Introductory Interview with Greg Barber - Part 3 of 3

Andy: The six fundamental steps you suggest taking when beginning to embark on the building and integration of non-traditional services make sense to me. Yet with that said, could you give us a few suggestions as to what services you’d actually suggest firms begin the building process with today? Would the approach differ depending on where a firm is in its evolutionary journey?

Greg: Sure. I will give you a few suggestions for three firms at different stages in their evolutionary journey.

SMALL FIRM

2-3 Partners, Around 20 People

These types of firms are generally serving smaller businesses and providing monthly accounting write-up or outsourced accounting services. If a firm is of this profile, I suggest their accounting service and outsourcing practice concentrate on helping smaller businesses build stronger metrics, KPIs and dashboards as tools to better manage their business. I’d align closely with one or two accounting software applications that are moving into the world of expanded management information. I’d then coach, teach and train my staff on how to use this improved business information to have better conversations relating to the client’s business and issues needing to be addressed. This approach will help my accounting staff become much better business advisors, capable of acting more like outsourced COOs than just accountants or controllers. I’d also look into bringing on board one or two HR consultants that could help smaller business clients deal with ongoing HR issues, from compliance to compensation systems to performance management and coaching. I’d strongly suggest getting my people out in our client’s place of business on a monthly basis. This simply accelerates and deepens their level of business acumen and proactive problem-solving skills.

MID-SIZE FIRM

$15-to-$40M in revenue, a few locations, 15-30 partners, 75-200 people

These firms are what I call “tweener” firms, and a lot of fun to be a part of. There are quite a few of these first-generation firms out there today that have grown nicely, even within some of our country’s more competitive major markets. As a result, they are a bit more entrepreneurial in nature and spirit, which is a key ingredient to successfully building and integrating new non-traditional services.

These firms are large enough to have partners and staff build special expertise, be that around two-to-three industries as well as accounting or tax expertise. These type of firms should begin helping their people “choose and focus” on building special expertise. They should begin expanding special industry expertise that quite often accelerates the need to bring on more special, non-traditional expertise to meet the more sophisticated needs of larger industry specific clients. It is also important that these firms concentrate on tiering their clients so they begin understanding the need to spend more and more time on more lucrative clients that need and are willing to pay for additional services. This leads to the firm’s need to “shed” smaller, less sophisticated clients that were once their sweet spot. I know this is not easy, however, I cannot over emphasize this point as I have seen too many firms struggle understanding the need to shift their client focus, which ultimately ends-up stymieing growth.

I’d also suggest these firms continue to focus on expanding monthly work with smaller clients they choose to continue serving, just like the smaller firms suggested above. However, I also suggest a firm of this nature accelerate the building and integrating of the non-traditional services of information and operations. In the operations area, your more sophisticated clients that also value industry expertise typically need a lot of help becoming more operationally efficient, especially manufacturers and certain types of service providers. As a result, these clients will be looking for expanded metrics and dashboard help–a great area for the traditional accounting staff to build expertise in continuous improvement and/or “lean.” These same clients are also looking for more information and technology expertise, especially at the strategic and staffing levels, even to the point where they are willing to outsouce their CIO and IT staffing needs. Data and proprietary information security needs are also in more demand from these clients. These non-traditional services can be significant for a firm of this nature and really solidify the relationships with their more lucrative current and future target clients. I have seen firms successfully navigate through this tricky stage of evolution quite nicely, which often leads to doubling in size in five to seven years. But be careful–sometimes if you grow too quickly and stub your toe along the way, the core traditionalists within a firm can become a bit “jittery,” which can then lead to other significant evolutionary issues that are counterproductive. Believe me, I’ve been there.

LARGE FIRM

$50-to-$75M+ in revenue, multiple locations in one state, multiple states or the entire country

This is the group of firms that I quite frankly struggle with understanding as to why they are not further along in their evolutionary journey of building and integrating non-traditional services. Especially with firms that are about $100M in revenue on-up. This is the “pace-setter” group I talked about earlier in this interview as to why I believe they are behind, and as a result, have set too slow of a rate of change in our profession that has had significant negative impact.

If a firm is in the $50-to-$75M annual revenue range, the course of action I’d suggest mirrors my suggestion to those firms in the $15-to-$40M range discussed above. This group simply has to bring it all to the next level sooner than later as they should have the resources to attract and retain some of the better talent needed to build the non-traditional service areas.

