High-Value Ways To Deploy Idle Staff During The Summer

As leaders are taking time to recharge and plan for annual retreats, partners are discussing the future in meeting rooms across the country.

Mike Platt

Mike Platt

To help stimulate some ideas, I offer my list of ways to deploy staff this summer:

  1.  Work with your international network to send select staff on a once-in-a-lifetime overseas internship.
  2. Focus staff on day-long reviews of each of your top 25 clients to gather business intelligence and uncover opportunities.
  3. Embed staff in key clients’ operations for a “free” week to review systems and processes. This will inevitably result in a list of chargeable projects for the future.
  4. Assign staff teams to review your firm’s most utilized processes and recommend improvements.
  5. Ask staff to document case studies highlighting client problems and how your firm helped resolve them. Capture these case studies and compile them for a marketing effort later this fall.
  6. Encourage staff to participate in community service events. Volunteer service is a much-needed, deeply rewarding experience for your staff and an image-booster for your firm.
  7. Assign key staff with a new service or skill to make a presentation at a firmwide staff meeting. Have all staff weigh in on how to utilize those new skills to help the firm succeed.
  8. Upgrade your CRM intelligence. Your staff knows a lot about your clients’ wants, needs and preferences, as well as their quirks. Focus on capturing that information so the next time the CEO of your favorite client comes in, she is impressed when she is automatically offered the frozen iced vanilla latte she loves.
  9. Give your referral sources a fresh perspective of how your firm handles similar challenges. Have key staff spend a week at a law firm to “shadow” their counterparts in other professions. Direct them to share how your firm handles certain issues, and encourage a reciprocal “peer review” by inviting your referral firm’s employee to spend a week at your firm.
  10. Review staff and partners. Not all will end up as superstars. If they are a drag on the firm, counsel them out and find someone else who will be a stronger asset.

There are plenty of ways to deploy staff during summer that will bring significant value to your firm. Get creative with your ideas and you will have a stronger staff and a stronger firm, better positioned to take advantage of opportunities.

IPA INSIDER: Tapping the Expertise of the Nation’s Top Accounting Marketers, Business Developers and IPA’s Benchmarking Metrics

Tapping the Expertise of the Nation’s  Top Accounting Marketers, Business Developers and The INSIDE Public Accounting Benchmarking Metrics

The accounting profession is caught in an epic tug-of-war between recording the past and influencing the future. By definition, accountants focus on the past, making sense of the objective, and undisputed results of a client’s business. But clients valuimages16O6IM1We proactive, forward-thinking, predictive ideas to help them navigate and shape the future.

Marketers are in a key position to help their firms bridge the gap between measuring the past and predicting the future. How? The first step is to understand what partners measure and why. This knowledge of traditional metrics will help marketers speak the language of firm economics and better connect with partners on the issues that are of most concern to them.

Guiding partners to look at leading indicators can help them see problems and opportunities earlier and act on them in a way that can influence the firm’s direction for the future. But first, marketers need to know and understand what measurements are of interest to partners.

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Elevating Your Accounting Practice_Marketing_IPA INSIDER

Your Clients May Not Be as Loyal to Your Firm as You Think

The best firm leaders know that they’re not really in the numbers business, they’re in the relationship business. 

INSIDE Public Accounting recently heard James Kane, a loyalty researcher and consultant, discuss ways business leaders can cultivate and maintain an unbreakable bond with their clients and staff. Kane blends the worlds of business, neuroscience and behavioral psychology to produce a presentation that made us realize that some of our assumptions about what makes people loyal were dead Customer-Loyalty-Satisfactionwrong. 

Intrigued, we wanted to learn more and to share his findings with attendees of the annual PRIME symposium, which is scheduled for Nov. 3 – 5 at the Conrad, Indianapolis.

To whet your appetite, we asked Kane to answer a few questions on loyalty.

Q: What’s the biggest mistake professional service firms make in trying to build loyalty?

A: There are two, really. The first is an expectation of most organizations and most people that they deserve the loyalty of their clients. They assume that “doing their job” they were hired to do should be enough to earn them the benefits of a truly loyal relationship and can’t understand – in fact, are often hurt, offended or angry – when those clients consider other options, question fees and contracts, bid out work that was once exclusive, or question the value they receive. Firms fail to understand that offering a great service and a fair price is exactly what their clients hired them to do. Meeting an expectation alone does not create loyalty.

The second mistake organizations make is thinking they can buy or manipulate someone’s loyalty. The word loyalty has been hijacked by marketers over the years and associated with sales gimmicks like rewards programs. The idea is that if I can offer you enough “stuff” or make you so dependent on the product or service I provide that you will be loyal. But that is like saying a hostage is loyal to their captor or an addict is loyal to their dealer. The behaviors may look similar to loyalty, but the outcomes are much different. When a hostage escapes or is set free, or when an addict gets sober, they don’t return to their captor or dealer. They don’t advocate for them, encourage others to get involved with them, forgive them for what they have done, or provide them with more opportunities. They get as far away as possible, say bad things about them, and wish the worst for them. 

Loyalty does not come from trying to manipulate or change the behaviors of others. It comes when you change your own. When an individual or organization is willing to learn and communicate the behaviors that cause other to be loyal, they can build nearly unbreakable relationships.

Q: How about internally? Does your staff need to be loyal to the organization before the firm can expect clients to be loyal?

A: So, it is important to know that from both a neurological and physiological standpoint, human beings are conditioned to be loyal. It is a response that has been evolving inside of us from the time we started living in social groups and communities. Our brains have learned to recognize not only who we can (or should) trust, but also who has our best interests at heart. In other words, our brains know who to be loyal to and seek out, both consciously and unconsciously, the clues and behaviors from others that tell it when it can be. 

