Guest Article: Navigating Through Preliminary Merger Discussions

Joe Tarasco

Joe Tarasco

Joseph A. Tarasco, CEO of Accountants Advisory Group

Most merger and acquisition deals typically go through five stages: preliminary discussions; transactional detail meetings and negotiations; an initial agreement outlined in a memo of understanding or letter of intent; due diligence; and the transaction agreement and signing of the partner / shareholder agreement.

Quite often, I am asked what are the pertinent types of questions that should be asked by the selling firm in a merger and acquisition transaction in the first few meetings. The following are some examples:

Vision, Strategic Planning and Future of the Firm

  • What is the vision and strategy for the firm for the next five years?
  • What is the culture of the firm?
  • Does the firm have an annual partner retreat and/or strategic planning meeting?

Partner Compensation, Management and Risk

  • How is partner compensation determined?
  • Do partners have annual goals and objectives? If so, how often are the partners counseled?
  • Are partners held accountable?
  • Describe your partner governance structure.
  • When was the last time you updated your partnership agreement?
  • Do you have partner meetings?  How often do you meet?
  • How is partner equity determined?
  • What are your average partner billing rates? Staff rates?
  • Has the firm gone through a de-merger or terminated any partners in the last five years?
  • Do you have any professional liability claims that have not been settled?
  • What has been your claim experience in the last five years?
  • What is the structure of your IT department?

Succession Planning and Professional Staff

  • How many equity and non-equity partners do you have?
  • Are any partners planning to retire in the next few years?
  • Do you have partner retirement payment projections for the next 10 years? Does the firm have a “cap” on retirement payments?
  • What is your staff turnover rate?
  • Describe your training program.
  • How often do you counsel staff?
  • What methods do you use to recruit staff?  Have they been successful?
  • Do you hold staff meetings?
  • What is your current staff-to-partner ratio?
  • Who oversees scheduling?
  • What is the structure of your HR department?

Partner Marketing Activity

  • What is the source of most of your new business? (If it is from referrals, what types of individuals and companies?)
  • How many partners bring in new business? How many are “rainmakers”?
  • For marketing purposes, is your firm organized into industry / service teams?
  • Are the partners held accountable for their marketing efforts?
  • Do you have new client acceptance criteria?
  • What does the firm do to identify additional service opportunities with existing clients?
  • Have you ever conducted a client satisfaction survey?  If so, what were the results?
  • What is the structure of your marketing department?

Service Offerings

  • What are the firm’s strongest niches?
  • Is the firm known as an expert in any industry?
  • What percentage of the firm’s revenue is compliance vs. consulting/advisory services?
  • What percentage of revenues is assurance versus tax?
  • Does the firm offer financial services? If yes, to what extent?

Building a Successful Membership Association: Part One

By Steven E. Sacks, CPA, CGMA, ABC

Steven E. Sacks

The world of accounting firm associations and networks (for the purpose of this paper “association” also means “network” and/or “organization” related to accounting) has rapidly evolved because of globalization, information technology, societal needs and changing demographics. Most associations, operated on a not-for-profit basis, irrespective of their mission, have learned, or are learning, that philosophies, assumptions and activities cannot remain static and serve the needs of their members. It is imperative to align goals and strategies with a clearly defined vision. This article addresses some of the more important aspects of operating a successful association.

Gathering Business Intelligence

No association can be successful without taking the pulse of its members – an environmental scan to determine whether the activities and initiatives are truly meaningful. To accomplish this, one of the most useful tools is an “outreach program,” a leadership communication and business intelligence undertaking to offer checks and balances among the board, senior leadership and the members – and not just those at the partner level.

Why is this important? Because it provides an understanding of the association’s strategic direction, new programs, the influence of new legislation and regulation, training and education programs, and cultural issues. This information can be used to determine trends, similarities and needs among cohorts. From this, new programs are developed and information is shared on a regular basis to keep members “in the know” and to elicit feedback. This results in a greater likelihood of the association retaining a strong bond with members and other interested parties. It creates a sense of esprit de corps and shared commitment to success.

Most associations offer 75% to 80% of the same benefits and services – conferences, intranet, newsletters, special interest groups, webinars, third-party discounts etc. – so why do certain associations have a long track record of relevance while others seem to constantly battle to maintain members?

The bigger question is, putting benefits and services aside, what  what comprises the remaining 20% to 25% that distinguishes one association from the others when all seek the affiliation of the same population? Two words: culture and commitment. While each accounting firm operates independently, based on structure and governance rules, members believe in the value of affiliation value through networking – between leadership and members and member-to-member relationships. In an ideal world, a member firm will treat another member firm’s client as if it were its own. This is the culture element. Promising to fulfill the needs of that client and actually doing so is the commitment element.

