Despite the evidence that we have been living in a knowledge economy for at least the past 45 years—ever since Peter Drucker coined the term in the early 60s—I am starting to conclude that most professional service firms do not share the same paradigm. Rather, they operate as if they are Industrial Era factories. My colleague Dan Morris has been making this argument for the past couple of years, and I am starting to be persuaded by his observations.
The more time I spend with firms and firm leaders, the more I realize they treat their people like bags of cement they can shuffle around for maximum efficiency. They don’t understand the difference between knowledge workers and manual—or service—workers, nor do they understand the critical distinction between efficiency and effectiveness.
Mark Bailey, who leads an enlightened firm in Nevada that has implemented Value Pricing and trashed timesheets recently sent me the following e-mail that supports the argument CPAs are not knowledge workers, mostly because the leaders in firms don’t treat them as such. Here’s what he wrote:
We interviewed a two year senior from a national firm last night, and a couple items that came out were illuminating, and offer additional support for trashing the timesheet, or at least not using it as a management/productivity tool. Since I’m not going to make the roundtable in October, I thought I’d share it with you now. I’m sending a Principal (partner in training) and a senior mgr. They are brighter than I am anyway.
During the interview I asked several questions—two of which were “What do you like about your present firm?,” and of course the antithesis “What don’t you like?” This lady liked her co-workers and the formal training she receives. She couldn’t think of anything else. What was interesting though, was that she didn’t like:
- while the formal training was a positive, the on-the-job training—particularly the supervision and review, by the supervisory seniors and managers was not giving her the chance to grow professionally. Apparently, this national firm requires the professionals to have 30 billable hrs each week during this time of year—the result is the supervisors won’t pass billable hours to staff, because they need to meet their own quotas. So lower level work is being hoarded by supervisors, and the product isn’t going out timely. So much for ‘efficiency’ and client service—two of the goals of tracking billable hours.
- She didn’t like that they work 65 to 70 hrs weekly during the busy season and 40 minimum during the rest of the year, and there was no comp or compensating time off.
- She didn’t like that there was literally no work / life balance during half of the year (no surprise there).
- She didn’t like that the firm circulates a monthly spreadsheet summarizing everyone’s billable and non-billable hours which points out the ‘slackers’ (what an awesome motivating tool!).
There was a lot more.
She’s coming on board January 1.
Why do these firms continue to cling to this outdated tool—the timesheet? Is it simply inertia? Is it because it’s been around two generations? But other industries make changes far more frequently, discarding various methods for better ones; why are professional service firms so much slower?
What is amazing is the leaders of these firms—especially those in the Top 100—will lament how hard it is to keep good people. Well, sure, treat them like they are machines, instill the fear of God in the them if they don’t hit their billable hour quotas, or exceed the budeted time, and what do they expect? I’d hoard hours too, which is essentially why we have so many surgeons piercing ears in these firms. I wouldn’t want to work for them—nor does the emerging generation, who understand they are knowledge workers, not factory workers.
I’ve never been so discouraged with the current leadership in our profession. The blame rests squarely on their shoulders. It’s not the colleges, it’s not the AICPA, it’s not the State Societies—it’s the myopic leadership in firms that is causing our profession to have less appeal to the best and brightest of the younger generation. All they seem to care about is this year’s income statement, and not a tinkers damn about posterity, or the legacy they will leave behind.
The Revolution VeraSage has committed itself to will happen from the bottom-up, not the top down. Firms like Mark’s will continue to become lightening rods for talent, siphoning off team members from firms above, and then perhaps some leader who is not hermetically sealed from “that’s the way we’ve always done it” will wake up and take personal responsibility for changing his or her firm’s culture, rather than waiting for “those other people” to change.
Revolutions always happen from the bottom-up, and perhaps it’s Pollyanish to expect it to be any other way in the professions. Firms like Mark’s, and the others in our Trailblazer section, will lead the profession out of Plato’s Cave.
Like the War on Terrorism, this is going to be a long Revolution.