
- Growing your HR function so you have the fire power to manage it all. If you have more than fifty employees and don’t have a full-time recruiter, start there. And not a recruiter who does a lot of other things. A FULL-TIME Recruiter. Part of the capacity challenge is growing and developing team members, and with all the initiatives around talent development, coaching, and learning programs, ensure you have enough team members to execute.
- The Great Resignation is a phrase coined by Texas A&M University professor Anthony Klotz and written about in national business publications and all-over social media. It is based on surveys that predict that 30 to upwards of 60% of employees will leave their jobs in the coming months. For instance, Microsoft’s Work Trend Index survey found that 46% of respondents were planning to move to a new location this year due to greater mobility and the rise in the work-from-home movement and 41% of those surveyed said they're mulling leaving their jobs. Why? Some speculate there is pent-up turnover from people who have held tight in their positions during the pandemic. Others say that the pandemic gave people time to reevaluate their priorities and degree of happiness in life, including their work, and this is driving the need to change. And, finally, people have realized that life is short, and it’s not worth feeling stuck in a company that is slow to change, tolerates poor behavior, or doesn’t provide clear pathways for advancement. The Great Resignation applies to all professions, including public accounting where capacity is already an enormous challenge.
So, what can you do? First, keep in mind that people are tender right now in ways that Jennifer Wilson asked us consider in Healing Our Psychic Bruises. We have to tread lightly with people and continue to seek to understand what they are dealing with or impacted by as we press forward with firm initiatives, client engagements, new services, technology implementations and more. Two specific areas to pay special consideration are:
- Performance Reviews – be careful and sensitize all leaders to tread lightly, recognizing that people are on the edge as you initiate performance reviews or feedback this year. You don’t want to push them over the edge, so consider what feedback must be delivered right now and what can wait. And, include as much gratitude and appreciation as possible. Share these ideas for 6 Steps to Pandemic-Sensitive Performance Reviews with your partners, managers, and HR professionals.
- Returning to the Office – another area to be sensitive and compassionate about relates to your plans for “re-opening” the office. During this pandemic, we proved that remote work works, and it is here to stay. So, that means you must prepare to manage a blended work environment with some people working in the office, some from clients and some from home or elsewhere and we can’t micromanage or dictate who has to return to the office, how many days a week they must appear and more. As you contemplate new remote and flex guidelines and expectations for where and when people work, be careful not to make broad mandates to be “back” in the office (your NextGen team members – and clients – don’t want to go back to anything, they want to progress forward). Instead, consider guidelines for “how we work” in this new blended environment, such as accessibility and responsiveness, and what the deliverables or client expectations may be. As you define your expectations, avoid these Four Reopening Mistakes Leaders Must Avoid.
- Strategic Growth – despite, or perhaps because of, the pandemic, most firms experienced growth in 2020 and are predicting growth in 2021. And, with that growth, the capacity challenge has been exacerbated. So, firm leaders must be strategic – and especially choosy – about their growth by:
- Slowing down sales, especially in very constrained practice areas. We get it, this sounds blasphemous to some, but in this market with all the services your existing clients need and the opportunities for new business, it’s important to balance growth with ensuring your team can handle the work without resentment. It can be demotivating for team members when rainmakers continue to bring in business when it isn’t clear how delivery will happen given staffing limitations. Slowing down sales isn’t a long-term solution, but until capacity is addressed, doing so is a smart staff retention strategy.
- Increasing fees – The standard 5% annual increase does not cut it, and we know some firms struggle with this increase. Your annual labor increase is 6-8% with raises and benefits, and that doesn’t account for investments in technology and other overhead. Work with your Service Line Leaders and partners to increase fees that are competitive and align with the value of the services you’re offering, remembering that this is a seller’s market. And as you increase efficiencies from process improvement and technology initiatives, please do not lower your bill!
- Defining and then focusing on your ideal target clients – which will help you know which clients to say yes to and which to say no to. Your ideal target client definition will also aid in identifying those clients that are no longer a fit that and should be transitioned out to help reduce the volume team members are experiencing. Doing so will free up time to serve the “right” clients when they come along or provide more value and solutions to existing clients. One of the times to cull clients is when a partner is retiring. Often, they have clients that are not a fit anymore, but the firm keeps them instead of getting honest and transitions them when the partner retires. Keep in mind that your team members are watching and respect leaders who make the difficult decisions for the long-term health and growth of the firm and question leaders when they don’t.
- Qualifying M&A opportunities carefully – so that you don’t perpetuate the drain on your people by merging with a firm that isn’t bringing qualified future leaders and enough staff capacity or is full of compliance clients with little opportunity for growth into “full-service” advisory clients. Your people are already burnt, so when partners talk about growing the top line with this strategy, it can feel hypocritical focusing on growth without addressing the capacity challenge you’re saying you’re committed to solve.
There is no better time to be in this profession! It’s full of opportunity, rewarding work, and great relationships. And we’ve never experienced a tougher time in the profession, too. So it’s up to you, Managing Partners, and to your fellow leaders to tackle these challenges head on and swiftly.
We welcome any questions or comments you have and any requests for help this blog may elicit. We welcome your thoughts on these ideas and any actions you’ve taken to address them, too. We’d love to learn from you!