Tax & Accounting Blog

Maximizing Staff Leverage in Your Tax Workflow

Accounting Firms, WorkFlow & Processes November 15, 2016

It’s every firm owner’s dream: Find the right staff to complete low-priority work, so you can focus on more value-added services like marketing, consulting, networking and engaging new clients.

Unfortunately it’s a dream that rarely materializes, and come January most owners are dragged into the trenches alongside their staff.

But if you approach hiring with this goal in mind, you can move closer to—and even realize—your ideal.

The Cheapest Staff Member You’ll Never Hire

Before we talk about optimizing labor resources, I’d like to discuss a key factor: technology leverage. Firm owners often view technology as an unavoidable expense, rather than the investment-returning asset it can be. And yet these same firms will hire more employees to solve issues that could be fixed with technology.

Instead of using an e-signature solution for Form 8879, firms hire temporary staff to manage the receipt and filing of completed e-file signature documents. Or they balk at the cost of a document management system, but will pay an employee to staff a file room all day.

So before you hire more staff, ask yourself: Could a technology solution eliminate the need for another hire? You’ll find the answer is increasingly, “Yes!”

Identifying Leverage Opportunities Throughout Your Tax Workflow

Once you’ve identified and implemented technological solutions, the next step is to map out your tax workflow and organize tasks into three categories:

  • Category 1—Tasks requiring deep tax expertise
  • Category 2—Tasks requiring moderate tax expertise
  • Category 3—Tasks requiring little to no tax expertise

NOTE: In larger firms, some staff may fall between Categories 2 and 3, making careful leverage-mapping even more valuable.

One way to assess the tax expertise required for each task is to consider the time it takes the average person to learn. If a task takes hours or days to learn, classify it in Category 3. If a task takes weeks or months, it’s Category 2. Anything that takes a year or more falls into Category 1.

Categories should generally align with the following firm roles:

  • Category 1—Partners, senior tax managers, some senior staff preparers
  • Category 2—Most staff preparers, junior tax managers
  • Category 3—Administrative support staff, receptionists, seasonal staff preparers

Although firms vary by size, structure and how they distribute tasks, the same basic tasks tend to occur when preparing any given return. Category 1 staff handles tasks vital to the long-term success of a firm, but not included in tax preparation—networking, marketing, thought leadership (blogs, informational presentations, etc.), new/ prospective client meetings, advising/ consulting, etc.

It’s important to determine which, if any, tax preparation workflow tasks are suitable for Category 1 staff. Ideally, they should limit themselves to client meetings, return reviews and client debriefs, leaving the rest of the tasks to Category 2 and 3 staff.

Because firm owners want to make sure their clients receive excellent service, it can be tough for them to delegate work. However, that reluctance—and the failure to consider whether the cost of involving a Category 1 staff member in the tax preparation process truly benefits the client—can be their biggest barrier to profitability.

The problem can multiply in firms that let Category 1 staff members define their own standards and expectations for Categories 2 and 3. Allowing these “Partner Preference Silos” to exist can lead to a number of problems, including (but not limited to):

  • Doubled, tripled or even quadrupled staff training and ramp-up time, since the demands of each Category 1 member must be taken into account
  • Staff frustration from trying to keep track of minute differences in otherwise identical engagements based on Category 1 members’ expectations
  • A natural bias of Category 2 and 3 staff toward work for Category 1 members with fewer, less complicated demands
  • The inability to roll out new firmwide policies and procedures as Category 1 staff members trump the new policies with their own preferences

You can avoid these pitfalls by mapping out your workflow tasks across your firm’s staff categories and carefully assessing which items you’re responsible for as a Category 1 firm member. If you find that Category 2 staff is overburdened with tasks, re-examine what can be delegated to Category 3.

A suggestion: If you’ve been out of a Category 2 or 3 role for a while, you may want to interview those staff members, or observe them at work and temporarily handle some of their tasks. You may find they’re taking on tasks that didn’t even exist when you were doing the job—tasks that would be better in a different category.

Relationships–Your Best Business Strategy

Over time, it’s natural for firm owners to build relationships and maintain consistent contact with clients, which is why relationship management—maintaining the relationship and day-to-day contact with established clients—is often the hardest task to delegate. However, if you’re the only person in your firm assisting clients, when you hit your capacity, you’ve effectively shut down your ability to scale your firm.

One progressive firm owner, Paul Miller of Business by Design, structures his firm so each client is assigned an accountant in charge, to whom Paul transitions management of the client relationship. The firm uses its practice management system to record all client information—the services clients use, upcoming obligations, business goals, financial aspirations, etc.— in a central location. That way, any staff member fielding a call can instantly be on the same page as Paul and the accountants.

Of course, without strict standardization across all categories, when one person fails to track customer insights and interactions, he or she can break the whole system. But an investment in time, effort and buy-in now from your entire firm can ensure you’ll be enjoying your ideal firm setup for years to come.

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