Understanding Member Demographic Differences

We are going through a generational change: Baby Boomers are retiring at the rate of 10,000 each day. In addition, 75% of today’s CPA firm leaders will most likely be retired by 2025. The next generation of leaders will decide whether to remain in their current membership organization or look elsewhere. While it is important to address the succession issues of Baby Boomers, it is equally important to be positioned to serve the younger professionals – those who have just reached partner or who are on an upward trajectory.

Associations must appeal to the varied needs of business or industry professionals, whether it involves assistance with client-facing matters or business operations (e.g., administration, IT, HR, marketing). The association should be able to identify and share best practices so that its members can experiment and implement new processes and policies. No one firm has a “lock” on the best practice (though some operate under this illusion).

Appealing to Young Professionals

It is up to the firm’s leadership to encourage membership in a relevant association or business group so the younger professionals can apply what they learned and bring more value back “in house.”

Three major areas of focus that accounting firm associations must address:

  • Promote professional respect that can increase interest and allegiance to the association. Treated as professionals, they are more likely to be engaged by the more senior members of the association.
  • Overcome resistance to getting the younger professionals involved. This means creating initiatives that go beyond the usual offerings to the more established members. Many young professionals have experienced a leadership opportunity within their firms – and this can translate into meaningful and successful involvement within the association.
  • Encourage relationship support. Associations need to identify the role of young professionals by developing program initiatives that meet their daily professional needs, such as training in management, communication and business development. If the focus remains solely on a legacy audience (MPs and partners with long-term participation) instead of future leaders, members and individual firms will be short-changed. Consequently, there will be an exodus of firms from the association when the next generation of firm leadership takes the helm.

Retaining Legacy Members

Let’s not forget, however, that the current and recent past leaders within association firms have their own needs. I have found that a very important membership benefit is in the form of a rapid and helpful response to a technical question or some other assistance. This is also accompanied by quality and quantity of information exchange between members. The latter, however, cannot be directly controlled. It is an element of circumstances – both domestically and internationally – requiring familiarity of the skills and expertise of other member firms and their representatives. This is why participation at conferences or on webinars and conference calls is crucial.

It is not onerous to regularly attend conferences and participate in special interest groups, to take part in discussion boards or to submit an article or a success story. Similarly, it is very worthwhile to offer a timely and helpful response to a request for assistance or to answer a technical question. A partner would not (or at least, should not) ignore a partner from his own firm for help. So why ignore a request by a member from to another firm? And if a request comes from an international member, it would be self-defeating to ignore it.

Confidence in the Peer Network

One of the greatest advantages that an association offers is an open and social network. This provides a “confident” environment, where members have a high degree of certainty they are communicating with a qualified community of peers. This vetting process has been traditionally used to determine a firm’s suitability for membership (and continued affiliation), as well as in the sharing and development of best practices, credentials and virtually all meaningful content that firms provide – from internal publications to training courses and conference presentations.

Appreciation and Understanding Behind Expanding Membership

Sometimes member firms view growth as a plus; sometimes they view it as a threat to competitive positioning. It is important to understand and convey the need for growth; it cannot be simply a matter of getting big to derive more dues revenue. An association, particularly one with global reach, must articulate the importance of growth and how it fits into a changing marketplace. The focus should not be on perceived low membership numbers; instead, establish a sensible and effective plan to recruit and retain member firms to rapidly benefit the entire group. Thus, it is important for an organization to understand why it pursues certain strategies.

Some methods of member recruitment resemble a sales process. An association needs to understand the purchasing life cycle of potential members. This is not dissimilar to building a client relationship.

Effective Member Recruiting

Before recruitment begins, an association needs to be sure that its information and message is creating a sense of awareness and understanding. If the leadership is centralized, then the member firms – through a regional archway – must be in alignment. If it is chapter- or regional-driven, then all participants must understand and embrace the vision and mission and articulate a consistent philosophy. This includes an effective methodology for bringing in new firms (e.g., creating awareness, recruiting, engaging, renewing). All regions’ marketing, branding and recruitment/sales teams should work in tandem to create cohesive messaging at every stage of this process.

Membership recruitment may be sales, but it’s not always about the dollars. Rather, it is about creating long-lasting relationships, engaging prospects and proving to them why they would benefit affiliating with the association.

The issue of differentiation, here, too, plays a role. The question of “What really is our ‘niche’?” needs to be defined and then shared with prospects. No association can operate as the solution for every type of firm. A careful assessment of the target market and how it can be infiltrated to gain new members is a vital step.

Continue reading part two of this article.

