In compiling Accounting Today’s Top 100 Firms list, I spend an awful lot of time tinkering with a mammoth Excel file full of data from 300 or so accounting firms. (That’s “mammoth” by editorial standards; to most accountants, it would probably look perfectly manageable.) This year, while I was busy moving rows around and adding formulas to calculate the data points we present in that report, I realized that there are whole categories of statistics that we don’t usually include, and that it would be relatively easy to generate them.
I decided to play around a little, and the very first set of stats was so interesting that it stopped me in my tracks — and became the genesis of this article. That first formula was the ratio of employees to partners, which for the overall Top 100 is 15. When you break that down by firm size, though, an enormous difference pops up: For the seven firms over $1 billion in revenue in the profession (the Big Four, RSM, Grant Thornton and BDO), the ratio of staff to partners is 18; for all the other firms, it drops to 10, regardless of whether they’re just under a billion in revenue, or just over the $37 million threshold for the list. That intrigued me enough to do the same calculation with some of the firms in our Regional Leaders list who were below that threshold, and the number quickly dropped to between six and seven staff members per partner.
That discrepancy between large and small firms got me thinking about how they leverage their partners differently. Since larger firms are able to afford all sorts of internal hierarchies and human resource structures, it’s naturally easier for them to support higher ratios — but they’re also much better at the simple act of pushing work down. Their partners are not spending a lot of time on basic client work; wherever possible, they are having someone else do it. In short, they’re better than most other accountants at delegating.
The smaller a firm is, the easier it is for partners to get caught up in client work — preparing returns, cleaning up transactions in QuickBooks, tinkering in Excel. This isn’t just a problem for accountants: People naturally gravitate to the work they’re used to, the work they know the best, and (whisper it) the work that’s easiest for them, regardless of whether it’s the best use of their time.
The problem is that it often isn’t the best use of their time. If you delegate a client’s 1040 to a staff member, that frees you up to do a more complicated return that you can charge more for, or to go out and find more clients. And even if you don’t have much in the way of staff, there’s probably work you can delegate — there are services that will handle your technology, for instance, so you don’t spend time installing software or setting up routers. You don’t need to maintain your own Web site, or send out invoices, or schedule appointments. Freelancers, part-timers and, more and more, apps and software solutions will handle all of these things. (If you’re looking for a place to start, the folks from firm association BKR International recently put together a great
Remember, when you’re not delegating, you’re not teaching, so you’re not building up your staff. When you’re not delegating, you’re not giving your clients the best you have to offer.
When you’re not delegating, you’re not doing your best.
