Is Michael Gerber right?

As most readers know MG advocates a highly systemised business. This is whereby there is a clear thought through and written down system of the work to be done in a business. Everyone works by following the system.

The idea is with a systemised way of working even a person with lower level of skill will be able to do the job. Skills and experience of the person would not be as important since everything is laid out as regards to what, how and when the work is to be done.

I do not think highly systemised approach takes into account of employees and the way they would feel about being told every step of the way what, when and how do the work.

People by their very nature do not like to be told what to do. They prefer autonomy to control. In a business where individual skills are important would a highly systemised step by step process of undertaking the tasks really work? I doubt it.

Of course there is a room for having systemised processes in all businesses. Though not so much In a highly knowledge based business such as accountancy services or the law. I think employees would resent the detailed systemised way of working.

I think a better solution would be to let people know outputs expected of them and timescale to produce those outputs. How they go about achieving those outputs would be up to them. Isn’t this treating people as people rather than doing their bit in the way that is demanded of them?

Comments
petersaxton's picture

I disagree    1 thanks

petersaxton | | Permalink

The highly systemised approach is used to make it easier for everybody. If you let people do things their way then whatever you introduce practices to make things easier they wont work if the workers are not doing things the same way. You might have a standard wording on an email but if you let an employee write their own emails then there is no time saved. Obviously it means that the standard wording has to be appropriate and there may need to be flexibility. You may have a standard wording for sending a tax return but with one client you may have to explain what you have done a little bit more. 99% of clients may use email but if a few clients have things sent by the post you may need a system to remind staff that the client is not on email. If your staff don't want to consider this then there may be problems. If people don't want to receive direction from those who pay their wages let them work elsewhere.

"knowledge in the head"    1 thanks

wilcoskip | | Permalink

Hi FT.  You raise some excellent points here.

From my point of view, the advantage of a systemised practice, with everyone following the same procedures for work, is that it avoids the situation where knowledge and systems (e.g. for particular clients) become trapped in people's heads (and yes, that includes yours) rather than accessible to everyone.  So in a systemised practice, if someone is unexpectedly ill, for example, it is much easier for another person to pick up where they were and run with it, because they know (or can access) the systems for getting the work done.

Another advantage could be that with systemised procedures, the level of expertise needed for routine jobs is downgraded a level.  I'm not saying we start using trained monkeys (we're not the Revenue, for goodness' sake), but you no longer need someone capable of reinventing the wheel at every turn.  This would, in turn, leave more room for the higher-grade employees to focus on higher-level activities such as consultancy (which you enjoy) or tax planning etc.

The down-side is the level of investment, in time and effort, needed to get this kind of systems-based business off the ground.  But in the long run I'd expect it to be worth it.

WS.

petersaxton's picture

Trained?    1 thanks

petersaxton | | Permalink

"I'm not saying we start using trained monkeys (we're not the Revenue, for goodness' sake)"  I thought they used UNTRAINED monkeys?

I stand corrected    1 thanks

wilcoskip | | Permalink

You are of course correct.

MissAccounting's picture

An interesting discussion FT    1 thanks

MissAccounting | | Permalink

An interesting discussion FT but as an aside - how do you find so much time to blog in January??

I have been contemplating whether or not to implement a full on staff hand book with all procedures or keep it the way it is with a few procedures written down and the rest just "best practice"

It might be a case of meeting the 2 somewhere in the middle perhaps?

Old Greying Accountant's picture

The big problem is ...    1 thanks

Old Greying Acc... | | Permalink

... peoples minds work in different ways.

So, having an inflexible system means that a very able person may take 50% longer doing a job, and give them all the grief that goes with it, but if they used their own instictive way they may do the job 50% quicker!

To me a mixture is best, with clearly defined way markers for important things, but leave the rest for the person do do in the manner that best suits their personal skill sets.

As an example, when i do a jig-saw I dig out all the edges and corners, put them together and then fill in the middle. It works for me, but if someone does it better finding all the sky and doing that first, then whatever!

 

ShirleyM's picture

I think systems are essential    1 thanks

ShirleyM | | Permalink

If there is more than one person working in the practice then it helps everyone.

It saves on time and interruptions if you (the boss) can look to see how things are progressing, without having to interrupt someone to ask them.