About the author:

Steven E. Sacks, CPA, CGMA, ABC is CEO and founder of Solutions to Results LLC. His firm assists professional service firms and organizations to solve the challenges of human capital development and culture, and develop effective internal and external communication strategies and techniques. He has been in the forefront of the accounting profession for nearly 30 years, serving professional service firms and membership associations through the deliverance of leading-edge conferences, presenting to colleges and universities on careers in accounting, and creating workshops, webinars and webcasts on a variety of accounting and consulting topics.

Planning to Become a Better CPA

In an article by Bill Tsotsos, he discusses professional development specific to the profession. He believes that there is a natural human desire to improve professionally. Whether the reason is to earn more money, a firm promotion, peer recognition or the satisfaction that we are operating at a high level for our clients, most of us want to improve our skills to be the best we can be. Since professional goals may be in conflict with personal goals (spending more time at home with the family), the answer is not simply to work more hours. The question is: How do I become better at what I do; how do I become a better CPA?

Tsotsos maintains that becoming a better CPA involves designing an annual plan for professional growth.

The primary elements of his professional growth plan include:

  • Industry expertise. A CPA can add much more value to a client if they become an expert in that client industry. To become an expert, talk to industry leaders, read what they read, join industry associations and attend local chapter meetings.
  • Service niche or tax specialty area. You don’t want to be a tax generalist; select an area of tax law and “make your mark.” Similarly, identify a service niche you would like to pursue – forensic accounting, business succession, merger and acquisition, and develop expertise.
  • CPE/soft skill development. Soft skills are typically identified as leadership, management, communication, and business development. Plan to take courses in these areas even if there are no continuing education credits available.
  • Build your referral pipeline. With the advent of social media, it is no longer necessary to ask for a referral with the question “Who do you know?” Once you are connected to a client on LinkedIn, you can now ask for introductions to specific people by name.
  • Organizations to join or attend. Consider professional associations of referral partners like estate planning attorneys or bankers. Joining a nonprofit association gives you exposure and access to community leaders.
  • Mentoring. Ask a partner of the firm to mentor you and schedule regular meetings. Ask to be included with client lunches, meetings with prospects and referral or potential referral partners.
  • Plan to have a coffee, breakfast, or lunch each business day (200 times/year) with a client, prospect or referral partner. This will produce a solid referral pipeline and enable you to know your client on a deeper level.
  • Hire a trainer/coach. Executives hire coaches and take management courses on how to be better leaders. A coach can give you a different perspective, advice and help you get the most out of your efforts.

If you are serious about becoming a better CPA, design an annual plan for professional growth and enlist an accountability partner. Do not limit expenditures to what might be reimbursable by your employer – invest in yourself and in your career. Take personal responsibility for your career development. It will pay huge dividends.

5 Mistakes to Avoid When Problem-Solving

By Arianna Campbell

Finding the best solutions to problems is a necessary skill for navigating the changes that are continuously affecting our profession. Firms that take a proactive and structured approach to problem-solving position themselves to overcome obstacles and take advantage of opportunities. This approach comes from making a concerted effort to avoid the following five common problem-solving mistakes.

Mistake No. 1 – Not involving the right people in the conversation

When the right people are excluded from the problem-solving process, the proposed solutions can be one-sided or limited. Different perspectives help to better understand the problem at hand. Resist the trap of allowing busy schedules and a desire for quick resolution to allow people to be excluded. However, this doesn’t mean that everyone needs to be involved. Progress may be slower when too many people participate. The most effective problem solving teams include representatives from various levels in the firm who share their perspective and insights.

Mistake No. 2 – Failing to get on the same page from the beginning

Certain people may agree that a problem exists, but that doesn’t mean that everyone has the same problem in mind. People often have different expectations, opinions on issues and goals, and potential solutions. Effective problem-solving requires getting everyone on the same page. When this doesn’t happen, there is a risk of running in different directions – this means that everyone may cross a finish line, but no one wins the race. Take the time to define and document issues and get alignment before attempting to solve a problem. The result will be better solutions.

Mistake No. 3 – Making improvements that don’t address the source of the problem

Brainstorming sessions are great for getting ideas flowing, but activity should not be mistaken for achievement. Finding solutions that don’t address the root of the problem only leads to more problems in the long run. We can avoid this by using a simple yet effective tool called the “Five Whys.” The website gives the following explanation: “By repeatedly asking the question “Why” (five is a good rule of thumb), you can peel away the layers of symptoms which can lead to the root cause of a problem. Very often the ostensible reason for a problem will lead you to another question.”

To complete the 5 Whys, identify a problem, ask why the problem happens, then discuss and determine the answer. If the answer does not uncover the source of the issue, ask why again. Repeat this process until everyone agrees on the source of the issue.