Those clues and behaviors come from a variety of sources, so when a client’s brain is “deciding” if it should or can be loyal to a particular firm, it will look at the entire firm, not just a single individual. They will evaluate everyone they come in contact with, every message they receive, every interaction they have – personally and virtually, and determine if the relationship warrants its loyalty. 

To accomplish that, firms need to create and maintain a culture that communicates those loyalty-causing behaviors as a whole. It is a lot like raising children, As a parent, you know you can’t be with your child 24 hours a day, seven days a week for the rest of their life. Eventually, they will start creating their own relationships and establishing their own connections. The most you can do as a parent is instill in them the values you believe will make them successful and teach them how to treat others. When you do a great job with that, the result is that your kids develop relationships with others that make you proud, and are a reflection on you. The same is true for an organization and its employees. When you teach and support and reward and encourage the behaviors you want them to display, you will get the desired results in return. 

Q: How can an accounting firm start the process of building an “unbreakable relationship” with their clients?

A: The first step is accepting that there is no magic pixie dust that you sprinkle on clients to make them loyal. If you want loyal clients you have to be willing to change your own behavior and the behavior of your entire organization. That is a commitment that not all firms are willing to make and prefer to operate under the illusion that what they have been doing all along has worked fine, and there is no reason to question the way they operate or build relationships.

The next thing they need to do is assess their current relationships – not by asking them if they are satisfied with the service being provided – but by determining their client and employee loyalty. The most important benefit to come out of our research is that we have been able to identify, not only the state of an existing relationship, but the precise cause of that state. For example, it is interesting to know that a particular client sees their relationship with a firm as transactional. But the really useful information is understanding why the see it that way. What is causing that client to feel that way? What is shaping their perceptions? What is the firm doing or not doing to prevent a deeper relationship from forming? When a firm can identify the specific behaviors that are impacting the relationships, it can develop strategies and tactics to properly address them. 

Finally, they need to commit to a loyalty strategy. It is easy to forget about the relationships that are important to us when they get too hard or become too much work. Think about the personal relationships you have had throughout your life. So many people form their closest relationships with friends they make in high school or college. They share their deepest secrets with one another, their goals and desires, their hopes and concerns. They are inseparable…until graduation. They keep in touch, still take vacations together, are in each others weddings, still talk and reminisce about the “good old days,” but before long their lives go in different directions, the things they shared and had in common are replaced by new friends and new experiences, and those people who at one time were the most important in the world to one another are reduced to exchanging Christmas cards once a year. 

Client relationships often follow a similar path. Maintaining relationships require work. They demand a diligence and attention that doesn’t occur automatically. 

Accountants Should do Much More than Prepare Taxes

A Duluth, Ga., CPA believes accountants should do much more than prepare taxes.

In a blog post titled “Is Your CPA Helping You Develop a Legacy and Fulfill the Parable of the Talents?” John Dillard, president of His CPA PC, advises taxpayers to work with their CPA “who can see both ‘the forest and the trees.’ ”

Dillard suggests several considerations for a client who is reporting substantive taxable income and is considering a retirement plan:

  • Adding you to pay you for your contribution to the family business.
  • Adding you to salary while continuing your present retirement plan an owner-only 401K.
  • Considering setting and funding a Defined Benefit Plan this year.
  • Adding you to salary and setting up a Defined Benefit Plan this year.
  • Impact to retirement plans of adding other employees other than yourselves if do so in future years.
  • IRS Filing Requirements of an Owner 401K vs. a Defined Benefit Plan, annual costs and Plan Documents.

Taxpayers can also think about starting and beginning funding of a legacy, through a will or a trust, in which a substantive portion of financial assets are left to charitable organizations. With a financial advisor, consider:

  • Plan requirements of adding you to salary in each an owner-only 401K and Defined Benefit Plans.
  • How adding other employees other than yourselves might impact an owner-only 401K and Defined Benefit Plan.
  • What they suggest as options to study and consider setting up a legacy and to update your wills accordingly.
  • Do several projections based upon several varying rates of returns given present assets, life insurance, liabilities etc. and saving levels.
  • Funding your children’s college tuition.
  • Review and consideration of future estate planning considerations, taxes and funding.
  • Review and consideration of present life insurance, disability insurance and long term care insurance.

Read more.

Consultant Article: Gary Adamson

Building Your Bench for Succession – A Few Tips to Help You

By: Gary Adamson

Thousands of firms are working through the succession and retirement of senior partners and deciding along the way whether or not they can pull it off internally and stay independent. The single most important factor for success is what we see when we look over our shoulder – is the bench of people there to succeed us? It is that simple but for many firms building that bench has been a daunting task. If you have near term retirements and your bench isn’t up to the task or just doesn’t exist, then you are probably one of the many firms driving the M&A explosion in the profession. If you have some time to work on it, this writing will provide some ideas to help you.


Gary Adamson

Gary Adamson

Make recruiting a constant effort in your firm meaning that you are always looking for people, not just when someone leaves. Said a little differently, we should always be looking for and have room for great people. If you make the commitment to hire more than you need another very healthy thing will likely happen – you will actually be able to make choices and outplace the weaker players, strengthening the team along the way. We will never be able to do this as well as the Big 4 who historically have accepted (promoted) significant turnover of their younger staff while watching the cream rise to the top. But we need to do it better.

Firms having the best success building their bench almost always have a commitment to grow their own. That means a commitment to a campus recruiting process and not being afraid to compete with the larger firms. This takes consistency, a campus presence, a social media and web face for the firm, knowing the professors and selling your firm. You don’t have to settle for the second tier of students. Not every top student is destined for a national firm – you can get some of the best if you work at it. Please don’t be cheap – if you want some of the best don’t let a few thousand dollars stand in the way.

