A word from the streets

If you’re a regular reader of this blog, then you will know that over the last few months I’ve been working on a book titled “What do Accounting Clients Really Want?” The book is scheduled to be published by Thomson Reuters in May/June this year. Its is a series of interviews of 25 people who buy accounting services.

When I’ve mentioned the book to friends, clients, business associates and people I bump into, almost without exception, they have asked me the obvious question, “Why?”

Since the why question has been asked of me so many times I have developed an almost scripted response that is built around one  statement, “Most advisers be they accountants, lawyers, management consultants or whoever, fall into the trap (more often that not) of assuming what their client or prospective client really wants”

I then go on to unpack with my audience at the time (usually consisting of 1 or 2 people who I have cornered somewhere!) why the above statement tends to be fact than fiction. Lets face it, the adviser in question may well be a partner in a big accounting or law firm, a director in a management consultancy or a principal within a marketing agency. They are, for all intents and purposes, a subject matter expert; they have deep technical knowledge, years of industry experience, well developed networks within their discipline, proven methodologies and processes and the list goes on.

It then becomes a little more understandable to my audience that advisers may, by default rather than be design, take on the mantle of “I know best” viz their client.

Set against the above  explanation, my audience start to nod their heads slowly in understanding. My business audience is usually one of two groups: a member of the adviser community or a client of that community.

If a thought bubble were to appear above the adviser(s)  heads it would read something like, “Oh … that’s what he means. Hmmm … have I fallen into that trap?”

On the other side of the coin, the client thought bubble reads, “Yep I know how that feels. Why on earth do they ask me questions and not listen to what I have to say?”

The above of course is a little exaggerated to make the point. If you’re an adviser, irrespective of the discipline, what does your thought bubble say? I’d love to know. Leave a comment and please tell me and others.

See you next time,

James E

Much ado about fees (part 3 of 3)

Last post we left the story at the critical point when John the CEO was understandably underwhelmed by the senior consultant’s revolutionary advice of a “to do list”.

The senior consultant replied, “Well, it’s not just a to-do list, John.  It’s more about the relationship that you have with your executives around that list.  It’s really important that you do it on a weekly basis and for the things that they don’t get done, they put it on the list for the folloing week, and so on.”

So John said, “Okay, I’ll try it.”  And John asked, “Well …what do I owe you?”

Now, given that this guy was only really speaking to John for about thirty or so minutes (not even an hour)  the senior consultant said, “Give it a go for three months, okay?  You do it for three months and you send me a cheque with what you think it’s worth.”

The three months came and went and this consultant checked the mail one day and he got a check fromJjohn.  What do you think he was paid for a 30 minute chat?  $500, $1,000? The CEO sent him a check for $200,000!  The moral of this story is that this guy had asked the CEO to pay him on the basis of the worth or put another way the value.  The simple advice had indeed revolutionised his executive team and it was worth $200,000 to him.  The $200,000 wasn’t reflective of the time or even the advice that the consultant had provided this chap.  What it was, was a recognition and an indicator of value that was generated by that advice, especially when the advice was exceuted.

It’s an extreme example, but a great example of changing one’s mindset around fees.  It’s not so much about the time you put in or even the advice you give.  It’s more about the value and the contribution that has been generated by that advice or by that piece of work. Don’t forget that. Your help is often more valuable than you think!

Until next time,

James E

Much ado about fees (part 2 of 3)

Moving to the other side of the fee type spectrum we have time-based fees which is traditionally how about accountants and lawyers charge their clients.  They have a charge out rate per hour, so if you engage them for ten hours, then of course they pay ten hours times the rate per hour.  That’s all well and good, but by definition, the professional advisor in this case, has put a cap on what they could potentially earn – because there’s only so many hours in a day, days in a week, weeks in a month, months in a year – if they’re purely charging on the basis of time.  The advantages and disadvantages have been well documented in lots of places for a long, long time. No need to waster our time here.

Much more interesting is the school of thought where an advisor charges, not just on the basis of success or time, but  on the basis of the value that you deliver to the client.  An extreme example here will help. There’s a very famous management consultant author by the name of Alan Weiss who has written a whole stack of books.  He gives some really good examples of, perhaps, the foolishness of advisors like accountants and lawyers charging on the basis of time purely because of that reason, that their potential earnings are capped by the availability of time.  His approach is, to  work out with your client from the get go what value they really need from the project that the advisor has been asked to deliver or the advice on.

