My daughter was an athletic trainer.
Her understanding of the human body can prove immensely helpful to an avid golfer like me. If my shoulder is hurting, for example, she may be able to connect that pain to my hamstring. It doesn’t always make sense to me—my shoulder pain is caused by my hamstring?—but she is usually right. And it’s because she never views an ache or pain in isolation.
Accounting firms are not that different. (Stick with me here.) When faced with big decisions, we must begin with a premise that a long-term solution is generally not found in looking at any issue in isolation. Oh, certainly we can do short-term triage on any time-sensitive issues, but the “fix” is best viewed by a comprehensive look at all.
In my 34-year public accounting career, four issues have frequently shown themselves to be inextricably interconnected, whether I was part of a Top 20 or Big 8 firm or helming my own small company. They are the other “Big Four:” owner compensation, succession planning, buy-outs, and profitability.
Owner compensation affects both retention and recruiting of talent. Talent is critical for favorable succession. Succession requires we appropriately retire/transition successful ownership from one generation to the next. And, of course, we must tackle all of these decisions within the desirable elements of profitability.
Which leads to the question: How? How do we think about these four major decisions in a comprehensive way? Stick with me through another golfing analogy.
I recently tested golf balls on the driving range. It was a fun and informational process, offering a number of interesting data points, including ball speed, spin rate, and distance traveled. I finished the test by concluding there were three golf balls that worked well for me, but one was the best path forward.
Two things were abundantly clear: 1) The decision was not necessarily a “right or wrong” decision; it was a “better or best” opportunity; and 2) Golf balls alone won’t fix my golf game. I have to keep working on my swing, my putting, my short game, etc.
The connection is similar, but certainly more dramatic and impactful, for your firm. One element alone can make a difference, but: 1) Not all decisions can be summarized as right or wrong; it’s more likely better or best; and 2) You need to have the appropriate focus on each of the elements.
How do you figure out what’s better or best for your firm? Through a clearly articulated Strategic Plan. It’s the process of developing a Strategic Plan that prompts each firm to determine how it values each of the “Big Four” issues and prioritize accordingly. Do you want to be in the top 10 percent for profitability? The top 10 percent for partner earnings? Again, there’s no right answer. There’s only what’s right for your firm right now.
As I work with firms in developing Strategic Plans, we spend a substantial amount of time understanding and building consensus around the “Big Four” goals and priorities. We constantly analyze how the overall plan will impact the way future decisions are made. And I get to float innovative ideas, perspectives, and methodologies gained from experiences at other firms and on my own.
At the end of the process, each firm ends up with a clear, comprehensive view of their “Big Four.” So, when a theoretical ache or pain arises in the future, they, like my daughter, can accurately treat the issue at hand.