The systems don't have to be very detailed. A checklist of all o/s jobs, and a checklist for each job, with each task ticked off or dated when completed, to make sure nothing is overlooked and it enables you to see how each job is progressing. As mentioned above, it also allows another person to take over the task, without the overhead of reviewing all the work to find out what has been done, and what hasn't.

petersaxton's picture

"As an example, when i do a    1 thanks

petersaxton | | Permalink

"As an example, when i do a jig-saw I dig out all the edges and corners, put them together and then fill in the middle. It works for me, but if someone does it better finding all the sky and doing that first, then whatever!" But you are not talking about more than one person doing it. If you have two people doing a jigsaw and using different systems you may have chaos!

Old Greying Accountant's picture

but how often ...    1 thanks

Old Greying Acc... | | Permalink

... do you have more than one person doing one job at a time?

And actually, the example works well - would be hard if both doing the edges at the same time!

The whole point of me having a small sole practice is i detest systems, they chain free thought and increase the risk of missing things.

I draw a clear distinction between systems and reference markers for work-flow.

As for systems, I am sure all the failed banks auditors had fantastic systems in place!  

ShirleyM's picture

We pass jobs backwards & forwards    1 thanks

ShirleyM | | Permalink

There are only 2 of us, but I only do the bits that my employee can't do, so every job passes from one to the other throughout the whole process.

Without checklists this would be very risky, or much time wasted exchanging information on the progress of the job.

Even if I worked on my own, I would still use checklists for the reassurance that I hadn't missed, or forgotten, something.

Horses for courses. We each do what is best for us.

Very brief example:

Emp: accepts jobs, adds it into WIP checklist, prepares annual checklist, scans records & other admin stuff

Emp: if new client, sets them up on our software

Me: do accounts, prep drafts

Emp: prints & sends drafts (or emails)

Emp: arranges for mtg to discuss drafts

Me: meet with client to discuss drafts

Me: amends accounts (if necessary)

Me: preps tax

Emp: prints accounts/tax, arranges appt for sign off, gets payment

Me: meet with client, explain tax, get sign off

Me: submit tax

Emp: scans in all signed docs, sets up reminders for next yr & other admin stuff

It works for us.

petersaxton's picture

Systems, checklists, templates and what else?    1 thanks

petersaxton | | Permalink

"do you have more than one person doing one job at a time?

And actually, the example works well - would be hard if both doing the edges at the same time!

The whole point of me having a small sole practice is i detest systems, they chain free thought and increase the risk of missing things." Systems are a lot different when there is only one person. You only have to consider how you work. I still think even for one person it's good to have systems. By that I mean checklists of what is needed to do and templates. I have ways of working and if somebody can show me a better way I will change but until then I would expect anybody working for me for any length of time to adhere with the way I work.

"I draw a clear distinction between systems and reference markers for work-flow." Maybe I'm agreeing with - see above. What do you mean by a system if it excludes checklists and templates?

"As for systems, I am sure all the failed banks auditors had fantastic systems in place!" It's pointless having a system is if the overriding philosophy is to ignore them.  It's pointless  I

petersaxton's picture

One example    1 thanks

petersaxton | | Permalink

I have a spreadsheet template for accounts. I have a sheet for sales invoices, bank receipts, bank payments and expenses paid personally. I will add deposit accounts and credit card sheets if necessary. My list of sales invoices has a column for dates the invoice is paid. My bank receipts column has a column for invoices paid. My bank payments and expenses paid personally have columns for expenses type and I sort on the expense type to make the analysis easier than spending a long time moving the cursor to different columns when doing the analysing. I then have a list of numbered journals with descriptions. I then have a list of journals in columns The left hand column is exactly the same as the ETB list of nominal descriptions. The second column is the total of all the journals and the further columns are journals 1, 2, 3 etc. I have an ETB with the second column being a list of nominal descriptions. The first column is a list of Digita codes for Digita Accounts Production. I then have further columns for opening trial balance, bank receipts, bank payments and journals. I may have extra columns for deposit accounts, personally paid expenses, credit card but I can be flexible and just use journals for these sometimes! I will then have a draft trial balance and then two columns: a P&L a/c and a balance sheet. All the way through I link the ETB numbers to totals of analysed bank, expenses, journal summary, journal details, any other analysis, etc. so that whenever anything changes the change ripples through to the P&L or Balance Sheet. I knew an accountant who tried something similar but he had Dr and Cr columns on his ETB (I have negatives for Cr) He had several journal columns on his ETB and his P&L and balance sheet was only linked to cells if there were numbers (I use SUM() from the first column with amounts to the last relevant column). He'd forget to change the formula if he added an extra journal and it would take him ages to get his trial balance to balance. I suppose some people would call his a "system"!

