Back to the Future

BY FRANK STITELY

The article “The Firm of the Future” (Nov. 08, page 68) suggests that time sheets and productivity tracking are relics of the past. However, the article actually shows time tracking and productivity management to be absolutely essential.

For instance, the Ohio firm cited requires 13.5 full-time equivalent employees to achieve $1.3 million in revenue. A firm with that number of employees should achieve close to $2 million of annual revenue. This example should certainly not motivate anyone to abandon productivity tracking. I can imagine why the employees are happy, but I don’t understand why the partners are. My college production management professor back in 1983 stated, “Happy employees are not necessarily productive employees. Many employees are perfectly happy doing next to nothing.”

Most current management experts, outside CPA practice management experts, teach that you get what you track. If you want productivity, you have to track productivity. The author would be much more convincing if more than only one of the top hundred firms had successfully adopted his model.

Frank Stitely, CPA, CVA
Chantilly, Va.

Author’s reply: The truthfulness of a theory is not determined by majority vote or by how many people are using it. The notion that the firm of the future theory is false because only one Top 100 firm is using it reminds me of those who didn’t believe the Earth is round back when only a small minority believed it to be true.

Today, more than 600 firms operate without time sheets, across all professional sectors––from accounting firms and advertising agencies, to IT, consulting and law firms. Some of these firms are in the top 1% of profitability in the world. Even if their level of profitability was the same, it seems obvious that most knowledge workers would rather work in an environment of high trust.

I was in college in 1983 as well, where I learned the same “happy employees are not necessarily productive employees” axiom. But the article wasn’t about happy employees, it was about effective knowledge workers who are less effective when they are micromanaged and demoralized when forced to track every six minutes of their day.

Mr. Stitely claims “time tracking and productivity management to be absolutely essential.” But the time sheet is not a measure of productivity since it is silent on output, results and value, being only a measure of input, activities and efforts. The firms in the article have replaced the time sheet with more effective Key Predictive Indicators that take into account output, results and value to the client, a far more effective tracking device that doesn’t suffer from the illusion of control the time sheet provides.

Mr. Stitely further asserts “you get what you track. If you want productivity, you have to track productivity.” This is nonsense. We don’t change our weight by weighing ourselves more frequently or accurately. We must look at the root causes and processes, which time sheets emphatically do not do.

Most current management experts––including Peter Drucker, Gary Hamel, Stephen Covey, and H. Thomas Johnson, whose books I cited in the article––all agree that knowledge-worker productivity is very difficult to measure since we can’t see what is going on inside people’s heads. We have to discern it from the quality of their work, which requires another knowledge worker to make a judgment, not a measurement.

Ronald J. Baker
Petaluma, Calif.

Subject’s reply: One measurement does not establish the success of a firm. I did initially hesitate in sending in financial information for the article because we are in a period of transition, not just in how we operate, but from one generation to the next. Looking solely at revenue by FTE for one year does not reveal any of that.

Is a firm with 13.5 FTEs that generates $2 million in annual revenue but has employees working 70 hours per week to get to that level of revenue better or worse than a firm that generates less revenue but does so without burning out employees? I don’t believe there is a clear-cut answer to that, but I know which way I prefer. I like having self-motivated employees who enjoy a good living and have a balance in their lives.

The letter’s author is suggesting that our revenue/FTE would change if we were keeping track of time and that the entire reason that metric is below his “industry norm” is because we’re not keeping time sheets. To me, that thinking is flawed, and it’s a reflection of what many in our industry do (internally and externally): We look at one metric, out of context, and formulate an opinion without understanding what is going on behind the numbers. Does the letter’s author know what that ratio was for our firm back when we billed by the hour? Does the author know whether it’s an improvement? Does the author factor in economic and business differences between Lancaster, Ohio, and the Washington, D.C., area (which is where his firm is located)? Does the author explore the mix of services provided?

He also notes that if you want productive employees, you have to track productivity. This suggests that we can’t have productive employees unless they jot down how they spend every minute of their day. That seems to be a very close-minded way of looking at productivity. If we monitor the work coming in and when it gets out, the satisfaction of our clients and staff, and the bottom line, what’s to say our firm is less productive than another?

Victor Christopher, of Snyder & Co. CPAs
Lancaster, Ohio

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