Is Variety the Spice of Life or a Realization Killer?

Understanding the Difference Between Variety and Variation

Variety is the spice of life. Isn’t that how the saying goes? I’ve said it many times because I believe it’s true. It’s great to have options on restaurant menus… to have cars come in different colors and models…to be able to vacation in a different locale each year. Things would definitely be boring without the options variety provides. 

Likewise, it is also good that you have a diverse work environment and a diverse range of clients. This variety allows for individual and personal growth and contributes to workplace satisfaction.  

Variety is not the killer of realization. However, variation can be.

Personal Preference and Profitability

Variation in a process shows up a number of different ways. Each time a process in your firm varies, you invite the opportunity for errors, re-work, client dissatisfaction and write downs. This is a result of gaps in one’s expectations and understanding.

If two different clients drop off information for their tax returns today, would their returns be filed at the same time? Even if these returns were started at different times, would it take your firm essentially the same amount of time to prepare, review and finalize the returns? If you’re like the many accountants I talk with, you’ll answer that question by saying, “it depends on the partner.” Hearing that, others in the room would chuckle. It seems as if there is always widespread agreement that this statement is true.

You’ve sacrificed and worked an incredible number of hours to get where you are today. Your reward is this ability to have things done your way. After all, your way works, doesn’t it? The business gets done, the clients still get billed and the firm makes money. That’s all true. However, as a business owner, shouldn’t firm profitability override your preferences?

Loss of Productivity Stems from Variation

Can you answer yes to any of the following questions?

  • After preparing a return, does your staff reorganize work papers just the way you like them for your review?
  • Do you view review notes as a method of training?
  • Are review notes laced with commentary or open-ended questions?
  • Do you or your staff double or triple check a return just to make sure it’s correct before delivering it to the client?
  • Are new staff members allowed to do things the way they did them at a previous firm?

On the surface, these issues don’t seem like a big deal. But for every yes you answered, you are losing productivity. Think about the impact these activities have on staff. How much time does it take your staff to re-organize work papers just to suit the reviewer’s preference? And think about your new staff members. Would you rather they learn the preferences of all your partners or focus on the software, the business and everything else they need to know to be successful?

Let’s look at this from a numbers perspective, too. Let’s say it takes someone an extra five to 10 minutes each time they do something special for you. Now, multiply that out by the 100 returns they work on. That equates to a lot of 0.1s added to work in process. That’s time that could be spent doing other things. Time that’s not factored into the price. Time that can increase your profitability.

Consistency Improves the Process

Chances are your seasoned staff can easily rattle off how much time they waste accommodating preferences that don’t add value to them, the client or the return. Six Sigma specifically hones in on variation and the importance of replacing it with consistency. When you eliminate personal preferences, returns can be prepared and reviewed quicker and with greater accuracy. When that happens, realization goes up and the billing cycle accelerates. The quality of work will also improve as staff new and old will learn one agreed upon way to do things, the firm’s way.

You can use Six Sigma, a client-centric, people-centric, team-based methodology, to create a more profitable way to serve clients and improve your firm. Work on eliminating the variation and enjoy the variety.

Lean CPA
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