Old Greying Accountant's picture

My way of seeing it ...    1 thanks

Old Greying Acc... | | Permalink

... is a detailed system is about how you do the work rather than recording it has been done, and at the right time.

For me it I work with what the client gives me, and have bespoke working papers for each client rather than force their system in to mine. Not saying it is the right way, or best way, just right for me and best for me.

It is all on spreadsheet and rolls on year by year.It gets boring doing every single job in the same way.

Going back to Shirley, may be I should have said tasks rather than jobs as that was my context.. In her example each are doing a single "task" that string together to form a whole "job", but at no point are two people involved on the same "task" - it rarely happens in a small firm.

petersaxton wrote:

"I have ways of working and if somebody can show me a better way I will change but until then I would expect anybody working for me for any length of time to adhere with the way I work" 

That's my point, I want a set of accounts that has back-up where appropriate, how that is presented is down to the person doing it, and you won't ever see a different way if they can't use a method intuitive to them. Note the word different, not better - makes life more interesting.

ChrisMartin's picture

FT - Michael Gerber is now    2 thanks

ChrisMartin | | Permalink

FT - Michael Gerber is now publishing industry-specific versions of the original E-Myth book, and there's one just for us (The E-Myth Accountant, funnily enough). Its big failing, in my view at least, is that it tries to shoehorn knowledge workers like us into the McDonalds template that Gerber likes so much. I agree with you - it can't work like that. In 'traditional' businesses, it's the system that is the productive unit  - it works because it allows low-skilled workers to contribute and perform (eg, Henry Ford / McDonalds). The worker is serving the system. The system is the business. In knowledge businesses like ours, we are the productive bits - the system should be serving us. Without our knowledge there is no business. The value in knowledge work rests with experience, judgment, creativity and wisdom. And you can’t systemise those. If you try, you destroy them. As Steve Jobs said (or something like this) - 'Why would we hire great people and then tell them what to do?'

 

As wilcoskip says, the best approach is to capture the knowledge that's within the firm and its people so everyone can access it. Create a knowledge base, if you like. Get it out of peoples' heads and into something we can all read. At the same time, systemise the stuff that lends itself to systemisation. Things that we'd like done the same way every time but that don't require detailed technical knowledge. I heard a good definition once - 'systemisation is the elimination of discretion'. If you don't want clients getting entirely different experiences depending on who did the work - systemise that process.

As an example, what we do here is have systems for the mechanics of work (so, for example, our system for preparing a tax return covers gathering info, chasing the client, sending out the return for signature, etc), but there's a black hole where 'A System for Understanding Income Tax and Putting The Right Numbers In The Right Boxes ' should be. That's a knowledge and experience thing. Specific bits of knowledge that will be useful are recorded in a knowledge base. I did one this week - the procedure for recording carried back terminal losses on tax returns. No-one in the office had done it before, but now we don't need to re-invent the wheel.. 

It's by no means perfect, but it feels like the right approach.

 

petersaxton's picture

Some flexibility    1 thanks

petersaxton | | Permalink

"For me it I work with what the client gives me, and have bespoke working papers for each client rather than force their system in to mine. Not saying it is the right way, or best way, just right for me and best for me." I change what I do if it's sensible. I have one client who is an accountant and he prepares his accounts to profit and loss account and balance sheet. I have other clients who use accounts software and I start at the trial balance. That doesn't mean I don't have a system. I have a system that I adjust if there's a better way for a particular client. I usually copy the spreadsheet from previous years but if it's better to start again I will do. "you won't ever see a different way if they can't use a method intuitive to them." If I have somebody working for me (I have in the past before setting up on my own) I will listen to their ideas. Usually when they have explained their idea I will ask how it deals with something that my system deals with and they accept it doesn't! "but there's a black hole where 'A System for Understanding Income Tax and Putting The Right Numbers In The Right Boxes ' should be. That's a knowledge and experience thing." The majority of that knowledge should be acquired before you start doing this work. If an employee doesn't have this knowledge I would recommend that a more knowledgeable employee does that work and at the same time trains the less knowledgeable employee. There may be things like considering whether a sole trader should consider incorporation and this can be included in a checklist. I'm not saying people use systems and checklists without thinking. They are an aide. Being able to do basic work with as little effort and stress as possible enables accountants to use their brain more productively. The Touchstone system above is a very cheap and effective method of systemising your business whichever way you want to do it.