There’s a wonderful example, which may fall into the realms of urban myth, of a CEO calling in a consultant – (it’s not Alan Weiss in this case, just some other guy) to help him. This CEO lead a very large firm and he was having problems getting his executive team of seve people to really achieve the things that they needed to achieve on a daily, weekly and monthly basis.  So he called in his friend, who was (I think) a senior partner with one of the big consultancies, and he explained his dilemma to the consultant.  The CEO went into lots of details and he shared his frustration that he just couldn’t get these people in his executive team, who were all talented, skilled, experienced senior executives to do the tasks and deliver the outcomes in the right time frame.  Things just took too long and would drag out from week to week, month to month, and so on.

The senior consulting partner, after pausing for a moment, shared the following with the CEO (let’s call him John)

“John, I hear your problem and I can sense your frustration, disappointment, and anger.  Please be assured that you are not the only CEO on earth to feel these things.  What I’m about to share with you will revolutionise the way that your executive team will work and how they relate with you.  It will change their world and your world.  The CEO, of course, leant forward and whispered, “Tell me the secret.  Tell me the secret.  This is fantastic.  I can’t wait.”

The partner took out a blank sheet of paper and started drawing a table.  The table had two columns. The left hand side, was labelled task; the right hand side, labelled task completed yes or no?.  I think in this case he had a tick for the yes or a cross for the no.  And he said, “Look, John, this is really simple.  In week one you get your executive team to write down the ten things that they want to achieve that week.  Some of them will be small things which will be achieved in five minutes.  Some will be quite long and they will be done over several weeks.  What I want you to do in week one is put the ten things that you want your executives to achieve, but also not just what you want them to achieve but what they want to achieve, and they get sign-off from you and they show you the blended list.  So that’s week one.  Every get together you have with them in week two, week three, week four and so on, you go through that one list.  You go through the things that are done and the things that are not done.”  This consultant said, “I guarantee that within a three months they will be transformed.  They will be focused on achieving those things on the list.”

The CEO said, “Is that it!?  A to-do list?”

Tune into the next post to read what happens next!

All my best,

James

Much ado about fees (part 1 of 3)

This week we are taking a slight departure from the client side and looking more closely at the advisor’s side (accountant, lawyer, management consultant, engineer etc …) when it comes to the wonderful topic of fees.

As we all know there are few different types of fee regimes.

1. Success -based

There are lots of clients out there who, for whatever reason, would prefer to pay out of their gain rather than pay fees up front for a project or a certain outcome.  The problem with that is that clients would probably do more with their advisors if there could be some element of the fees being charged based on a success basis.

Many advisers don’t like doing that purely because of the fact that they increase their risk.  However, consider some of the advantages of charging clients a success fee only:

Advantages

a.  Getting more work.

b. Building confidence and trust with the client, because of the fact that the advisor has been prepared to back themselves, or take skin in the game, or have a stake.  Clients like that because in effect the advisor is sharing the pain with the client.

c. Fees can be actually higher than normally charged, since if a project is successful then the client is prepared to pay more because it’s out of their gain. For example, if the project is a sale of an asset and the success fee is based upon that asset reaching a certain price and the advisor is able to exceed that price expectation, then of course the client is prepared – and has the capacity – to pay more.  Of course the size of the premium depends upon a range of factors: the agreement that you have with your client and the quality/strength of the relationship.

Disadvantages

a. Sometimes you may not get paid.  If the fee for the project is success only, then you can put in a lot of time, effort and resources and not have anything to show for it. Not a good outcome.

b. Even though a success fee is charged and you’ve delivered the client a great outcome, sometimes clients want to balk on agreements. Although the project was so incredibly well-delivered and the client has made a huge gain, they may backtrack and not want to pay that big fee.  This can sometimes happen when expectations of both parties and the client-advisor relationship is not strong.

c. In some respects a success fee only regime may lower the quality of the work that the advisor actually delivers to the client.  This is especially the case when the usual mode for the advisor is to charge fees for time or to charge their fees on a retainer basis.  Now, if the advisor has other clients that are paying him/her up front or on a part basis when stage one of a project is delivered, then stage two and so on, then depending on the mindset of the advisor, he/she may lean towards those clients that are prepared to part with cash up front as opposed to the success only piece.  So, sometimes from a client’s point of view, they’re not getting the best from the advisor.  It really depends upon the type of advice, the area of specialty, and the relationship between the client and the advisor.

