Chances are your firm’s plans for growth are based on the number of new clients or new engagements you need to take on. However, to take on more work, you need to be able to get the work done.
In many firms, the problem isn’t finding clients or work; it’s finding the capacity. Unfortunately, no silver bullet exists to solve the profession’s capacity woes. So, it’s time to think differently about capacity and how you approach workload management.
Everyone is well aware of the
For years, we’ve recommended firm leaders get comfortable hiring non-CPAs. And while that’s still a good component of an overall talent strategy, it’s crucial to realize that the talent shortage isn’t confined to the accounting profession. It’s a phenomenon affecting the entire workforce as we grapple with a demographic shift of unprecedented proportions.
In most developed countries, a
It’s a global challenge, demanding innovative solutions and rethinking traditional workforce strategies.
How to build firm capacity
Building firm capacity in the face of persistent talent shortages requires a multipronged approach that goes beyond the traditional methods. When you can’t simply hire more people, you need to make the most of your resources, optimize processes and explore innovative approaches to workload management.
Here is a set of strategies firm leaders can employ to increase capacity and sustain growth.
1. Automation. Automate routine tasks to free up valuable time. Automating data entry, report generation, engagement letter creation, invoicing, account reconciliations, audit testing, e-file authorizations and other manual processes can save staff time, allowing people to focus on more complex tasks. Some automation opportunities may be available in your existing technology stack, or you may need to look at new platforms that integrate with your current systems. Some popular ones include Microsoft Power Automation, Power Apps, UiPath and Blue Prism.
2. Outsourcing. Consider outsourcing non-core activities. By moving tasks like payroll, bookkeeping, tax return preparation, marketing and more to external providers, the firm can focus more on strategic, high-value services that boost growth. Remember, outsourcing comes in many shapes and sizes. It may be on-demand, seasonal or interim workers, or long-term, dedicated recurring workers. While we tend to think of offshoring, where some or all of the process happens in another country, other options include:
- Onshoring. A third party in your country does the work.
- Insourcing. The talent is an inclusive member of your team.
3. Process improvement. Automation and outsourcing start with efficient and effective digital processes. Paper-based processes don’t work with someone in another city or country, and trying to automate inconsistent processes wastes time and resources. Evaluate and optimize your firm’s operational processes and address bottlenecks or inefficiencies to enhance overall productivity and create more capacity. Work toward getting processes across the firm in sync. You’ll have a tough time creating a positive client experience when you have multiple ways of doing things and using different technologies across departments.
4. Client filtering and revenue replacement. Not all clients contribute equally to your business, but when we talk to clients about client filtering, we often get pushback. Firm leaders just aren’t willing to consider the loss of revenue that comes with letting go of clients who aren’t the right fit for their firms.
That’s why we’re changing the conversation to revenue replacement. Let’s say your 1040-only clients bring the firm roughly $160,000 in annual revenue. You don’t want to lose that revenue, but what if you could replace 160 individual tax clients, each paying $1,000 annually, with eight advisory clients paying $20,000 annually? Most firm leaders are much more willing to part with the 1040-only clients when they have a plan for replacing them with right-fit clients.
5. Technology investment. Invest in modern software and tools that improve efficiency and support the above-mentioned strategies. Technologies such as cloud computing, artificial intelligence, and machine learning can drive productivity and make capacity constraints less of an issue.
6. Talent attraction and retention. While hiring more people isn’t the answer to all of our capacity woes, being an employer of choice allows firms to attract and retain the talent we do have available. Offer competitive compensation and benefits, flexible work options, and opportunities for professional development. Look beyond accounting graduates and CPAs. Chances are, many tasks are currently being handled by CPAs that don’t require a license. When you break down your processes into individual tasks and take a team approach to getting the work done, the accountants in your firm will have more capacity than ever before. You’ll always have far fewer people leaving the firm due to burnout.
Building capacity is a crucial building block for your firm, yet it can feel overwhelming if you try to tackle all strategies at once. So select two or three of the methods outlined above and start leveraging them in your firm. Once you get comfortable with those, add others.
Crafting a strategy that fits your organization’s individual needs allows your team to reach its full potential and allows the firm to achieve its growth goals — and that’s an investment worth making.
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