Mistake No. 4 – Not considering how technology could be part of the solution

The failure to leverage technology is a costly mistake. Some common reasons include negative experiences from a past software trial, the belief that clients will not welcome technology advances, lack of education about features and benefits, and fear of a learning curve slowing down internal processes. Firms are that are unwilling to include technology as part of their problem-solving toolkit are getting left behind. The rate of change for technology has accelerated dramatically, and solutions are customized to address the needs of the firm and the profession. Our people are smart, capable and often eager to use technology solutions that will allow them to provide a better internal and external client experience. With a few exceptions, clients have the necessary technical expertise that they already use daily while interacting with banks, mortgage companies, social media and other outlets. Discomfort with technology should not hold the firm and clients back from taking advantage of the best possible solutions.

Mistake No. 5 – Not having a framework for problem-solving

Finding the best solutions starts with having a structured approach to problem-solving. Developing the habit of having the appropriate team members ask the following five questions will help to avoid problem solving mistakes:

  • What problem are we trying to solve?
  • Why is this an issue?
  • What are we currently doing to address this problem?
  • What could we do differently/better?
  • How can we move these ideas forward? What are the next steps?

Effective problem solving doesn’t happen by accident. Firms that take a disciplined approach find lasting solutions that lead to progress and growth.

Arianna Campbell, consultant for Boomer Consulting, helps accounting firms challenge the status quo by leading process improvement initiatives that result in increased profitability and client satisfaction. She also facilitates the development and cultivation of future firm leaders in The P3 Leadership Academy™. Internally, she blends concepts from Lean Six Sigma and leadership development to drive innovation and continuous improvement within the company. Campbell also enjoys the opportunity to share knowledge through regular contributions to the Boomer Bulletin and other industry-wide publications, as well as public speaking at industry conferences.

Moving the Rocks on the Path to Growth

According to Dom Esposito, CEO of ESPOSITO CEO2CEO, a CPA firm must move many rocks that are on the path to growth. If a firm doesn’t effectively address these obstacles, it will not be able to grow at a satisfactory rate.

The following are six growth path rocks and how you can begin to move them.

Ineffective Leadership and Governance

The CEO has the broad responsibility to create a culture that drives revenue and profitability. In addition to the CEO, firms need two standing groups to drive growth and achieve success. The first is a senior management team that includes a COO and office MPs. The second group is an executive committee that oversees the execution of operating budget, addresses partner matters, makes sure that the partnership agreement is up to date and reflective of a firm’s needs, and evaluates the effectiveness of the CEO and the senior management team.

Need for a Broader and Deeper Menu of Services

A firm attracts and retains clients by adding value through industry specialization. The greatest growth and margin opportunities for a firm are in advisory and consulting, as clients outsource specialized skills to deal with business challenges that they cannot handle internally.

Lack of a Strategic Plan

A strategic plan provides direction and gets partners on the same page. It instills discipline. It is a vehicle for individual partner goal-setting, periodic monitoring, counseling and an annual evaluation that forms the basis for annual partner compensation adjustments.

Poor Strategy Execution

Many CPA firms undertake exhaustive strategic planning but don’t use the plan as a living, breathing tool that holds partners accountable through a performance management and compensation system. Some firms go through this exercise to produce a plan that eventually sits on a shelf gathering dust in partner offices. This is a missed opportunity because a sound strategic plan, if executed properly, is a great leadership and management tool that can enable a firm grow.

Inability to Align Strategy to Goal-Setting and Accountability

Actionable results need to be periodically measured against goals and modified if certain goals are deemed unrealistic. Compensation adjustments should be made according to progress made toward these goals. Partners know that a firm is serious about strategy execution if they can measure the impact their participation has in their wallets.

Price is Always Why We Lose

According to Esposito, the thought that price is main reason your firm loses clients or proposals is a myth. Price is a one-dimensional sales pitch whereas value creates motivation for clients to select your firm. Value is perceived benefits less perceived cost. Clients and prospects want a firm that will help their business grow and be more profitable – a firm that brings real value to the relationship.

5 Reasons To Go Paperless This Tax Season

Jesse Wood

Jesse Wood

By: Jesse Wood, CEO of eFileCabinet

Are You Ready To Go Paperless This Tax Season?

As tax season approaches, businesses of all sizes should be reevaluating workflow practices to improve office operations, efficiency and profitability. Electronic document management can create quick wins on an organization’s balance sheet, lower overhead 30% to 40%, and drive profitability and growth during this busy season.

