Paradigm Shifts that are Changing the Accounting Profession

This article was original published in the October 2016 CPA Journal, The Voice of the Profession, a publication of the New York State Society of CPAs. It has been posted here with permission of the Publisher.

The accounting profession is one of the slowest to change in the country. Maybe it’s due to CPAs’ natural conservatism, but the accounting profession is far behind others in adapting to 21st century business practices. The following longstanding paradigms need to change order to move the profession forward.

Timesheets Are Ruining Your Practice

No one likes timesheets, but almost all accounting firms use them. A firm sets various charge rates and then requires staff to work mandatory hours in order to bill accordingly. This model creates an incentive for people to work less efficiently in order to work their required hours. The best workers are given more work, since they are more efficient, and thus burn out faster. Meanwhile, slower, inefficient workers rise to the top with the same amount of hours and less work. The client, on the other hand, values the work being done correctly and on time; in other words, efficiently. This is why smart firms are switching to value-based billing, which prices jobs based upon the value to the client as opposed to hours worked.

Titles Create Fragmented Firms

Titles promote the idea that new workers have nothing to contribute to a firm, or that certain people cannot do certain tasks because they aren’t senior enough. Titles create a culture that rewards longevity, not talent. If someone who has been with the firm for one year is clearly smarter, more talented, and hungrier to do work than a manager who has been with the firm for 7 years, why should that manager oversee the more talented staff? How does a firm tell a client that it’s put its best person on the job, but that person hasn’t worked long enough to make manager so he’s just a senior associate? This is not to say that a natural hierarchy is not important, but a title-driven workforce does not promote innovation or cultural growth.

Mandatory Anything Is Bad

Mandatory retirement age, mandatory CPA exam passing, or mandatory work hours during tax season: firms should avoid setting all of the above. There are always exceptions to rules based on circumstances. Every employee is unique and possesses a certain set of skills to that add value to the firm. If a partner wants to work and is contributing to the firm in a positive manner, why should he be forced to retire? If an accountant is one of the firm’s best tax preparers but doesn’t want to get certified as a CPA because he enjoys his current job and doesn’t want to take time away from his family, why should the firm make him? Proper management, like proper accounting, involves an acute understanding of each individual’s unique circumstances.

Flexibility Is a Must, Not a Want

An accounting firm must offer its team members the flexibility to work from anywhere, any time they want. The most important metrics to evaluate team members are “Did the work get done on time?” and “Was the client happy?” As long as the answer is “Yes,” then the journey to that result doesn’t matter.

Cubicles Are Demeaning

There are very few things more depressing than walking into a large office space consisting of row after row of cubicles. Firms that value their team members should give them an office or create a unique shared work space that makes them proud to come into the office.

Model Your Culture after Technology Firms

when asked where they want to work when they grow up, elementary, middle, or high school students will almost always say Google, Apple, Facebook, Snapchat, or another technology company. Few will ever say, “When I grow up I want to work at PWC, because they are super cool and treat their employees well.” So why do firms still model their cultures and firms after these places no one dreams of working at? Google has free cafeterias and nap rooms. PWC has a filing cabinet with old RIA checkpoint manuals. The most talented youth want to go work for companies that are “cool.” CPA firms might not have the resources of a Google or Apple, but they can still be cool. Why not add a mini-fridge stocked with drinks beyond instant coffee or a ping-pong or foosball table to the break room, or host free yoga classes every week? Creative thinking in this area could improve employees’ impression of the office by leaps and bounds.

Millennials are Problem Solvers, not Problem Creators

The problem with most firms is that they are run by old people who don’t understand that a business revolution is happening. Millennials have grown up witnessing the mismanagement of businesses, and they are sick and tired of it. They are tired of the layoffs, unfair business practices, slow technology adoption, sexism, racism, lack of transparency, and greed that has taken hold of a lot of the largest companies, accounting firms included. The good news is that they are also willing and capable of transitioning these firms to the 21st century and ushering in a new era of the accounting profession. A firm has two choices: build a firm culture that attract millennials or keep the status quo culture of 20th century firms in place while young accountants build the firms of the future themselves. The firms that pick the former are setting themselves up for success, the latter for irrelevancy.

One constant in any industry is that change comes whether people want it to or not. Accounting firms that embrace the changes currently sweeping over American business culture will reap the benefits of being in the vanguard of progress.

By Jason Ackerman, CPA, CFP®, CGMA