We’ll visit another fee type next post.

All my best,

James E

Straight talk

We have all heard the old saying – “give it to me straight.”

Usually in the movies someone is sitting in a doctors office on a chair on one side of the desk with the doctor sitting on the other side.  The doctor looks worried, is fidgety and is searching for the right words to use. The patient (usually a man) calmly asks the doctor to “give it to me straight.”

The doctor replies, “Marshall … I have good news and bad news. Which would you like first?”

Marshall says, “Give me the good news Doc”

Doctor replies, “You have one week to live”

“What? One week to live! That’s the good news? What on earth is the bad news?, Marshall shouts out.

The Doctor sheepishly admits, “The bad news is … I meant to tell you the good news last week”

Funny story, but unfortunately many clients of accountants, are victims of not being told the bad news early enough.

A good friend of mine is a management consultant.  He is highly skilled and experienced and earns a very good living. Being
self-employed he has to fulfill the usual compliance requirements for operating a small business. As you know, in Australia one of these requirements is to lodge a quarterly business activity statement (BAS). Along with lodging the documentation there is usually an amount of tax payable.

For some strange reason my friend hadn’t lodged his BAS’s for 12 consecutive quarters. For some strange reason his accountant didn’t remind or raise the issue with my friend not until one day four years later he had a difficult chat with his client. Needless to sy it was not a nice discussion – the outcome of which was a bunch of fines, interest on what was owing, and the balance of the tax payable – a truckload of money and a blemished record with the Tax Office.

A question for you … “Who is at fault … the client or the accountant? Legally its the client. Morally it maybe the accountant.

What do you think?

See you next post.

James E.

Some funny client stories

I’m thinking its time for a little light relief. I found these funny accounting client stories on the web earlier today. Enjoy!

An accountant reviewing a sale of a small salvage company:

“So, who are your primary suppliers?”

“Auctions, 70%. Liquidations and Cash distressed contractors, 20%. Gypsies, 10%.”

“Gypsies?”

“Yes. They go to auction, they buy at auction, then they sell back to you. Gypsies.”

“I’m just going to write down arbitrage resellers…”

A junior auditor seconded to our firm who used to work with me was performing some analytics over expenses. As not much activity had occurred, one of the larger expenditure accounts was actually the audit fee (which had increased). Oddly enough, the junior decided to ask the CFO why it had increased, to which he replied, “you tell me.”

(A client calls us requesting we email him a scan of a document. We promptly send this over to him and he calls back almost immediately.)

Client: “This scan you have sent me only has one page of the document and the rest of it is pornography!”

Me: “I’m sorry? There is certainly no chance that this contains any pornography. It looks perfectly fine from our end.

Client: “But there is. I am looking at it right now!”

Me: “Which button are you clicking?  The one that says ‘Next Page’ or ‘Next Document’?”

Client: “Why does that matter?”

Me: “Well if you are clicking Next Document, you are currently looking at all of the pornography that you have recently been viewing on your computer.”

Client: “F***!” *hangs up*


… and of course we must end with a joke about accountants.
A young accountant spends a week at his new office with the retiring accountant he is replacing. Each and every morning as the more experienced accountant begins the day, he opens his desk drawer, takes out a worn envelope, removes a yellowing sheet of paper, reads it, nods his head, looks around the room with renewed vigor, returns the envelope to the drawer, and then begins his day’s work. After he retires, the new accountant can hardly wait to read for himself the message contained in the envelope in the drawer, particularly since he feels so inadequate in replacing the far wiser and more highly esteemed accountant. Surely, he thinks to himself, it must contain the great secret to his success, a wondrous treasure of inspiration and motivation. His fingers tremble anxiously as he removes the mysterious envelope from the drawer and reads the following message: “Debits in the column toward the file cabinet. Credits in the column toward the window.”
Keep smiling and bye for now!
James E


A client named Elliot

The other day I was editing one of the chapters in the book I’m working on with Thomson Reuters titled “What do Accounting Clients Really Want?” I can’t tell you the name of the CFO or his organisation I interviewed (due to current release restrictions) but I can share some valuable insights to come out of the meeting. Lets call this chap Elliot.

