Martukovich: Knowledge transfers within the accounting firm

In this episode of Pulse of the Practice, “A sit down with Mark Martukovich”, Paul Miller, our guest today, Mark Martukovich, partner in the firm fma, CPAs, and I discuss some of the trends found in firms that he interacted with this last year.

Martukovich has talked with a number of the firms at Partner Summits as a partner with Thompson Reuters, and he found that there were a couple themes that seem to really come to the forefront, the biggest one being how to manage accounting knowledge transfer to others in the firm, and step away from the grind of operations as a firm leader.

Lighten your load to focus on advisory services

There’s a lot of work that we all do as accountants, and there’s a big struggle with that common 90 hour work week, especially as CPAs focus on getting tax returns completed.

Martukovich adds that was something his firm struggled with, and he struggled himself with his own transformation from being somebody that was immersed in the daily operations and compliance work, to someone who has now transferred that work to his tax manager so he can focus on other areas of the business, like advisory services.

He thinks many firms are looking for ways to get out of operation mode. There are a number of different things that can be done to help people change gears, whether it’s hiring staff, outsourcing technology by utilizing software, or partnering with other firms that do outsourced type work. It’s a common theme, regardless if the firm is a sole practitioner or a larger firm, that at some point you need to lighten the load of operations. Miller adds that when considering getting out of operations mode, doubts creep in and bring up questions.

Martukovich agrees he had doubts too about moving into more of an advisory role, because it was something that was foreign to him. He didn’t know exactly what he was getting into when he started down this path. All he knew was the grind of having 2,000 tax returns that had to be processed for clients, and his name was going on almost all of them, so the work had to be done.

He had that early recognition that he had to do something different, and it wasn’t something that he would be able to do immediately. Many firm leaders recognize that they want basic accounting to be more automated, or to have their staff manage it, but they aren’t sure how to make that crossover. It can be done, but firms also have to understand that it’s not an overnight process to make that accounting knowledge transfer.

Moving out of operations takes time and trust

It took Martukovich two years to get to where he is now. He was successfully able to transform his workload where he doesn’t review tax returns to the extent that he used to. He does it just enough to keep his hands in it, maybe 100 a year, whereas before he was reviewing roughly 2,000 returns each year. The hardest part was letting go of some of that control to others in the firm, even though he knew they were capable.

Martukovich felt there was information that he just knew inherently that he had to get out of his head and put to paper, documenting his processes for others in the firm. He created his own checklist of steps for his own benefit and to share with others in the firm, and also provided training.

That, to him, was the foundation that helped him manage the accounting knowledge transfer to his partner, Lisa. He could now hand over the reins of the Tax Manager position to Lisa with the confidence that she would do all the things that he did.

Choose the right staff for knowledge transfer

Once the transfer of knowledge was successful, Martukovich didn’t worry about whether his staff would handle the workload well. He trusts them. You have to trust that the people you hire can do the job. It’s like the old adage says, “Hire people that are smarter than you, give them the tools, and get out of the way.”

When Martukovich was looking at his journey out of operations, he had to identify staff that could do some of the things that he did. He took a critical look at everything he did, from an operational perspective and he said, ‘Okay, who can I put in place, or what can I put in place in terms of a process, that can get me out of doing this task?’

When speaking at Partner Summit, one of the examples he used was the post-review of a tax return.  He used to do some steps that were pretty consistent, and normal for every return. He just trained one of his admin staff to do that, and she does it very well. That was just one little piece of it, that he had to trust another person in the firm and offload that work to free up more time that he could devote to other things.

Choosing staff to transfer knowledge

When we talk about human resource allocation, sometimes it’s important to leave the names off the paper and say, okay, what do we have? Make a list. I have a staff person with this strength, or this skill, or I’ve got capacity in these areas. I’m going to move it around, and keep it a little bit faceless, at first. Where we get in our own way when redeploying our resources, is the personal attachment that comes with either our work, or the fear about how staff might respond if we shift their responsibilities. We have to learn how to get out of our own way to see the big picture towards the end goal.

Many firm CPAs want to look at converting their firms to more of an advisory practices, and want to be leaders in the industry, but they are wondering how to move into that advisory arena, and still get the day-to-day work done.

One of the things Martukovich says his firm struggled with was having an ex-partner that felt that everything had to flow through him. He was the only person that could do all of the work. When he came into the practice, he didn’t have the expertise that his partner did, or the knowledge. He had to learn a lot, and he did over time. It’s important to trust this process when you are transferring knowledge and you have to be willing to let go of that control.

Common challenges for accounting firms

Martukovich sees that many of the firms he has talked to are still trying to embrace this change and figure out how to get to a more efficient place within the firm. Everybody knows that they need to do things differently, because we’re facing such a commoditization of what we do from a compliance standpoint.

Martukovich thinks many firms struggle to believe that they’re providing value with advisory services. You need to understand that when you talk to an independent contractor, for example, and you tell them that they should be structured as an LLC or taxed as an S Corporation, that there’s value in that conversation. You need to get compensated for that discussion. It’s not something that you offer up just because you know the answer. It’s easy to fall in the trap of giving valuable information away for free.

Martukovich thinks that firms struggle with honoring the value proposition when it comes to advisory services, and they need to understand and communicate that better. That’s one thing that his firm has learned to do over the years, and they’ve been highly rewarded for it. These days, they are getting paid for those conversations, whereas five years ago they were offering that information for free.

Effective communication to manage accounting knowledge transfer successfully is imperative. This show that your focus is not only on tax preparation, but also on other advisory services you can offer clients to grow the firm by working smarter, not harder.

Listen to the “A sit down with Mark Martukovich” podcast episode of the Pulse of the Practice on your preferred platform (Google Play, Apple, Spotify, Stitcher) or here.