Are you promoting the wrong behavior in your firm?

"Reduce your chargeable hours and be effective."

That line sounds like an awfully naïve thing to say in a historical CPA firm. But it is a counter-intuitive truth that firms will begin to discover, if they haven't already. Why? Well, if your firm is constantly harp­ing on charge hours, you'll get charge hours. But how effective those charge hours are is another story all together. As a result, you may be taking more time to do the same amount of work, which does not benefit the firm or your clients.  

This issue becomes very apparent in firms imple­menting Lean Six Sigma. Because firms that focus on effectiveness want to take less time to do more work and with a higher level of service.

What is your firm promoting?

If your people feel they are being judged on how many charge hours they can rack up, it is likely you are encountering inefficient staff performance, and projects are more than likely dragging out. As a re­sult, client satisfaction may be suffering.  

Conversely, if your staff is more concerned with being effective, you will see more efficient perfor­mance. Projects will be completed in a timely fash­ion, resulting in cash receipts coming in earlier. Cli­ent satisfaction will rise as you find more time in your busy schedule to spend with them.

What can this lead to?

By focusing on reducing your chargeable hours through effective process improvement, you'll get the same work done in fewer hours. Just think of the added revenue that could be generated from the additional capacity you will now have in your firm. Just multiply your average billing rate by the amount of new hours identified (that extra capacity you've gained) and you'll see the potential. And if you value bill the services, you'll be ahead of the game - your fees will be similar and you will have additional capacity. All you have to do is motivate your rainmakers to go out and find new business.  

Those laggard firms won't know their true capacity. While they hire additional bodies to service more work, leading firms will fill in their capacity first be­fore hiring - dropping more dollars to the bottom line. What shareholder doesn't want that?

Lean CPA
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