1You may not like what I am about to say but the 7 bad management techniques listed here are just the tip of the iceberg on the ways many professional firms in the UK go about their business.

You could say that they are the 7 deadly sins.

Most accountancy firms use poor management techniques
Most accountancy firms use poor management techniques (which I call “methods of mass destruction”) and as a result they:

  • Have poor cash flow.
  • Have fee collection problems with clients.
  • Never charge properly for the work they do.
  • Never achieve the success that they deserve (and the Partners work too hard).
  • Put themselves at risk far too often in the work they do.

Of course, a successful firm will not employ any of these methods since to do so will put the firm and its partners at risk.  However, there are lessons to be learned from these methods and firms should go through their systems and procedures carefully and work towards eliminating as many of the methods as possible.

Method 1 – “Sign Anything”

2This method succeeds when the partners add the firm’s signature to a myriad of certificates even though certification is not required.  For example, the accounts of sole traders and partnerships routinely do not need to be audited yet many accountancy firms insist on adding a certificate along the lines of “these accounts have been prepared from the books and records of XYZ and from information supplied to us and are certified to be in accordance therewith.”  The savvy accountancy firm know that this is a really dumb thing to do – why sign or certify anything if it is not required.  The savvy firm even takes this further by deleting all references to the firm from the accounts where an opinion is not expressed.

Method 2 – “Be really helpful to ex-employees and sign employment references”

This is a great method of mass destruction and can easily lead towards claims against the firm by an ex-employee.  Some firms have got this method down to a fine art – they tell the new/prospective employer that the employee was useless and should have been sacked long ago. To be more helpful, they even point out certain personal issues about the employee. And, it comes as a complete surprise to them when a specialist employment lawyer writes to them to announce that the firm is to be taken to an Employment Tribunal for damages running to a lot of money. The savvy accountancy firm simply replies to an employment reference request giving the name of the employee and the period of employment and nothing else.

Tip: Consult a lawyer to agree the wording your firm should use when replying to reference requests about ex-employees.

Method 3 – “Play a guessing game and don’t issue job descriptions to employees”

This method can really cause havoc. Simply avoid telling employees what they should do and don’t tell them what is expected of them. It creates an environment that doesn’t work at all: employees leave, new ones join, clients get upset and they leave too and generally it’s not a very happy place to be in at all.  The savvy accountancy firm has a proper system for assigning roles and responsibilities to each employee as well as issuing proper contracts of employment.

Tip: Look at Bizezia’s Work Manual, here.

Method 4 – “Let Partners do mundane and low value work”

This method is based on the myth that clients love to have the partners do all the work for them rather than routine work being delegated to less senior people. The method works well in pushing up billing costs, raising client resistance to fees, partner stress and can even result in losing the best clients.  The benefits are low profits, dissatisfied clients, heartache (and heart attacks) and if it’s carried on for long enough, bankruptcy.

Method 5 – “Ignore practice guidance from your professional body”

3Firms that are hell-bent on getting into really hot water with their professional body employ this method.  Even though most assignments the firm undertakes are subject to some form of statutory requirement or professional body guidance, the firm and the partners ignore these requirements completely. As a method of mass destruction, this works well and often leads to the firm being fined and the partners sometimes losing their professional qualification.

Tip: If your firm is an ICAEW firm, read Bizezia publication – “Practice Assurance Standards for ICAEW Accounting Firms”. It provides valuable information on how firms can become compliant including recommendations on client acceptance and disengagement, technical competency and quality control.

Method 6 – “Don’t run the practice as a business”

Those using this method truly believe that running a professional practice is simply about being technically competent and everything will then take care of itself. Many other firms aren’t run as a business so partners think: why should we do anything different?  This method works like a dream as professional firms are usually run as partnerships and that structure seems to be the norm even though it usually conspires against valid business management techniques. Little wonder then that most firms fail to completely satisfy their partners – let alone their clients. Savvy partners know that this approach is well past its sell-buy date and that today the only way to succeed is to run a firm properly using the best-of-their-kind management techniques.

Tip: It’s time to develop a strategic approach for your firm drawing the ideas from great thinkers such as David Maister.  Read Bizezia publication “A Strategic Planning Checklist for Professional Firms”, available on request to mpollins@bizezia.com

Method 7 – “Forget about quality, just focus on getting the work done”

4With this method, firms focus only on getting their work done. Even if they do deliver some degree of quality in the work they do, they handle their clients so badly that service quality goes out of the window. Savvy firms know different: they know that 68% of clients lost by an accounting firm blame poor personal service as the reason for changing accountants and when clients do complain about how badly they have been treated, 74% are not even happy with the way their complaints are handled.

Tip: If it’s time for your firm to seriously embrace client care, read Bizezia publication– “Client Care”, available on request to mpollins@bizezia.com

Martin Pollins
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