I also encourage you to create an internship program in your firm. It is a tremendous way to get a test drive before you actually hire someone. Most schools are now structuring internships that run during tax season. A few points: make sure that you look for interns who you have a reasonable shot at hiring when they graduate; look for multiple year students if you can find them (repeating internships); again, don’t be cheap – you want to pay market or better.

Make sure that you have a staff bonus program for recruiting experienced people. You want your team talking to friends about how great it is to work for you and with some skin in the game they will be more inclined. The good news here is that the quality of what they send you is generally much better than what you’ll get from an outside recruiter. You want to talk to their friends who aren’t currently looking for a job. These plans are generally for senior positions and above and pay $5000 or more with half at the time of hire and the other half at some future date, if the person sticks.

Growth and Development

If you can fill the pipeline with new hires how do you grow and keep them? A few ideas that may be helpful:

Do a better job in defining your position descriptions and what it takes to advance to the next level in your firm. Your staff want a checklist – that is not what I am talking about. It is more about the experiences that they have had, the initiatives and leadership they have shown, the training that they have completed. Try to articulate how your expectations are different for each level, for example a senior over a staff person. If you can describe that verbally first, that’s a good start. That will give you the basis to build around in writing your position description.

Make it clear what the career progression is in your firm and what the ladder looks like. Then, if you are like most firms and have people on that ladder who are not advancing (they have peaked out at a particular level and will never be an owner in the firm) be honest with them and with everyone else in the firm. That means tell them the truth – they are not going to be a partner. They probably already know it. As important is that everyone else in the firm knows who is on track and who is not. You will lose younger “stars” who want to move up if they think the ladder is clogged by too many people above them.

When I started out in public accounting I didn’t get much nurturing along the way. It’s different now and building your bench begins with the new hires. It starts off with “buddies” who are peers to help get new staff going, then mentors who are career counselors in most firms and a newer role that I am starting to see in more firms is the sponsor.

A sponsor is a partner who takes a personal interest in helping someone grow into a future owner. It means spending the time and building the relationship to help that person get there. It is really grabbing one of the “stars” in your firm and taking a personal interest in their success. It is a step beyond mentorship and it takes the right partner to do it. Unfortunately most firms don’t have enough if any sponsors.


The college grads that you are hiring today want to be “a part of it”. That is much more than it used to be and it is difficult for many firms to meet the expectations. It is more than communication – it is involvement. The Millennials want you to involve them on the front end. They want to be in the know. They want to not just understand where the firm is going, they want to influence it.

Short of putting new hires on the Executive Committee, there are things that you can do to make your people feel more “a part of it”. Here are a few examples:

  • Most firms are not very good at articulating the firm’s mission and vision. Your staff really does care where the firm is going and they want to be part of a winning team. You need to find opportunities to talk about your mission and vision often and how the firm’s actions and direction are consistent with them.
  • Put young people on task forces and committees of the firm. Better yet form an Inclusion Committee to get their ideas on how the firm can improve communications with and involvement of the team.
  • Create opportunities to communicate with the team especially from the firm’s management/leadership group. For example, meet with your manager group after partner meetings to keep them informed; hold an open forum lunch for staff with your managing partner a couple of times a year.

Building your bench is a big job and it involves several different fronts. For smaller firms it is much more difficult to devote the resources to get it done. With that said, it is the answer to perpetuating your firm and accomplishing internal succession.

Top 10 Attributes of a Good Shareholder Agreement


By John Dillard President of His CPA PC

As a Virtual CFO and a CPA to Atlanta/America’s business owners and entrepreneurs our responsibility is to well consider many varied business issues and scenarios before they occur helping you avoid costly miscues along the way. These Top 10 will do much to help you not only consider how partners will/might enter and exit your business but will do much to ensure that management/ownership changes and their impacts are mitigated rather than exaggerated.

1. Understanding the Tenants of Business co-Management/Ownership. When you add a shareholder ideally you are only doing so as the new owner will add so much value to the business you will make more money, penetrate more markets and gain operational and financial efficiencies. It is prudent before you consider and document in signed written form offering a partnership to consider the attributes of what a potential new owner can and will bring to the business.

2. Decision Making. Frequently when there are two or more partners own a business there is another voice to be heard and perspective to be gained. However sometimes in the process someone has to make the final tough decisions. If you are the majority owner this will mostly like always be you, though certainly you may elect to pursue follow the path suggested by a minority shareholder. However in the event you are 50/50 owners this may prove much more challenging as frequently you may differ on the direction but may still have equal voting ability. It is prudent in these cases to determine in advance how these issues will be resolved so that you both may work in unison and harmony.

3. Valuations. When you are adding a shareholder to an ongoing business the first issue that needs to be agreed to is the net worth of the business. This allows new and existing shareholders to agree on a purchase value of the business when the new shareholder is purchasing stock. Care should be exercised at this point to consider how this valuation agrees to/reconciles to the valuation that will be in force in a written shareholder agreement when a shareholder elects or is contractually obligated to sell their stock. Typically valuations are based upon either a formula multiplier of earnings or by the performance of an unbiased appraisal from an independent CPA.

4. Payment Periods. As you are determining the valuation of a business great care should be exercised in determining the pay period over which a value will be paid as frequently a multiplier or independent appraisal may result in the calculation in excess of present excess cash/reserves. Typically a percentage of the purchase price is paid at the time of the stock sell with the remaining being paid for over a reasonable specified period and stated interest rate.

5. Non-Compete Agreements. Great consideration should be given to having all key integral personnel being required to sign a non-compete agreement sufficiently detailed to preclude a key employee/owner “leaving with the store.” The goal of these should not be to hamstring an employee/owner from working in their chosen field however the agreement should have “sufficient teeth” to protect the company’s business interests for a reasonable time period/geographic distance.