Old Greying Accountant's picture

Thanks Chris    1 thanks

Old Greying Acc... | | Permalink

What I was trying to say but put better!

I would add though, I have bought the book you mention and will read it next month, always up for new ideas.

petersaxton's picture

The E-Myth Accountant    1 thanks

petersaxton | | Permalink

Somebody said they had read it and were disappointed. It seemed to be that it's like a franchise operation - the use the main book and then insert "accountant" all over the place and rebrand it. I still might buy the books - when I have some time left after systemising!

Old Greying Accountant's picture

Ah but you see ...    1 thanks

Old Greying Acc... | | Permalink

... the OP was, as I read it, about a rigid inflexible system that cannot be deviated from, ever.

Time for that song again, I think it probably was the single most important influence that shaped who I am now!

 

 

 

FirstTab's picture

Great response

FirstTab | | Permalink

Thank you all fir a fantastic response.

WS and Chris - thanks you changed my perception on this subject. There is room for systems in a highly knowledge based business. This is in the way you both outlined.

Peter I really like to read what you say but lost patience not because of what you say, it is some IT issue that makes your comments come in one big paragraph. I read most of what you say.

petersaxton's picture

Sorry    1 thanks

petersaxton | | Permalink

Yes, ever since I updated to Windows 8 quite often I can't format the comment box. I try to use enter but it doesn't accept it. I'll see what I can do about it. It's only a problem with AccountingWeb.

petersaxton's picture

I read the OP differently    1 thanks

petersaxton | | Permalink

 I didn't think he was more concerned about how rigid the system was. I thought he was worried about imposing his way of doing things on others. I see that Shirley uses less of a system than me - at least that is how I read her example. I have a checklist for accounts and one of the lines is to do a journal for wages because if it is a one man company I may forget to enter the wages. They don't have wages if they have another job or other earnings. I also list things like prepare draft accounts before tax and then enter details into the tax software. I don't think I've ever forgotten to do that but it's one stage on the complete process so I include it on the checklist. 

petersaxton's picture

test

petersaxton | | Permalink

Test 1

Test 2

This is pasted from Word and I hope it works!

petersaxton's picture

test

petersaxton | | Permalink

It does!

MissAccounting's picture

Peter, have you tried using a

MissAccounting | | Permalink

Peter, have you tried using a different browser?  Perhaps Google Chrome?

Old Greying Accountant's picture

Peter ...

Old Greying Acc... | | Permalink

... when posting a comment, click on the "disable rich text" just below the comment box - you can then delete all the crud between the words, re-format, and then re click (enable rich text) to go back to normal

petersaxton's picture

It worked

petersaxton | | Permalink

"Peter, have you tried using a different browser?  Perhaps Google Chrome?"

You are a genius!

I wondered why it sometimes worked and sometimes it didn't. If I followed the link from Outlook it would go to IE. I just need to set Chrome as my default browser.

petersaxton's picture

test

petersaxton | | Permalink

"when posting a comment, click on the "disable rich text" just below the comment box - you can then delete all the crud between the words, re-format, and then re click (enable rich text) to go back to normal"

Thanks. Your method worked, too, but changing browser is easier!

ShirleyM's picture

@Peter    1 thanks

ShirleyM | | Permalink

petersaxton wrote:

I see that Shirley uses less of a system than me - at least that is how I read her example. 

My example wasn't an actual checklist. I just used the example to demonstrate how we pass jobs from one person to another.

We have more tasks on our real checklists, and each task has a written procedure.

petersaxton's picture

I see    1 thanks

petersaxton | | Permalink

So you have more of a checklist!

That's what I thought from other postings.

I think Touchstone is a really good system for people who can make use of it a lot. I think we are not the best people given our present situations. It would be ideal for FT though.

Steve McQueen's picture

Systems are essential in our business    2 thanks

Steve McQueen | | Permalink

I have been often asked how I grew so big as a sole practitioner. There is one answer: I systematised everything I could. Every minute detail of everything was written down and replicated over and over.

Sure, every CF deal had its peculiarities, every tax enquiry looked at something new, but the SYSTEM of practice remained unchanged and allowed me to highly leverage my time so that I dealt only with the very essentials I had to deal with whilst my "monkeys" did the rest.

I did it to grow big that time; I'm doing it again this time so that I don't have to work hard as I am at heart bone lazy.

But if you choose to follow me, don't reinvent the wheel, buy it all in. Sure it'll cost a few quid, but it'll save you in the longer term.

Steve

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