Here are a few reasons why electronic document management will make a difference:

  • Create quick wins on your balance sheet. Electronic document management frees up administrative and productive time spent locating and retrieving documents. For example, a cloud-based document management system can reduce reliance not only on physical hardware and expensive server licensing fees, saving an organization’s office space and IT spending, but it also provides anytime/anywhere access to critical files and documents.
  • Lower key overheads. A well-designed paperless system not only frees up person-hours, it can lower several costs, including stationery expenses and document storage space, and it can even positively influence carbon credit.
  • Drive profitability and growth. The inherent efficiency of a paperless office can be maximized when combined with other productivity tools such as workflow management. Imagine an enterprise where work instructions for every step of a process automatically open when an employee performs the specific step. Secure, paperless offices see significant reductions in cost, turnaround time, risk profile and training periods, and they see better performance on key growth indicators. These growth indicators enable a business to do more with less time and money – another great reason to go paperless.
  • Provide security. Electronic document management and file sharing are the safest way to store and transmit sensitive documents, like tax forms. The security provided through these sophisticated systems protects your customers, your company and your bottom line. It reduces risk from compliance and regulatory requirements (SEC, HIPPA, etc.) and is an easier and safer way of transmitting information than email, FTP and physical document distribution.
  • Produce faster response times. Electronic document management and file sharing allow for faster and more accurate access to information, which not only increases workflow productivity, but also quality perception from customers (the sooner you respond to customers, the more organized you appear and the happier they are).

Jesse Wood is the CEO of Lehi, Utah-based eFileCabinet. Founded in 2001, eFileCabinet began as a tool to digitally store records in accounting firms. Since then, eFileCabinet has developed into a full electronic document management solution designed to help organizations capture, manage and protect their data.

Guest Blogger: Flexible Firms Are Moving to Unlimited PTO Programs

By: Renee Moelders, ConvergenceCoaching

Renee Moelders

Renee Moelders

More Results from Our 2016 Anytime, Anywhere Work™ Survey

With the emphasis on flexible work programs in CPA firms, it’s no surprise that Unlimited PTO has become a hot topic. Employees are drawn to the idea that they could take as much time off as they would like as long as the work gets done.  And firms are using this benefit to better position themselves in the CPA marketplace and attract and retain the best and brightest.

We asked a number of Unlimited PTO questions in our 2016 Anytime, Anywhere Work survey, and in this post, we’ll share the what we learned as well as some specific recommendations for firms who are interested in offering this cutting-edge benefit. If you’re just tuning in to our survey results, here’s what we’ve shared so far: an overview of our survey results, the benefits and challenges firms experience with their flex programs, how firms are enhancing their flexibility around WHEN their employees work, strategies firms are using to allow employees more control over WHERE they work, and seven technology ideas to enable flexible work programs.

Unlimited PTO:  A Major Differentiator

Only 5% of firms surveyed, or 8 leading edge firms, are offering an Unlimited PTO program, while another 19 firms (13%) are thinking about implementing such a program.

In this year’s Anytime, Anywhere Work survey, 97% of firms surveyed noted that they offer flex-time programs, demonstrating that offering flexibility is NOT a major differentiator for firms. If you are one of the leading-edge firms offering Unlimited PTO, be sure that you are promoting this competitive differentiator in your recruiting efforts, employee orientations, busy-season kick off meetings and other team member meetings – because you are special (for now)!

What is Unlimited PTO?

Unlimited PTO programs emphasize a culture of flexibility built on personal responsibility and mutual trust, and essentially the message to your people is “meet your work and production goals, finish your projects, and we don’t care when you take time off.”

Let’s take the example of the team member who crushes it one week, working 65 hours to finish reviewing a series of client deliverables and getting the monthly audit schedule published. The next week, this same team member has a dentist appointment during the work day on Monday and leaves early on Thursday for hockey practice. Because of these personal commitments, this person only puts 36 hours into the system. Under a traditional PTO model, she or he would be asked to take 4 hours of PTO for those two events, regardless of their extra effort made the prior week.

Or how about the employee who has a three-week bank of PTO available to her. She has planned a two week fall vacation with her family, and has used the other week by the end of July. She tells her family that because she’s already scheduled her full three weeks, she won’t be able to take an extra two days at Thanksgiving, even though she’s ahead of her realizable revenue goals and other metrics. She feels like there should be a way to have the time off with her family but the firm’s policies don’t allow her that flexibility.

In both cases, instead of being treated like a trusted professional, empowered to integrate their life with their work, these team members feel like they are being “nickel and dimed” about their time.

Why offer Unlimited PTO?

While improving the morale of your people and empowering them to manage their own schedules, there can also be an attractive financial benefit for your firm in eliminating PTO. When you stop accruing and tracking PTO, you will ultimately experience a reduction of a sizeable accrued liability. In addition, firms spend so much time administering PTO accruals – tracking them, monitoring timesheets and employee accrual balances, and encouraging team members to burn PTO to keep accruals in check. Upon the creation of an Unlimited PTO program, the firm can regain that administrative time which can be repurposed for more meaningful HR efforts.