6.Intellectual Property. Though frequently intertwined in the minds of many non-compete agreements protection of Intellectual Property is different in they protect the working knowledge of steps, procedures, methods, patents & copyrights etc. It is a critical component of protecting your business as these assets are at the core of what a business truly is, does and performs.

8. With and without cause. All partnerships end. I promise. All of them will at some point cease. The final parting of the ways between you and your partner may be something easy and a time to rejoice or it may be a result of a disability, death or cancelation of employment with cause. All of these situations may result in varied options and determinations for considering valuation payouts and terms. For example a shareholder opting to leave may result in a higher payout and a shareholder being asked to leave for malfeasance etc. Care should be given and consideration noted to ensure that the agreement is fair to all parties and to continue the viability of the business.

8. Death & Disability. One of these two or perhaps both will happen to all of us. Guaranteed! Though you may have great respect for the talents and skills of your partner you might not be able to afford them in the event they are disabled and no longer able to work. Absent a shareholder agreement upon a shareholder’s death their assets will pass according to their will/state law. A well drafted shareholder agreement will enable the business to have options to buy the shares of a disabled/deceased shareholder allowing the business to avoid having the stock pass to heirs who know nothing about the business or worse.

9. Seek wise counsel. Working closely with your CPA to help make the “tough decisions” and then your attorney to draft a shareholder agreement are essential as using one without the other may result in an agreement that is legal but not practical or vice versa. Surrounding yourself with key advisors will do much to help you ensure your business is “on task rather than tasked.”

10. Don’t be in a hurry. If you have an employee you are considering making a shareholder you will want to be sure to “court them” by getting to know them over an extended period of time way before you actually make an employee a shareholder. Being able to see an employee under many varying degrees of success and challenges will do much to enable you see what you and they are getting into before you decide to become business partners. Also setting up operational, administrative and financial goals an employee has to achieve before even being considered being made a shareholder so they “will have skin in the game” and a history of goal setting and their achievement.


CIOs Are from Mars; CMOs Are from Venus

CIOs Are from Mars; CMOs Are from Venus: Seven Ways to
Bridge the Great Divide (and Strengthen Your “Soft Edge” in the Process)

Infighting is nothing new in the corporate world, but in today’s marketplace it can be
especially damaging. And the rise of web commerce and social media has exacerbated the friction between two C-suite leaders in particular—CMOs and CIOs. Rich Karlgaard explains why their “Mars vs. Venus” rivalry matters and how companies can bridge the divide.

Behind closed doors, in the corner offices of companies throughout the nation, a heated C-suite battle rages on. On the surface it looks like a battle waged over the corporate budget—a tale as old as time—with both sides seeking to claim a bigger portion of the pie. But take a closer look at the classic fight between chief marketing officers (CMOs) and chief information officers (CIOs), urges Rich Karlgaard. When you do, you’ll see that the contention is actually about much more than just money.

“The CMO-CIO divide is exacerbated by the rise of web commerce and social media,” says Karlgaard, author of the new book The Soft Edge: Where Great Companies Find Lasting Success (Jossey-Bass/A Wiley Imprint, 2014, ISBN: 978-1-118-82942-4, $28.00, www.richkarlgaard.com). “These new marketing channels mean CMOs command a growing share of their company’s investment in technology, and CIOs are none too happy about that. But still, it’s only part of the story.

The Soft Edge

The Soft Edge

“Dig deeper and you start to see stark differences between CMOs and CIOs,” he adds. “CMOs tend to be female while CIOs tend to be male, so you have a War of the Sexes going on. Then, you realize CMOs are liberal arts types while CIOs are technologists. As I learned from Forrester Research’s Sheryl Pattek, most CMOs think their CIOs are jargon-speaking nerds with no sense of market urgency, while CIOs think CMOs are ignorant fakers when it comes to technology more complex than a PowerPoint slide show.”

So Corporate America has a dogs vs. cats problem—or perhaps a “Mars vs. Venus” problem is more appropriate. And mutual disdain and squabbling prevent the collaboration needed to thrive in a tough global economy. But can anything be done about it?

Actually, yes, says Karlgaard. Invest in your company’s “soft edge,” and while CMOs and CIOs may not start holding hands and singing Kumbayah, at least they will have the language to discuss their differences and the values to bridge them.

First, what is the “soft edge”? To understand it, picture a triangle. Great strategy makes up the base. Masterful execution makes up one of the triangle’s two vertical sides. (Karlgaard calls this the “hard edge.”) It’s the third side of the triangle—the oft-neglected, misunderstood, and underfunded soft edge—that consumes Karlgaard’s book.

It’s much tougher to quantify but might be summed up as “the expression of your deepest values” or “the heart and soul of your company.” The author describes the soft edge culture in terms of five pillars—Trust, Smarts, Teamwork, Taste, and Story—and the book, packed with real-world examples, unfolds around them.

“Most C-suites and shareholders speak the language of the hard edge: metrics, analytics, logistics, strategies, and a well-defined and easy-to-see ROI,” says Karlgaard. “But today’s turbulent marketplace has taken much of the bite out of the hard edge. What can be measured and quantified can also be analyzed and copied by the competition.

“Look around and you’ll see the companies that have achieved soft edge excellence—the FedExes, Apples, and NetApps of the world—are thriving, while others flounder in our uneven and unforgiving recovery,” he adds. “A strong soft edge makes a company resilient and agile— even in the face of the occasional C-suite disagreement.”

One company that has figured out how to nurture its soft edge is NetApp, the $6.5 billion vendor of computer network storage solutions, which regularly makes Clayton Christensen’s list of the World’s Most Innovative Companies and a number of the best-places-to-work lists. Specifically, look at the relationship between NetApp’s CMO, Julie Parrish, and its CIO, Cynthia Stoddard—they’re the perfect example of how a strong focus on the soft edge improves relationships, eases internal strife, and makes for a healthier company.

