According to the latest IPA benchmarking survey, CPA firm profits are under pressure. Across the Top 100 firms in that survey, talent costs are increasing faster than billing rates, resulting in a squeeze that’s reducing the bottom line. There are many strategies you can employ to relieve the pressure, and in this blog, we’ll focus on a concept called “highest and best use” and the resulting impact it can have on your team’s ability to leverage.
In the real estate world, highest and best use says that property, a scarce resource, should be valued based not on current use, but on the potential application of the land that would produce the highest value for the seller. In public accounting, our most limited and precious resource is our team’s time. If we want to be more profitable, we must ensure that each person is focused on their highest value activities. We only have so many hours to sell to our clients, so we must carefully allocate those precious hours in the right places.
As a result, each of us is charged with working at our own highest and best use, which means we’re doing the work that only we (or others at our level) can produce, that will create the highest level of value for the organization. For example, partners shouldn’t be doing manager, staff or admin-level work but must focus instead on tasks that require a shareholder’s experience and expertise. Tasks that aren’t partner-level should be leveraged or “pushed down” to the managers, staff and administrators on the team. For example, on the tax side of the business, partners should not be processing or preparing any tax returns because those tasks can be effectively completed by other, less experienced members of the team.
The same highest and best use requirement applies to managers (leveraging to seniors, staff and admin), seniors (leveraging to staff and admin) and admin (leveraging to admin with fewer years of experience and expertise). As each of us moves up the ladder in our organization, we gain experience and skills that prepare us for an elevated level of work. Elevating as a leader isn’t just piling more work on, so it’s critical to give simpler things up and progress our responsibilities to reflect our current highest and best use.
Working at our highest and best use means we’re more likely to feel engaged and motivated each day to create successful outcomes with our team and clients. The days include tasks that challenge and excite us to learn, grow and develop new skills. As we move up the ladder and progress the work we can manage, we increase our value to the clients and our organization. This means we can command higher billing rates and salaries as well.
Some of us, however, are not doing the work that fits our current title and capabilities. We’ve “stalled out” in our progression and are managing tasks that don’t fit our level. This can happen for a number of reasons, including:
- A lack of resources that we can leverage to due to turnover and inconsistent retention strategies
- Our organization’s ineffective recruiting strategies or not hiring ahead
- Not knowing how to effectively leverage to the team
- Feeling unempowered to leverage, or that we don’t have the authority to access available resources
- Fear that we don’t “have what it takes” to move to the next level of tasks and responsibilities
- Financial rewards focused on chargeable hours rather than leverage, incenting the team to hoard tasks and hours
- Working under leaders who are operating below their own level and “hogging” tasks that should be delegated
- Not having the courage to speak up and ask for higher level tasks
Each of us will benefit from regularly examining our current priorities or task list to discern whether we are working at our highest and best use, ideally at least once a year. Here is a five-step process to discover yours.
- Make a list of all of the “things” you are responsible for. Include the things that don’t get done unless you handle them, the things that people look to you for status or information, and what you plan for on an ongoing basis. Consider client relationships, staff you mentor, business development responsibilities you own, internal responsibilities and/or processes you manage, external relationships you manage, etc.
- For each “thing” on your list, note next to it the answer to this question: When I manage this task or responsibility, am I operating at my highest and best use? Does it require someone with my talents and experience?
- If the answer is NO, note next to the item a likely candidate who might be better suited or is strong in this particular area. Get buy-in from him or her to own this “thing” in the future. If the new owner needs training or practice before he or she can manage the task, begin the mentoring process. If there isn’t someone on the team who has the necessary skills, even with training, group tasks together and build a case for hiring the right individual to take them on.
- If the answer is YES, and you enjoy the task and would like to continue being responsible for it long-term, then you have discovered something that is your highest and best use. Make sure that this “thing” is in your role description and others are aware that when you operate in this area, you are working according to your strengths. Ideally, you’d like to do more of these types of tasks in the future.
- Once you’ve dealt with the things you’re currently responsible for, generate a list of the new things you’d like to take on to better fulfill your maximum potential. Discuss your wish list with your mentor, career advisor and other leaders and gain commitment for moving toward a role that has you producing the greatest value for your firm.
As you grapple with your highest and best use, be sure to teach the concept to others on your team. No matter their level, they are likely to be handling tasks that could be better leveraged. Ensure they know how to effectively move towards work that is commensurate with their role and will maximize their value to the firm.
I’m envisioning a possibility of a high-performing team that gets the very best out of its members by assigning them to challenging and engaging work. What will it take to get you and your team there, and start driving more profits to the bottom line as a result? Undergo this five-step process and begin your journey today!