This short series has been written with the intention of helping you get the most from your staff and maximise the profits of your practice.
For any firm of accountants, with the exception of losing a major client, the most costly mistakes are going to relate to employees. Indeed, if you hire the wrong employee or employees, that might lead directly to the loss of a key client.
While I do not have formal HR experience, my main qualification for writing on the subject is the benefit of bitter experience at both ends, as employer and employee, including 20 years working as a partner in tax practices of various sizes.
Each article will offer very direct advice that should help you to avoid some of the pitfalls that other firms have dived into over the years, might on occasion amuse and will contain a series of anonymised anecdotes that are likely to leave you either with a familiar, wry smile, shaking your head in recognition or possibly bursting into tears.
It is generally recognised that an accountancy practice makes its money from selling employees’ (and partners’) time. In order to maximise profits, it therefore follows that you need to charge the maximum amount for each hour provided, while paying as little as possible to staff and for other expenses.
This is as simple as it gets but, almost immediately, stresses become apparent in a model that can work perfectly or leave you tearing your hair out.
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To get the perfect staff balance you need to recruit them, retain them and, where necessary, get rid of them and start the cycle again. In principle, the same applies to your fellow partners, although there is always the risk that if you get that one wrong, they could get rid of you.
Sadly, while most of us are experts when it comes to juggling numbers, judging character can be more difficult, while we are all prone to short termism, which as often as not turns out to be more costly in the long run.
For example, if you give a good member of staff a £1,000 pay rise when they wanted £1,500 that could tip them over the edge. The cost of replacing them is likely to be more than the £500 that you so cleverly saved. Worse, one person finding a better job on higher pay can create a domino effect where others follow.
I imagine that every reader will now be laughing and saying “it couldn’t happen to me”. Look into your heart and you will almost certainly discover that this is precisely what has happened to you on numerous occasions, either while running your own practice or when you became a disgruntled employee in the time that it took to open an envelope and reveal its contents.
I used to have a managing partner who loved the phrase “it’s not rocket science”. That is a pretty accurate analysis of the situation but, unfortunately he never really managed to master this simple area of practice management and therefore did not get the opportunity to move on to Cape Canaveral and the Apollo programme. He did however, like pretty much everyone else for whom I have ever worked, provide some superb illustrative material for this series.
Over coming weeks, I will provide a considerable amount of practical guidance about every step of the employment process from cradle to grave. This will include pieces covering recruitment of both junior and more senior staff, employing rainmakers, remunerated and rewarding employees, dispensing with their services and a great deal more.