Read on for some steps CMOs and CIOs can take right now to follow their lead:

Strive to understand each other’s challenges. (Soft Edge Pillar: TRUST) NetApp’s CMO, Julie Parrish, wisely empathizes with the company’s CIO, Cynthia Stoddard. She’ll tell you straightaway that she thinks Stoddard has one of the toughest jobs at NetApp. Parrish recognizes that Stoddard faces multiple challenges including: adapting to the cloud while assuring adequate security; betting on which technology platforms to go with; serving all functions at the company, not just marketing; and always doing more with less. Hers is a rapidly changing world.

And Stoddard recognizes that Parrish’s world is changing just as rapidly. After all, the share of marketing that goes through digital channels—through the web and social media, on smartphones and tablets—is growing like crazy. Social media in particular is always tossing up market opportunities that are fleeting in nature. These must be grabbed or they’re lost.

“Stoddard recognizes, as all CIOs must, that a CMO’s requests for greater technology budgets are not power grabs, but a reflection of reality,” notes Karlgaard. “Of course, to come to that understanding, there must be trust. And in these high-level relationships, trust comes from three places—first, showing that you have the other person’s best interests in mind; second, working hard to achieve common language and transparency; and finally, doing what you say you’ll do.”

Work together to ensure you’re mining the right data. (Soft Edge Pillar: SMARTS) To stay ahead of the curve, Parrish and Stoddard regularly meet to discuss trends in predictive analytics, sentiment analysis, and other valuable information. This requires a healthy CMO-CIO relationship. To stay smart, Parrish likes to put this question to their teams: What are the questions we should be asking?

That’s how NetApp gets the information it needs in order to build the right dashboards. If you don’t ask the right questions, Parrish explains, you build up a lot of technology in marketing without any coherence. As CMO, she uses Stoddard and her team of technologists to make sure marketing is using technology wisely and efficiently to get the data it needs. Parrish adds, “The key question for me is, where can I get data that will help NetApp be smarter? How do we mine data from the outside and pull it back into the organization? Those are the big questions.”

Don’t succumb to departmental tunnel vision. Keep the needs of the whole company in mind. (Soft Edge Pillar: SMARTS) This is an important reminder for any C-suite leader, but especially for CMOs and CIOs, who may feel the urge to dig in their heels for their own departments.

“No company survives solely based on its marketing, its technology, its operations, or any other factor,” says Karlgaard. “The company functions as a whole. In order to be successful, C-suite leaders cannot get bogged down in their own department’s issues. Every leader must recognize that the company’s overall needs matter more than an individual department’s.”

In The Soft Edge, Karlgaard tells of his conversations with Tony Fadell, CEO of Nest Labs. Fadell told Karlgaard about the importance of team meetings at Nest. Fadell brings everyone together—from user-experience people to management people to algorithms people—so that there are people there who can speak to every aspect of their product from design to marketing to user experience. Otherwise, Fadell says, the company’s thermostat algorithms might be written solely to satisfy the “code jockeys” at Nest.

And Stoddard notes that at NetApp they use proper governance to facilitate faster learning: “We use an enterprise executive architecture committee, with all the leaders of every NetApp function—marketing, sales, HR, operations, finance, and so on. That’s how we can come up with a roadmap for the whole company. We put on our NetApp hats and ask if this is the right thing to do for the company at this particular time.”

“My conversations with Fadell and my observations of how Parrish and Stoddard handle things at NetApp show just how vitally important it is to have analytical people and intuitive people in the room together on every major issue,” says Karlgaard. “You need the complementarities of the design people and execution people; the creative people and discipline people; the math people and salespeople. We have to be willing to learn from each other. We have to be humble enough to say, ‘I don’t know’ and then seek out the answers in each other.”

Regularly immerse yourself in the world of the “other side.” (Soft Edge Pillar: TEAMWORK) In a healthy CMO-CIO relationship, members of the marketing team and the IT team do regular “tours of duty” on the other side. “Embedded marketers get to learn from their IT counterparts about data and analytics; embedded IT people get to learn about key marketing programs and metrics,” explains Karlgaard. “These tours of duty help establish common ground that can help create unity and trust and helps lubricate collaboration.”

Be as transparent as possible. Invite scrutiny. (Soft Edge Pillar: TEAMWORK) At NetApp, both sides are open and honest about their cost structures. NetApp’s CMO Parrish established a foundation of good teamwork with CIO Stoddard when she admitted that marketing owned too many projects. “I raised my hand for an IT audit,” Parrish said. From that day, Stoddard knew Parrish wasn’t trying to build an empire.

“Collaboration and innovation are musts for survival in the global economy and that means great teamwork is vital,” says Karlgaard. “But you can’t have great teamwork if you aren’t strong in another Soft Edge Pillar as well: Trust. And you can’t have trust without transparency. That’s why Parrish’s IT audit request was so powerful. It was a way of saying, ‘Our information is your information. Help us see what we can do to make this company better.’ Transparency increases accountability, passion, and effort; it facilitates learning and catalyzes innovation.”

Don’t try to bury disagreement. (Soft Edge Pillar: TASTE) In a soft edge excellent company, CMOs teach CIOs how marketing platforms are crafted and how to fine-tune messages for any given audiences. CIOs show where complexity will slow down deployment, and therefore suggest areas to simplify the platform for maximum rapid deployment. Sometimes there is disagreement. Don’t bury it. Instead, use it to push everyone forward as you keep your eye on the prize. The truth is, taste evolves through disagreement. When opinions are shared, problems hashed out, arguments heard, the best possible products are born—products that look great and work great and that are somehow so compelling to customers that they must buy them.