Another advantage of an Unlimited PTO program is the goodwill it creates in teams, where you trust your people to meet their production goals, hit their metrics for the year, bring in the amount of agreed upon business, and achieve whatever other expectations have been established for you. In essence, we treat our people like professionals. Many firms find that Unlimited PTO programs create more committed team members with a passion for the firm (and in turn, the firm’s clients!).

If you are already offering high levels of flexibility to your team members…if your leaders are less focused on using “face time” to measure an employee’s success…if your firm is doing a great job setting clear expectations and situations where there is poor performance, these matters are being managed…then you might be a candidate for an Unlimited PTO program.

In our survey, the few firms who are currently running an Unlimited PTO program shared these positive comments about their experience:

“Best policy we have implemented in a while!”
“I intend to take the entire month of July off this year.”
“Time worked is completely at the discretion of the team members.”
“Do it! You will be surprised how much your staff loves this benefit. They are professionals and manage their schedules fine.”

Managing the transition

One of the benefits the firm realizes when transitioning to Unlimited PTO is the removal of the accrued liability for PTO that firms would ordinarily carry on their balance sheet. It may, however, be hard for firms to imagine how they’d make the transition to Unlimited PTO without generating feelings of “takeaway” in the team. We asked our survey participants how they managed this transition and learned that of those firms with a program, 50% chose to dissolve any accrued leave upon conversion, 40% did not allow carryover of leave under the PTO model and therefore had nothing to convert, and 13% paid out some of the accrued leave to participants. None of those surveyed chose the answer options “Yes, we paid it out in full” or “No, but we will payout accrued leave if employees leave the firm.”


Firms may benefit from planning ahead for a transition by encouraging team members to “spend down” accrued PTO balances to minimize any feelings of loss associated with the conversion to an Unlimited PTO program. When asked the time of year when they converted from a traditional PTO program to Unlimited PTO, 25% indicated January – March while 13% chose the July – September timeframe. These differences may be the difference between December and June year-ends. The remainder of respondents chose “have always had Unlimited PTO” (25%), “N/A or not sure” (25%) and “When promoted to manager” (13%.)

Sharing best practices

Unlimited PTO programs are still a relatively new offering and as a result, there are many different options when structuring your program. Even so, there are best practices when transitioning to an Unlimited PTO program and we’ll share those with you here.

  • Eligibility for the program. Of the eight firms surveyed who offer an Unlimited PTO program, half make the program available to all exempt employees. No firms indicated that they offer Unlimited PTO to non-exempt employees and for many firms that makes sense due to legal issues around overtime that introduce barriers to establishing one program application for all employees. Firms should carefully design communications to minimize any feelings of resentment or feeling “less than” by non-exempt employees.

  • Create accessibility and response time expectations. Firms that develop clear requirements for how quickly calls and emails are returned (even if it’s only to confirm receipt and set a future date for follow-up) are likely to have fewer upsets operating in a more flexible manner. Team member calendars should clearly reflect accessibility details – whether team members are off or not and how they can be reached when they are available but working away from the office.
  • Plan how Unlimited PTO will intersect with other types of leave. Unlimited PTO still exists in the “Wild, Wild West” of HR policies because there isn’t much case law yet upon which to base policies and practices. There is, however, one clear recommendation – ensure you separate any legally required leave of absence programs from your Unlimited PTO program. For instance, time off due to extended illness, injury, maternity, disability and FMLA would have separate rules and requirements and your staff won’t use Unlimited PTO to cover those needs. We’d recommend you contact your firm’s labor counsel before finalizing any policy to ensure that your state’s labor laws are covered appropriately.
  • Map out changes to blackout periods, coverage requirements and the process to request time off. There will likely be times when the team needs to all be working together and time off would be less acceptable. To maximize the feeling of flexibility, we’d recommend that you minimize blackout periods and make the request process as easy and flexible as possible.
  • Teach your team to flex up. Flexible work environments require flexibility from those using flex, too. They require clear, specific and frequent communication, as well as accessibility and responsiveness. Clarify ahead of time when peak periods or “all hands-on deck” client engagements will require the team to change their ordinary schedules or come into the office.
  • Consider mandatory time off. Under traditional PTO programs, HR often has to coax certain team members to use their leave, and under an Unlimited PTO model that will likely be the case as well. In Take a Vacation: It’s Good For Productivity and the Economy, the author notes that time off results in higher productivity, stronger workplace morale, greater employee retention and significant health benefits.

 One survey participant shared this recommendation:

“Often the high performers take less PTO time than if they had a bank of hours. You really have to encourage them to use their PTO.”

If many of your team members are reluctant to use time off, stay tuned for our upcoming blog on sludge and learn more about creating acceptance and transparency on the team for the use of flex programs.