For firms above the $75M annual revenue mark, I suggest they first slow down a bit and really understand why their firm is behind. The Pyramid of Success model I created would really help firms do this. What I believe they will most likely find are some very fundamental reasons at the “Culture/Beliefs/Philosophies and Values” base level that are not in alignment. In addition, there will most likely be a few things at the “Supporting Systems & Disciplines” and “People/Talent/Team” levels that are out of alignment too. These firms need to assess their situation and determine what it will take to change course because, if they don’t, I am of the opinion their future will be in question. The few firms at the $100M levels and above that have figured this out are doing well and have anywhere between 25-to-35% of their revenue coming from these integrated non-traditional services. And they know they are winners, which simply strengthens their one-firm culture and therefore, are more difficult to compete with.

Andy: Interesting stuff Greg. I can see you really understand this area of non-traditional services and what it takes at all different levels of firm evolution to build success. So, in closing, please tell me a little about your plans for building your advisory practice and how you differ from so many advisors working with firms today.

Greg: As I mentioned earlier, I always knew I would like to do advisory work for firms once I stepped out of the daily grind. I have always enjoyed sharing knowledge and wisdom with others in our profession, with a goal of making life easier for all. I just turned sixty-three and feel I have a lot of energy left to offer my time and talents to firms–especially those with the desire to build and integrate non-traditional people and talents into their firm.

My model is a little different because of my background and where my focus will be. Don’t get me wrong, there are a lot of good advisors to our profession today, many of which I have used in my managing partner roles and will continue to refer others to–such as, August Aquilla, Gail Crosley, Sam Allred and Alan Koltin–to name a few. They each have unique areas of focus and yet provide valuable perspectives on a wide range of topics today. I, too, can provide my perspective on many different issues as well from my many years of hands-on experience dealing with them in two different firms.

However, because of my unique background of ACTUALLY building practices and leading two very different firms, I really believe I understand “WHAT WORKS” and does not work when dealing with change and implementing new thoughts and ideas into the rank and file of a firm. With that said, I am of best value when a firm wants to either have me facilitate a partner retreat to help create a vision of their future while sharing my real-life experiences with them. Then as we wrap things up, we agree on actionable steps and time frames for implementation. Or, I can be invited in to assess a situation and offer my perspective on how to address it. What happens from there in each different scenario is where I am a bit different than other advisors. More times than not, the firms I have helped in the past year or so have asked me to remain in their “change implementation equation” on a monthly basis to actually experience how I work to make sure things get done. It also helps the firms stay focused and accountable. I usually then agree on a flat monthly “coaching” fee for a range of hours so I no longer have to chase my timesheet. I like this approach and it seems the firms I have worked with do too.

Andy: Well, thank you Greg for taking the time to share your thoughts and perspectives on what appears to be a very significant challenge facing firms today relative to building and integrating new, non-traditional services. I am sure firms will find great value in your services and wish you all the best as you continue to launch your new advisory practice.

Greg: Thank you.

Introductory Interview with Greg Barber - Part 2 of 3

Andy: From what you are saying and what I hear from others, I agree that if not the top issue, the need for more value-added, non-traditional services is at least one of the top two or three. But unless I’m missing something, I believe we’ve heard about this issue for quite some time now. So why then have the strong majority of top fifty firms that should have the resources not reacted sooner?

Greg: Another good question that also has a few dimensions to the answer. As I answer this one, please understand I am not being critical of anyone or even the top 100 firms collectively as a group. I too have been guilty of some of the reasons–I am simply just trying to give you my open and honest perspective.

Why We've Fallen Behind

#1. Accountants not fundamentally wired for change

First and foremost, over the last twenty to twenty-five years, our ability to simply change as a collective group of public accounting firms has not kept pace with the change demanded by our clients. To begin to answer “why,” we first need to reflect on the basic core make-up of the strong majority of us accountants. We must remember that all of us bean counters were–and still appear to be–willing to spend four-to-five years earning our degrees learning how to become a “professional skeptic.” We also feel most comfortable with numbers and detailed black and white logical and linear answers, focusing more in the past and present than in the future. Our core make-up allowed us to succeed in delivering value since the inception of our profession, however, the accelerated rate of change over the past fifteen years has been just too much for us as a profession to keep up with. Just like old, strong, dependable Clydesdales when asked to become race-horses–just can’t do it.

#2. Technological advancements have been too much, too fast

Here comes this thing called “information technology” that surfaced in the mid-80s with the birth of the laptop, then the internet in the mid to later 90s. Then–the real disrupter–the iPhone in the later 2000s. It’s all just been too much, too fast for our generation of accounting firm leaders to get our partners to properly absorb on a timely basis to best meet the needs of our client.

