At Weinstein Spira & Company, we are committed to continuous improvement. One of the best gauges of how we are doing and where we can improve are benchmark surveys. AGN North America’s member survey and the AICPA PCPS/TSCPA National MAP Survey are two examples of benchmark surveys that provide valuable insight and specific data on important firm metrics. We use benchmarking surveys in our firm to identify areas where we are doing well and also areas where we should focus, especially where we should invest to secure our firm’s future.
As the Managing Shareholder, I review the survey data and share the highlights with our shareholders. We then dissect the data that is important to us while engaging in lively discussion about what’s included in the data and how that impacts our comparative numbers. After reviewing the survey results, we note that we are fortunate to have no debt and are proud of our revenue per equity shareholder. We also note that our billing rates are higher than benchmark averages but we credit that to doing business in a large metropolitan market (Houston) compared to firms located in Omaha or St. Louis, where their market may require a lower rate per hour. In addition to recognizing areas where our performance shines, we also pay attention to the areas where we can improve. For instance, as we decided where to focus and invest this year, we committed to improve efficiencies and better leverage our staff to increase our realization without sacrificing our rates, improve our AR and WIP performance and continue our firm’s focus on marketing initiatives.
Long-Term Strategies to Improve our Metrics
As we worked on our realization this year, we placed an emphasis on training our staff and ensuring that each person is working at the right level on engagements where possible. We committed as a leadership team to a strategy where we invest in interns and staff that we can develop and grow as the firm grows. And we did something different this past busy season and over-hired. We made a conscious decision to forego the quick hit we could have had in overall profitability by running lean and not delegating work to new staff but instead having experienced managers do most of the work or putting the most efficient person on the job instead of leveraging all of our staff. Instead, we invested in our future and hired so that we had extra capacity and flexibility in our scheduling. Our goal this year is to continue to over hire, even though we are challenged like many firms in finding senior level staff and must instead focus on hiring interns and college graduates. The result is that our realization is down slightly this year, but we expect real gains in years two and three as we continue our investment in our people and an increasingly leveraged model.
The survey results also showed that our shareholders’ billable hours are lower than average. We recognized that this showed an opportunity to do more for clients, but we also confirmed the important leadership areas and initiatives our shareholders are driving in the firm. We place a high value on our shareholders’ involvement in training and mentoring our staff, recruiting, business development and nurturing client relationships, and developing our niches. While these activities show up as non-billable, which directly impacts our shareholders’ billable hour metrics, we are actively building future capacity for our firm.
Another area that we have focused on and improved this year is our accounts receivable and WIP management. We upgraded and streamlined our systems and we’ve moved most of our clients to electronic invoicing. We also took an idea from our audit department where we interim bill and applied that to some of our corporate tax clients and began interim billing for them, too. This focus – along with more involvement and diligent follow up by our administrative staff and shareholders – has improved our cash flow.
We are proud to have maintained our organic growth rate year over year. We attribute that to our marketing focus over the last 12 to 18 months and expect to see an increase in our organic growth rate over the next year or two because of our investment. Part of developing a marketing culture includes capitalizing on our fun, team-oriented culture where we divided the firm into cross-sectional teams this fall that we called the “Football Frenzy” made up of all levels, disciplines and administrative professionals where each team earned points for particular marketing activities. While our team members are competitive and had fun together, the end result wasn’t just about winning but instead about building a stronger firm with deeper relationships and achieving a common goal through cooperative efforts. We had tailgates and other activities throughout the competition and the culmination of the Football Frenzy was a post-game show to recognize MVPs, winning teams, and the results we had all produced. It was fun to see everyone come together and have some people really come out of their shell and shine where they may not have had the opportunity otherwise.
Benchmarking reports like the AICPA PCPS/TSCPA National MAP Survey provide firm leadership teams the ability to come together and evaluate performance and determine which areas to invest in to achieve your strategic plan. When you identify areas for improvement, agree where to focus and then follow through, you will end up driving results that will secure your firm’s future.
This article originally appeared on AICPA.org.