Measuring success and ensuring accountability

As you transition to Unlimited PTO, plan to assess the program’s success at regular intervals. Building in an evaluation process will provide support among your leaders who are less confident about the change and will allow them to rest assured that the program will be adjusted if results aren’t what you’re anticipating. Any program you create should protect your firm’s business model deal-breakers like:

  • Production is at or above expectations
  • Projects are being completed in the anticipated timeline
  • Client service hasn’t been negatively impacted
  • Team members are taking time off as expected and are satisfied with the program as designed

Consider evaluating your program at 90 days, 180 days and year-end, with an ongoing annual review after year one. Rather than trying to build the perfect program out of the gate, be willing to adjust and make changes over time to ensure the program meets both the needs of the firm and your team members for the long-term.

We are encouraged by the interest and buzz around Unlimited PTO programs and can’t wait to see new developments unfolding in the public accounting firm marketplace!

Guest Blogger: Predictions for 2017 and Beyond

By: Joe Tarasco

The firms that will take full advantage of the huge opportunities for the accounting profession in 2017 and beyond will be those that attract and retain the best staff, offer more formal advisory and solutions-oriented services, and control their direct labor costs through process improvements and financial management of engagements.

As we close out 2016, the accounting profession landscape and marketplace is changing rapidly. Here are some predictions and trends that you may wish to consider in your strategic planning for 2017 and beyond.

Joe Tarasco

Joe Tarasco

  • Fee pressures, rising staff labor costs, increased regulations and client demands will force firms to carefully examine their mix of services, industry concentrations and niches. Client engagement profitability will be more scrutinized and evaluated while making partners more accountable to increase realizations. The future holds tremendous opportunities for accounting firms who are highly leveraged, with well trained professional staff, using state of the art technology and efficiency methods. To take full advantage of this favorable marketplace for accounting firm services, partners need to be highly effective client relationship-trusted advisors and rainmakers, not grinders.
  • Firms will continue to acquire consulting and advisory companies that complement their traditional services to provide integrated solutions services to their clients.
  • Career development and leadership training will be further expanded into firm CPE curriculums as succession planning evolves into a crisis mode. Progressive firms will significantly increase their training budgets. Firms will have no choice but to invest heavily in their best and brightest in all stages of their careers to remain competitive and avoid merging into a larger firm.
  • The firms who have grown through consolidation of aging practices will begin to deal with intensified succession issues in terms of transitioning clients to qualified partners who can play the trusted advisor role.
  • Consolidation of firms in the country will continue at a faster pace. There will be more mergers of mega firms into larger firms. More firms will merge as a competitive strategy to gain more resources and services rather than for near term succession problems. There will be more mergers of accounting associations and networks.
  • Managing Partners and Executive Committee members will be held more accountable by their partners in their ability to lead and manage successfully and to achieve the goals and objectives as documented in their strategic plans.
  • There will be an increase in the number of firms hiring professional lead generators to supplement the practice development efforts of the partners. In addition, firms below the Top 200 will outsource their marketing and practice development programs to marketing consulting companies as the need for diversified multi-faceted marketing professionals becomes necessary to maintain a competitive edge.
  • The partnership structure will continue to fade away and be replaced by a more corporate type structure. More firms will hire professional COO’s from outside of the CPA profession to assist them in managing their organizations.
  • Partner compensation will be more geared toward higher levels of profitability and results driven contributions to the future success of the firm. Aligning the firm’s goals and vision with partner performance criteria and accountability will be a key objective for progressive firms.
  • More small firms will split up due to a lack of partner consensus on succession planning and investing in the future direction of the firm.

The future is bright for accounting firms that can quickly implement initiatives and strategies to adapt to the changing marketplace and the needs of quality clients. All of us at Accountants Advisory Group wish you a healthy and prosperous 2017.

Joseph A. Tarasco is founder and CEO of Accountants Advisory Group, a consulting firm focusing on practice management, marketing and human capital strategies to help CPA firms achieve long-term success and profitability.

A Managing Partner’s Guide to Social Media

By: Lee Frederiksen

Lee Frederiksen

Lee Frederiksen

Guest Blogger

As a managing partner or top executive, you’re probably more focused on taxes than Twitter. Growing your firm, finding great talent and fostering profitable client relationships are probably at the top of your to-do list. But what you may not know is that social media can play an important role in all of those areas.

In my decades of work with accounting firms, I have witnessed the impact of social media on growth, profitability and recruiting. And this observation is supported by the research my company has been conducting into professional services firms. Those that use social media stay ahead of the game. They’re the playmakers, the fast growers.

Social media is important in today’s competitive and increasingly Internet-fueled marketplace. If you’re not harnessing the power of social media, you are missing key opportunities.

The good news is that you don’t need to be a tech guru to put social media to work for your firm. But you do need to understand how and why it’s being used – and you’ll need a basic working knowledge of one or two key tools, starting with LinkedIn.