“Recall how Nest Labs CEO Tony Fadell likes to put analytics people and marketing people in the same room to discuss which algorithms will create customer enchantment and loyalty in Nest’s products,” says Karlgaard. “Rest assured these meetings aren’t spent with everyone in agreement, congratulating each other on their perfect ideas. There’s disagreement, maybe even arguing. And what Fadell, and Parrish, and Stoddard, and other soft edge leaders understand is that that’s okay. Sometimes it’s just better to argue it out.

“Yes, there will be tension,” he adds. “It may be messy, and there will very likely be misunderstandings. It might even feel dysfunctional. But sometimes you just have to get people together, urge them to speak up, and convince them to face their disagreements. Encourage these difficult conversations. In the end, their differing opinions and interests will sharpen the company and result in better products and services.”

Let your story drive your behavior (and solve your disagreements). (Soft Edge Pillar: STORY) NetApp keeps really, really good company. (Excuse the pun!) Along with Google, Singapore Airlines, Starbucks, and very few others, it makes two annual lists: the world’s best places to work and the world’s most innovative companies. It takes huge pride in making both lists, and it should. But aside from pride, the real value of making both lists is that it creates a consistent story for employees, suppliers, and customers.

Whenever NetApp’s CMO Parrish and CIO Stoddard disagree on anything, they can call a time-out, step back, and ask: What would a top innovative company do? What would a best place to work company do? Thus NetApp’s story—its belief about itself—drives the right behavior and, more often than not, correct decisions at every turn. It’s a beautiful thing.

“Knowing the right story to tell combined with knowing how to deliver it effectively can inspire everything from understanding to action,” notes Karlgaard. “It can be used to connect employees to a strategy by providing understanding, belief, and motivation. Story can create legends that an entire workplace culture can build upon, grow with, and lean on. Stories capture and communicate knowledge, drive innovation, build community, strengthen organizational culture, and support individual growth.”

“Julie Parrish and Cynthia Stoddard realized long ago that greater things would happen for NetApp if they put their own departmental loyalties aside and worked together,” says Karlgaard. “They realized this would help them more easily respond to the challenges and changes constantly being thrown at NetApp. And it would let them optimize both departments’ functions, helping the company grow and innovate—one of the only roads to corporate survival these days. The confidence to do all of that comes from NetApp’s strong soft edge.

“The message to all C-suite leaders is clear,” he adds. “We are now working in a corporate environment where the soft edge dominates, where trust, teamwork, smarts, taste, and story matter as much as ROI, market share, and other hard metrics. Recognize this truth, and live by it, and you’ll thrive. Get caught up in infighting over hard edge principles and you may not even survive.”

# # #

The Five Pillars of the Soft Edge
By Rich Karlgaard, author of the new book The Soft Edge: Where Great
Companies Find Lasting Success
(Jossey-Bass/A Wiley Imprint, 2014,
SBN: 978-1-118-82942-4, $28.00, www.richkarlgaard.com)

Success in business has traditionally meant having a strategy and excelling at the hard skills. Controlling costs. Boosting speed. Effectively managing the supply chain. Superior number-crunching and analytics. Most of today’s CEOs, CFOs, chief operating officers, boards of directors, and shareholders speak the language of this hard edge. It’s their comfort zone: numbers, metrics, analytics, logistics, strategies, and a well-defined and easy-to-see ROI.

But today’s turbulent marketplace has taken much of the bite out of the hard edge. Its very appeal, the fact that it can be measured and quantified, also means it can be analyzed and copied by the competition. To really get ahead, and stay there, a company must also master its “soft edge”—a powerful competitive advantage that is made up of five pillars:

PILLAR 1: Trust. When it comes to trust, you must ask yourself two questions: 1) Does your external market, your customers and shareholders, trust you? And 2) Does your internal market, your employees and suppliers, trust you?

Customers must trust that your product or service is authentic and robust enough to withstand the immediacy of today’s media. And when things go wrong, they must believe you’ll do the right thing. Internally, trust underlies effective working relationships. It improves group effectiveness and organizational performance. Maybe most importantly, trust underpins innovation by facilitating learning and experimentation.

Trust may seem like a blurry concept in terms of ROI. But research and market results have proven that deep trust creates measurable real-world returns.

PILLAR 2: Smarts. Today, “smarts” is much more than what we conventionally think of as “intelligence.” In the age of Google, true smartness means the ability to see and recognize patterns—and constitutes the difference between forecasting a likely future and simply following the conventional wisdom.

Of course, we know that unlocking knowledge and supporting learning are pivotal to success. But there’s another dimension to being smart: one that relates to a few old-fashioned sounding concepts like grit, perseverance, and hard work. It also requires an ability to learn from others and from our own mistakes.

PILLAR 3: Teamwork. How does FedEx’s Fred Smith manage 290,000 worldwide employees, who move more than 3 trillion packages in a year? What balance of central authority and peripheral autonomy works in such a logistically complex organization? Or why, in an entirely different industry, did German software giant SAP blow up the management framework for its 20,000-person development department and replace it with small teams?

Since collaboration and innovation are a must in the global economy, effective teamwork is vital. Yes, we humans are imperfect. We have different needs, roles, and perspectives that we bring to every interaction or team effort. But when we work together, we make each other better. We increase accountability, passion, and effort. We facilitate learning and catalyze innovation.

For example, just consider that team-oriented selling and sales commissions outperform individually focused sales teams by 30 percent.

PILLAR 4: Taste. This is the word Steve Jobs used when he described Apple’s unique but universal aesthetic appeal. Jobs felt taste came from his own understanding of the yin-yang of science and humanity. The chief designer of Specialized Bicycles, Robert Egger, calls it “the elusive sweet spot between data truth and human truth.” Nest Labs founder Tony Fadell said, “If you don’t have an emotionally engaging design, no one will care.”

