How CPA firms can evolve for continued success

CPA firms are preparing to experience significant disruption over the next few years as a combination of factors will change the marketplace.

“The firm model is based on a 60-plus-year-old premise, and technology is taking us in completely different directions,” AICPA Vice President–Firm Services & Global Alliances Mark Koziel, CPA, CGMA, said during an interview last week.

Firms are using technology in innovative ways and taking advantage of opportunities to specialize in areas requiring specific expertise. Meanwhile, many small firms with aging owners are trying to figure out how they are going to transition their practices.

During a presentation Tuesday at the AICPA spring Council meeting in New Orleans, Koziel described the changes firms are experiencing and provided a road map for how they can remain relevant in the future.

The AICPA Private Companies Practice Section (PCPS) has created a “Firm inMotion” toolkit that expands upon the CPA Horizons 2025 Report and provides the “how”—how firms can transition to being a high-performing firm of the future. The toolkit addresses firm structure and strategy, technology, clients and relationship building, and staff development. A fifth section of the toolkit that remains under development addresses globalization.

In developing the toolkit, a PCPS task force asked practitioners what they wanted firms to look like in the future. The task force developed a “transition continuum” and checklist for firms as they consider how they need to evolve to be successful in the future.

The tool is based on the premise that making the transition to a high-performing firm of the future doesn’t have to be an overwhelming ordeal. Many firms are already moving forward without realizing their progress, so understanding where you are in the process can help you move forward. One way to get started is to look closely at three primary areas of your firm and where each falls on the continuum.

Strategy: We have developed a strategy or plan to move our firm into the future.

Action: Our practice has put a transition plan into action.

Focus: We focus on carrying out the plan each day, not just when it’s convenient. We track metrics and reward success.

The transition continuum and checklist provide best practices that firms can follow in the areas of culture, clients, and talent. Under “culture,” the checklist addresses:

• Challenge your firm model. Analyze the firm’s partnership agreements and governance to make sure they make sense for the future.
• Be flexible. Adapting to the changing needs of the workforce can strengthen the staff’s loyalty.
• Commit to a dynamic workplace culture. Team members can be empowered to make decisions, required to exercise discipline, and rewarded for delivering strong results.
• Focus on value. This could include a move away from billable hours.
• Embrace innovation and change. Developing new ideas can improve processes and employee engagement.

The checklist items under “talent” are:

• Rethink your firm’s career track. It may be more of a lattice than a ladder, and the pyramid model may not work anymore.
• Develop an inclusive culture. This includes both diversity and a transparency with all staff members in the firm so that everyone will understand decisions.
• Embrace generational differences. Firms can use the unique talents of each generation to their advantage.
• Embrace training and coaching. Talent should be educated with acumen and leadership and coached for succession.
• Recruit with intention. Firms must have a recruiting strategy to match talent with firm needs. Strategies include providing internships or recruiting through social media and virtual career fairs.

“Clients” is the area with the most checklist items:

• Revisit service offerings. Assessing the effects of technology is important. “If tax prep is being disintermediated, what am I going to do if I’m the tax-only shop?” Koziel said. “Well, I can do tax planning, tax consulting, get into wealth management. Not that I have to hold assets, but I definitely have to look at my tax clients differently.”
• Reignite relationships. Relationships provide clients with value that technology alone cannot offer. Networking goals should be defined for everybody in the firm, focusing on the relationship with the client.
• Manage expectations. Being deliberate in communications with clients and your team aids in client service and in turn builds trust with clients.
• Be deliberate with technology solutions. Aligning technology with strategy can increase efficiency and aid in client retention.
• Maximize social media benefits. Younger staffers especially may be adept at using social media to publicize the firm and follow clients.
• Form alliances. A tax-only practice with a client that just reached 100 participants in its employee benefits plan may want to get another firm to do the EBP audit. And small firms have the opportunity to join international associations, as large firms have done.
• Capitalize on your differences. Firms can articulate their value and confidently capitalize on their specialties and strengths.
• Be purposeful when selecting and evaluating clients. Firms must choose carefully who they serve, with a laser focus on which clients their particular firm is best and brightest for.
• Think globally. Advances in technology, social media, and the ease of travel have made the world a more global arena.

“In each of these areas, you challenge yourself,” Koziel said. “It doesn’t matter if you’re a sole practitioner, small firm, medium firm, large firm. Every firm has a capability to do that.”

PCPS members can access the transition continuum and checklist on the AICPA website.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.