In this article I focus on the role social media plays in the marketplace and why you may want to consider upping your social game.

Here are six ways to think about it:

  1. Social media is here to stay.
    Like it or not, social networking is not a fad. It’s only going to become more important to firms like yours. For instance, social media is being used today to vet potential employees, expand firms’ networks, nurture prospects, develop visibility, demonstrate expertise and position executives as thought leaders. If you aren’t doing these things today, you will be at some point in the future. The question is, can you afford to be much later to the game?
  2. Your competitors and prospects are already using it.
    I get it. Not everyone at your firm is going to be excited about social media. Even if you or other top executives don’t want to participate on LinkedIn or Twitter, you can still benefit from being on social media. That’s because your clients and prospects use social networks to do everything from research to finding and vetting possible vendors. If your firm isn’t visible, it is missing out on a growing source of new business. In fact, six of 10 buyers use social media to check out a firm before they do business with them. So long as someone on staff is paying attention to your firm’s social media, you’ll at least be on people’s radar. Many of your competitors have embraced social media. If you want to compete, so should you.
  3. It is the new “face” of networking.
    Social media is just another form of networking. You still may prefer to meet with colleagues or prospects over lunch or at an in-person event, but face-to-face networking isn’t the only way to forge connections. Sure, social media isn’t as personal as traditional networking, but it offers other advantages. It’s the perfect medium to build a thought leadership following, for example, and you can use it to reach far more people with less effort. Keep in mind that your clients are using social media to network – if your firm isn’t part of the conversation, they are likely being influenced by a firm that is.
  4. All social media is not created equal.
    Social networking encompasses a wide range of platforms that use different formats – micro-blogging (Twitter), photos (Instagram), videos (YouTube) – each designed to reach different kinds of audiences. It can be overwhelming. Fortunately, you can safely ignore the vast majority of these platforms. If you focused only on one, LinkedIn, you’d cover most of your bases. LinkedIn offers a variety of channels designed with businesses in mind. LinkedIn Pulse is a great place to publish articles, while LinkedIn Groups is where like-minded people gather to share ideas, discuss their business challenges, and offer up possible solutions. Other platforms such as YouTube, Twitter and Facebook have their place, but you can add them to your mix over time as you need them. When it comes to social media, figure out where your audiences interact and put your energy there first.
  5. Using social media requires an investment.
    Creating a social networking profile may be free, but you still have to invest in it. How? You’ll need a strategy, one or more writers, social media policies, someone to post messages and someone to manage the whole thing. While it’s fine to start small, to make the most of a platform you’ll need to commit real resources to it. That’s when you’ll begin to see a real return on investment.
  6. It can boost morale – and much more.
    If you want your team to tout your business, let them loose on social media. This process has a name – employee advocacy – and it can turn your employees into powerful brand ambassadors. We’re not talking about bald-faced bragging. Rather, it’s a way staff can share industry insights, client success stories, and expert advice. Getting them involved cultivates a sense of “ownership” in your firm. According to our research on employee advocacy, firms with a formal employee advocacy program grow faster and see more benefits than those without one. In fact, high-growth firms are twice as likely to encourage staff to use social networking.

In particular, employee advocacy encourages Millennial staffers to get involved in marketing the firm using a medium they are already comfortable with. If they balk at the prospect of attending a networking event, why give them an equally valuable way to contribute? Our research finds that Millennials want to participate in social media more than Baby Boomers and Generation Xers because it helps them develop relevant skills, differentiate themselves from their peers and boost their career opportunities. And of course, the younger members of your firm can probably teach you a few things about using social media in the process. Win-win.

Social media can help the modern accounting firm in many ways. From marketing strategy and operations to employee development and recruiting, social media is changing the way firms grow.

Lee Frederiksen is managing partner of Hinge Marketing, which focuses on professional services firms.

The 2016 IPA Most Recommended Consultants

We are proud to announce the 2016 IPA Most Recommended Consultants, listed in alphabetical order, and their firms. The full list will be highlighted in the October issue of INSIDE Public Accounting.2013_IPA_Most Recommended Consultants_Artwork

Each year INSIDE Public Accounting asks firms from across the nation in the IPA Annual Survey and Analysis of Firms to name one consultant, whom they have used during the past year.

Congratulations to this group and IPA thanks this group for their hard work and dedication to the profession.

Boomer Consulting Inc.
Gary Boomer

Carl George Advisory
Carl George

ConvergenceCoaching LLC
Jennifer Wilson

Crosley Company
Gale Crosley

Koltin Consulting Group
Allan Koltin

The Rosenberg Associates
Marc Rosenberg

Steve Erickson LLC
Steve Erickson

Succession Institute
Bill Reeb

Upstream Academy
Sam Allred, Tim Bartz

Roman Kepczyk