Clever product design and integration are proxies for intelligence—they make customers feel smart. If your product or service is seen as a badge of intelligence, you’re far along the road to lasting success. But taste is much more than just good design. It’s a universal sensibility, an emotional engagement, that appeals to the deepest part of ourselves. It’s wonderment and desire, power and control. And we see it in those magical products that not only show us at our best, but also make us feel and perform even better.

PILLAR 5: Story. In a world where outsiders can weigh in and have a greater voice on your brand, the ability to create an effective narrative is more important than ever. Used both internally and externally, stories create purpose and build brand. Purpose may be a soft attribute, but it’s what gives you steel in your spine, especially when cutting corners might temporarily boost the bottom line and delight shareholders.

Externally, stories are used to launch new brands and enhance the image of existing brands—a task made more difficult by today’s many new forms of communication.

Make no mistake, the hard edge does matter. Mastering it is “table stakes”—necessary to compete but not sufficient to win. Still, companies that can’t find the right balance between their hard and soft edges—those that neglect and underestimate the five pillars—will ultimately fall to those that can.

What many left-brained business titans have viewed as the realm of artists, idealists, hippies, poets, shrinks, and do-gooders, the soft edge is where innovation happens. It’s where brands are built. It’s how companies become agile. It’s where loyalty, passion, and commitment are born. It’s how today’s companies can differentiate themselves from the competition.

# # #

About the Author:
Rich Karlgaard is author of The Soft Edge: Where Great Companies Find Lasting Success (Jossey-Bass/A Wiley Imprint, 2014, ISBN: 978-1-118-82942-4, $28.00, www.richkarlgaard.com). He is also the publisher of Forbes magazine, where he writes a column, Innovation Rules, known for its witty assessment of business and leadership issues. He has been a regular panelist on television’s Forbes on FOX since the show’s inception in 2001. Karlgaard is also a serial entrepreneur, having co-founded Upside magazine, Garage Technology Partners, and Silicon Valley’s premier public business forum, the 7,500-member Churchill Club. He is a past winner of Ernst & Young’s “Entrepreneur of the Year” award. Karlgaard’s 2004 book, Life 2.0, was a Wall Street Journal business bestseller. A graduate of Stanford University, Karlgaard and his family live in Silicon Valley.

About the Book:
The Soft Edge: Where Great Companies Find Lasting Success (Jossey-Bass/A Wiley Imprint, 2014, ISBN: 978-1-118-82942-4, $28.00, www.richkarlgaard.com) is available at bookstores nationwide, from major online booksellers, and direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797. For more information, please visit the book’s page on www.wiley.com.

Consultant Article: CEB Global

Companies That Fail To Retain High-Potential Employees Groom Top Leaders For The Competition

More than two-thirds of organizations are investing in the wrong employees; Organizations must reinvigorate high-potential programs to build and maintain strong talent pipelines

CEB Global

CEB Global

CEB Global, a member-based advisory company, has revealed that more than two-thirds of companies are misidentifying their high-potential employees (HiPos) jeopardizing long-term corporate performance. This failure drives true HiPos – those who demonstrate the attributes to be successful future leaders – to pursue positions with potentially competitive organizations willing to invest in their development. In order to keep top talent in-house and maximize bottom-line results, companies must re-evaluate and reinvigorate their HiPo programs.

Major corporations spend an average of $3 million every year on leadership and development programs for HiPo employees, but 55% of these employees will turn over in a five-year period, resulting in wasted dollars and an insufficient leadership bench. The inability to establish a strong, diverse leadership pipeline impairs bottom-line performance since organizations with weak leadership generate roughly half the revenue and profit growth as those with strong leadership.

“There is mounting pressure on companies to realize the value of any talent investment made, especially HiPo programs which deliver future leaders for the business. Too often resources, training and career opportunities are directed at employees who lack the aspiration, engagement or ability to be effective at the next level. This misidentification is preventing those with the strongest potential from reaching senior roles and could restrict an organization’s future productivity, innovation and performance,” says Eugene Burke, chief science and analytics officer, CEB.

Companies can expect to improve the success of their programs more than 10-fold by correctly identifying HiPos and engaging them with the right training and development. Not only are they well positioned to groom employees for senior leadership positions, but will also strengthen talent pipelines and reduce flight risk for the business longer term.

Insights from a decade of research sampling 6.6 million people and more than 100 Fortune 500 HR leaders suggest that companies can improve the caliber of leaders and create incentives for HiPos to stay by applying a four-pronged approach:

  • Redefine “potential.” Adopt a clearer definition that accounts for the key attributes employees need to have in order to rise to more senior roles: the desire to assume senior positions (aspiration), manage and lead others effectively (ability), as well as having the commitment to realize their career goals with their current employer (engagement).
  • Measure potential objectively. Rather than relying solely on subjective manager nominations or evaluation, organizations should adopt a systematic process for identifying HiPo talent through objective talent assessment and evaluation.
  • Ask for commitment in return for career opportunities. Proactively evaluate engagement and act to mitigate flight risk among HiPo employees by evaluating their engagement today and their longer-term commitment to the organization in the future.
  • Create differentiated development experiences. Typical HiPo programs provide opportunities for incremental skill building but fail to prepare HiPo employees for realistic future roles. The best organizations help HiPos learn new skills, but also apply existing skills in different roles by exposing them to high-impact development experiences.

To learn more about how to increase the return on HiPo programs download “Improving the Odds of Success for High-Potential Programs.”

Guest Article: Accountants Advisory Group

Creating a Competitive Advantage Through Innovation

By Joseph A. Tarasco

Joe Tarasco

Joe Tarasco

Firms continue to experience significant compe­tition in traditional commodity-driven services; yet, few are attacking the marketplace with the new and innovative services necessary to survive. In fact, many accounting firms have been providing the same services to the same geographic areas for years— resulting in very little growth. As competition intensi­fies, traditional compliance services are quickly com­moditizing, causing firms to primarily compete on fees. This is taking its toll on profitability and, therefore, forcing firms to come up with new survival strategies such as joining forces with other firms (e.g., through an mergers and acquisitions [M&A]). Because traditional local practices are then forced to compete with much larger firms, many need to rethink their service model and how they position themselves in the marketplace.