Elliot, until about a year ago, worked with an iconic muliti-national corporation in a senior finance role; he is now CFO with an Australian-based business with lets say a $100m+ revenue. One could say the organisations Elliot had worked with were almost opposite ends of the business size spectrum.

Elliot is in his forties and has had more than 20+ years finance experience. He has worked with a wide range of professional advisors – accountants, lawyers, technologists, management consultants and the like. You name it, Elliot has worked with them. Elliot is no plebe; he is an assertive senior executive who has a wealth of expertise in the finance and accounting fields. He is certainly no one’s fool and know what he wants.

Set against this background I was both surprised and delighted to hear him express his delight when working with external advisers who “get it.” Elliot gets a kick out of advisers who do the following often and well:

1. Communicate early and often.

If there is a problem tell me (the client) all about it. The sooner I know about it the more options we both have to solve it. Towards the end of a project you & I have much less options to work with and I will be less happy.

2. Share new ideas freely

No idea is stupid. The more ideas the better. I want my advisers to share with me ideas they have learnt from their other clients in industries which may share common elements with ours. They actually do me (and other clients for that matter) a real disservice if they don’t share their thoughts and ideas to innovate and improve our current processes.

3. Work together to achieve a common goal

I want to know that I have the full support from my advisers. Their fee should be a by-product of the relationship they have me (and the business) to work together to make our organisation better for the owners/investors, customers, management, staff  and suppliers.

This is what Elliot expects and when it is delivered he is one happy CFO!

See you next post,

James E

Being a happy & successful professional (part 3 of 3)

Here is the last installment in our being a happy & successful professional. Below you’ll find the last 4 of  Stephen C Ellis’s pearls of wisdom.

6. Be enthusiastic. Because we deal in rules, it’s real easy to fall into cataloging all the reasons something won’t work or why somebody shouldn’t do something. In fact, we lawyers take pride in being the first one to find fault with an idea. Makes us look smart. In my days as managing partner I would roll out a strategic initiative, and I could see my partner’s eyes starting to spin. Who would get the prize for being the first one to spot the flaw?

Clients want to do things – they don’t call you so they can not do things. They want to stay in the borders of the law, but they want to be told how to do what they want to do. And they want to know that you’re happy to be part of what they’re doing. There is no better way to end a client meeting than saying “This is going to be great” and to mean it. It’s fun to be charged up – to add energy to every conversation.

7. Trust yourself. You are a very bright person or you wouldn’t be here today. I think among the most important conclusions I came to as a young lawyer was that if I didn’t understand something, it was because the thing in fact didn’t make sense, not because I was stupid. Most of the times I’ve found myself in hot water it’s because I let a conversation continue past the point where I understood what was being said. And virtually every time I would say “stop, I’m not following this,” someone would come up to me after the meeting and say “Boy I’m glad you said that. I had no idea what we were talking about.”

8. Get involved. Organize the reunion or the bicycle race. Chair the church committee. Help people who have not enjoyed your good fortune. You have spent three years learning how to organize your thoughts, analyze a situation, and articulate action plans. Use those skills everywhere in your life. Stuff will get done, people will appreciate your initiative, and you will derive great satisfaction from making things better.

9. Be yourself. Here are my final two unappreciated but clearly true truths: The toughest lawyer is not the one who is the most obnoxious. Clients will say they want a tough son of a gun to make somebody life’s miserable, a real bulldog, etc. Don’t be that person. It’s been my 100% uniform experience that the bulldog only adds time, expense, stress and confusion to an otherwise inevitable result. Even clients can’t stand them after a couple of months. You want to be tough? Have the best preparation on the facts, the law and the strategy. Judges care only about those things, not a whit for bluster. Bullies are jerks, they wreck the profession for everyone, and you can beat them every time.

And finally and hands down most importantly, and please pass this on to your friends and your children, because it’s really important — Be nice and have fun. Just doing that makes life better for everybody, mostly you.

