That’s according to analysis from Karbon’s 2022 Practice Excellence Report, which crunches the numbers on the performance and proficiency of accounting firms across the globe.
To date, more than 1,000 firms have completed Karbon’s Practice Excellence Assessment, a 20-minute online survey designed to help accounting firms compare their performance and pinpoint opportunities for improvement. The assessment measures proficiency across the Four Pillars of Practice Excellence: Strategy, Efficiency, Management, and Growth.
A close look at the data reveals that Management is a key driver of improvement, both for those firms that are just beginning to push toward Practice Excellence and those that are reaching for the top echelons of the industry.
Likewise, the firms with the highest Practice Excellence scores and above-average revenue per employee are the ones making the best use of impactful management techniques such as 360-degree performance evaluations, standardized staff onboarding, and Objectives and Key Results (OKRs).
Shaun Stubley, co-founder of Air Accounting, joined Karbon’s Director of Customer Success (APAC), Omer Khan, at the inaugural Karbon X event at Lake Tahoe to talk about his firm’s successful management structure. Their conversation was part of an expert panel on building the perfect accounting firm.
Here are the key takeaways from their discussion.
Topple the triangle: Rethink management structure
Shaun co-founded Air Accounting with his wife in 2015 after working in Australian mid-tier accounting firms for more than a decade. Those traditional firms operated within a triangular structure, with multiple managers reporting to each partner, multiple supervisors reporting to each manager, and so on.
“We found that that’s really slow for decision-making, slow for change, slow to adopt practices,” Shaun says.
As a result, Air Accounting uses a productized revenue model based on three core services. An origination team brings in new clients—primarily small-to-medium food and beverage businesses—before handing them off to one of the three department heads.
This new structure allows for functional flexibility. Shaun has hired a People & Talent Partner, built out marketing and admin teams, and hopes to bring on an innovation team in the future.
Ensure your team knows the score
Moving to a less conventional management structure also meant transitioning Air Accounting from a family-type culture to a high-performance team.
“In a team culture, there needs to be standards, and there needs to be a scoreboard,” he says. “The team needs to know whether they’re winning or losing, or progressing or going backwards.”
Air Accounting created a scoreboard that tracks metrics such as ‘jobs completed under budget per week’. A heat maps colors underperforming metrics red and excelling metrics green so that team members can watch their performance in real time.
And the company’s OKR process—an activity that data shows has the strongest impact on Practice Excellence—also uses a heat map to visualize progress toward quarterly goals.
“We’re starting at red and we’re going to get toward that green,” Shaun says. “And by 12 weeks, we want to see that we’re hitting those targets.”
Pathway to excellence
Karbon’s Practice Excellence data highlights the impact that strong leadership and management have on a firm’s ability to successfully navigate change and meet new milestones.
Harnessing the power of management looks like:
Cultivating a management structure that works for your team and your clients, and allows you to adapt as needed
Shifting your culture toward a high-performing, team-based approach
Regularly measuring success and making sure the whole team understands their contributions
Invest in building up strong accounting firm management techniques and watch your firm soar to new heights.