Service Offering Strategies

One way for a firm to stand out from the competi­tion is to develop solutions-oriented specialty services in growing niches and become noted experts in those niches. Another way for firms to stand out is to bundle existing services and market them under one label (i.e., family office practice, litigation support, or personal financial business management), or promote bundled solutions to clients rather than present clients with a long list of individual services.

Here are some examples of new and innovative ser­vices that firms can provide to their clients:

  • LGBT services. These services are for same-sex mar­riage couples in the areas of tax compliance or fi­nancial estate planning, customized to deal with complex state-by-state laws. Currently, 25 states al­low same-sex couples to file a joint state income tax return and this number is growing. These services are excellent examples of bundling new services with a firm’s existing technical expertise and addressing the needs of a new and growing marketplace.
  • Divorce advisory services. These services include having a certified divorce financial analyst on staff to assist in pre-divorce planning, needs analysis, and goal-setting planning and implementation. According to Jennifer Baker, Psy. D., of the For­est Institute of Professional Psychology, 50% of first marriages, 67% of second mar­riages, and 74% of third marriages end in di­vorce. Divorce attorneys can be a significant refer­ral source for these clients.
  • Risk advisory services. These services provide infor­mation technology assurance and compliance ser­vices in areas, including Statement on Standards for Attestation Engagements (SSAE) No. 16, Re­porting on Controls and a Service Organization, Service Organization Control (SOC) audits, and HIPPA/HITECH compliance.
  • Medical marijuana business owner services. These ser­vices address a newly created marketplace with new issues and problems (e.g., best practices for proper compliance in areas of taxation and financial regu­lations for city, county, state, and federal govern­ment). They include consulting on entity selection issues depending on state law and interpretation and IRS Code Section 280E (i.e., expenditures in connection with the sale of federal illegal drugs).
  • Economic claims and disaster recovery services. These services target individuals and businesses, includ­ing monitoring and oversight services to govern­mental entities and agencies that are required to show accountability for relief or compensation funds provided by the federal government or the private sector.
  • Outsourced corporate development services. These ser­vices range from researching and identifying M&A transactions for clients to closing the acquisition.
  • Comprehensive workforce management services. These services include employee assessments, hu­man resources management, benefits, and insur­ance.

Suggestions for Gathering Innovative Ideas

Where does innovation come from? Innovation starts with ideas from partners, staff, clients, or referral sourc­es (e.g., attorneys, bankers, or insurance professionals). Taking these ideas from planning to implementation requires several steps, including: research; design; mar­keting; and delivering the final product.

Suggested ways for gathering new and innovative ser­vice ideas include the following:

  • Review competitors’ brochures describing their ser­vices and specializations;
  • Discuss with bankers and attorneys which special services they believe are needed by businesses in your area;
  • Review business newsletters, trade periodicals, and chambers of commerce publications for business growth trends and industry problems;
  • Solicit ideas from clients and non-clients through surveys or focused meetings;
  • Engage an outside marketing consultant to per­form a market research study; and
  • Request that partners and staff provide suggestions and perform research.

When firms offer new services to clients, they in­crease their exposure to a broader base of prospective clients and referrals, which can expand their network, thus leading to additional growth in traditional service areas. One way for a firm to expand its services is to merge with or acquire a company to combine/replace products to answer the needs in the marketplace.

There is a fundamental shift in the playing field as marketplace needs and demands change and consolida­tion reshapes the landscape. It is time to play the game to win. Develop a contemporary marketing strategy that targets segments in the marketplace that are un­derserved, but require value-added services.

While the mainstream accounting firms may be slow to adapt, there are firms around the country aggressively carving out opportunities for new kinds of engagements that the marketplace is ready to em­brace. In focusing on nontraditional examples, this article does not set out to diminish the need and im­portance of traditional services, but rather to add to firm’s service offerings and to complement and en­hance existing services.

Click here to read the full article.

Guest Article: Engineered Tax Services

“If there was ever a year to extend your return….this is it.”
Author: Heidi Henderson

Heidi Henderson

Heidi Henderson

Over the past six months, the IRS has finalized the tangible property regulations in relation to the acquisition, repair and/or disposition of tangible property (T-Regs), along with further guidance. This guidance has clarified partial disposition elections (Revenue Procedure 014-17) along with automatic consents for accounting method changes and elections under the final regs.

One of the key areas of opportunity for taxpayers lies in the ability to write off the undepreciated basis of “ghost assets”, or assets which remain on a taxpayers books but have physically been disposed of, removed, or are no longer in service.

Historically, tax payers were required to continue depreciating a unit of property or asset even after it was removed or destroyed. However, the final t-regs address a taxpayers ability to claim a loss on those components via partial disposition elections. This allows for an immediate write-off and the accurate accounting of building components and machinery in accordance with actual activities.

Why is there a limited window of opportunity? The temporary regulations effective for tax years 2012 and 2013 allow for retroactive application of the partial disposition election. Thereby allowing taxpayers to historically identify disposed assets with undepreciated basis and file an accounting method change on their 2013 tax return to write off that remaining basis.

The final regulations also allow for the disposition of assets when removed, however, the election is allowed only in the current year, on a timely filed return. Therefore, many taxpayers have the opportunity on their 2013 tax return to make a one-time adjustment to accurately reflect the status of their tangible property and to comply with these tangible property regulations.

If you feel that this may benefit you or you have additional questions, please feel free to contact Heidi Henderson at Engineered Tax Services at (801) 689-3232 or email at hhenderson@engineeredtaxservices.com