Good on you Stephen – great advice for any lawyer, accountant, engineer & professional consultant out there!

See you next time.

All my best,

James E

Being a happy & successful professional (part 2 of 3)

Following on from Monday’s post here are a few more pearls of wisdom from Stephen C Ellis.

3. Look out for yourself. Nobody cares about you like you do except maybe your parents, and you won’t be working for them. My late and very wise father used to tell me to not worry about what people were thinking about me, because they weren’t. They were thinking about themselves.

4. Mentors are important, but they are only a resource. Accept that you are in charge of your success. Your employer may have a mentoring program, but nobody is mentored into a success. So if you think you need experience in an area, make it your business to go get it. Ask somebody; don’t wait for it to come along. Don’t wait for somebody to notice that you’re missing an important skill. Ask for a promotion – people aren’t watching what you do as carefully as you think or hope.

5. Determination matters. It matters more than intellect. The streets are littered with directionless geniuses with unexecuted good ideas. . Woody Allen had it pretty dead on when be said that 90% of success is simply showing up. You won’t suddenly have a great career. Nobody ever does. The secret is simple- great careers are the result of day after day deciding to do good work and being someone who others count on.

Tune in next time for the last installment of how to be a happy & successful professional.

Bye for now,

James E

Being a happy & successful professional (part 1 of 3)

One of my all time favourite writers and thought leaders when it comes to the professions of accounting and law is David Maister. (visit http://davidmaister.com/ for more information).

A couple of years ago David Maister blogged about a speech given by a senior lawyer at a university’s school of law commencement for new students. Stephen C. Ellis is the managing partner at the law firm of Tucker, Ellis & West, what follows are extracts from his address to new students.

Although, Stephen’s address is aimed lawyers, the wisdom he shares can be applied to any professional – lawyer, accountant, management consultant, engineer, architect etc…

Over the past few years I’ve come to some conclusions on finding guideposts that will give us lawyers the best chance of being successful, in the sense of truly enjoying our lives and careers as lawyers. They are simple, some might say “trite”. But 36 years of listening to happy and desperately unhappy lawyers and watching colleagues succeed as lawyers and people, and some fail, I know that these may be cliché’s, but I also know they are true.

I’m going to talk about a handful of these “truisms”, only a couple of which I’ve made up, on being a successful lawyer in the sense of being fulfilled. Just so you know how close I am to wrapping up, there are nine of these, and they’re pretty short.

1.  Be someone others count on. Most folks talk a good game; very few come through. Clients come to you because they have a situation they cannot solve on their own. Most are not looking for an analysis of the law. Most want you to solve a problem. So solve it, don’t add to their problem by being hard to find, by missing deadlines, or by simply describing their problem back to them. It’s like going to the dentist when you have a toothache. You want it fixed and you want it fixed now. That’s what a client wants every time they talk to you. Walk in with a problem, walk out with a solution.

What they want is someone they can count on to make their lives simpler, to accomplish what they want accomplished. If you can simply do that, you’ll be sought out as an extraordinarily effective lawyer. And there is a real difference in your sense of self between being simply a resource; somebody who knows the law, and the person that people count on to solve their problems.

2. Be an interesting person, for your own good and so that clients think of you as more than a lawyer. A decent definition of hell is a dinner party companion who is a first year lawyer on the day after his or her first trial. Law stuff is interesting mostly to lawyers. In fact, it’s real interesting to lawyers, so that’s what we talk about all the time, just like you talk about law school all the time.

Force yourself to do be able to talk about more than law – read books, go to movies, be part of politics, go to lectures. You’ll meet people, you’ll be able to talk about things that other people find interesting, and you won’t burn out on your job.

The horror stories you hear about associates working 2500 hours a year? You will be surprised when you see how much of that is self imposed. These young lawyers get caught up in the chase and find that what they’re doing more interesting than anything else- so they become that boring self absorbed dining companion. The world’s full of great people with jobs and hobbies that are just as demanding and just as fascinating as yours, (assuming you make yourself get a hobby). Learn about them. You’ll be happier and much more fun to be with.

Tune into the next two posts (Wednesday & Friday) for the other seven pearls of wisdom from young Stephen!

All my best,

James E