#3. Not willing to welcome-in and treat non-traditional service leaders and team members as equals. Many non-traditional practitioners will tell you that quite often they feel as if they are treated as “second class citizens” when entering a firm. This significantly hurts retention as well as recruitment.

#4. Inability to attract and retain our best accounting talent

There are many reasons why this issue has escalated over the past fifteen-to-twenty-years, but it simply comes down to the fact that the real good ones have had much better professional choices put before them than what we within our profession have been able to offer. This shortage of top talent has put too much stress on our succession and growth efforts that are traditionally driven by our mid-thirties to mid-forties partners stepping forward to lead new efforts and take on more growth and leadership responsibilities. Again, no disrespect to this group of partners out there today, but at a profession-wide level, this group is not as relatively strong as they were in past generations. But again, it’s my generation of managing partners that could have collectively done a better job of making sure their firms were progressing to the point that would have at least slowed this top talent exodus down.

#5. Flawed career counseling, training and collective team building models

For the most part, we are not building the collective team talent needed to succeed in firms today and in the future. Today, more than ever, the public accounting “game” is a “team game” needing players that are quite diverse with different talents that can play well together–like well-oiled college and pro football teams today. If you’ve been a fan of this sport like I have for many years, it’s amazing to see how their team building model has advanced. No longer do the leaders of these teams recruit, train, coach, feed and build the athlete’s career progression model the same. Yet, for the most part, our profession has not evolved to this more diverse progression model. We basically recruit, coach, teach and train to build one type of professional. Our inability to embrace this more customized diverse team member model has definitely hurt the advancement of our diverse integrated client service team approach.

#6. More than enough traditional work

For the most part, firms have had more than enough work to handle over the past twenty-to-twenty five years. This has been compounded by the fact we’ve not been able to keep our best and brightest in the fold, which forces those remaining to simply keep their heads down and pound the work out that's in front of them.

#7. Enron

This was a serious and sad event that caused our profession to make needed independence adjustments to our services at the public client level. At the private client level, it was a warning shot to remind us to simply be careful. However, I believe this event created more of a scapegoat for most top fifty firms to back away from the needed stronger pursuit of building the much-needed integrated non-traditional services. This event simply put those of us serving the private sector further behind.

#8. Overly concerned about shorter-term profitability

In order to maximize future retirement payments for the escalated number of accounting firm partners entering retirement over the past ten to fifteen years, firms have placed a significant emphasis on current profitability. This shorter-term focus on profitability has hurt the often-needed investments required to attract and retain new and different types of talent.

#9. And finally, the accelerated level of smaller firm acquisitions

The accelerated number of smaller firm acquisitions made by the top fifty firms over the past ten years has definitely slowed the progression and integration of non-traditional services. Yes, I understand the temptation that swirls when an acquisition surfaces with all the “wide-eyed” aspirational benefits envisioned, however, reality is there have been many more not-so-good post-acquisition experiences than good ones. Let’s be honest with ourselves. The majority of partners a firm brings in with an acquisition really struggle trying to “raise their game” to the needed next level. And when this occurs, the speed of the acquiring firm’s overall progress slows down, and quite often, significantly.

Andy: So Greg, I concur as to why we as a profession are behind on bringing more valued, non-traditional services to our clients. However, what’s most important today is what leaders in firms should begin doing differently in order to close this value expectation gap with their clients. With that said, what do you suggest firms begin doing more to close this expectation gap?

Greg: No matter where a firm is today in its evolutionary journey, there are six basic foundational steps I recommend firms go through to begin this building process.

The Six Basic Foundational Steps to Begin Building & Integrating Non-Traditional Services

#1. Understand where you are in the evolutionary journey as a firm today

See my Evolution of a Firm diagram. How a firm goes about building new, non-traditional services as a two-office firm with fifty people will be different than a firm with five offices and three hundred people. Each firm’s type and size of clients, as well as the talent level of its people, will also be different–so what you begin to add, how much and at what pace can differ significantly, too. Also, how aligned by industries you already are can have a significant impact as well.

#2. Obtain a basic understanding of the Integrated Client Service Team Model as well as what services are normally included in the core non-traditional services of People, Process, Technology and Strategy (PPTS).

Once you understand the basics of this client service approach and what services are possible, determine which services might work best in your targeted client base of today and within the next five years. I strongly suggest a firm go through a basic client tiering exercise to best determine their most lucrative and opportune clients to begin working “deeper and wider” with. If a firm is aligned by industries either currently or will be in the future, consider the industry needs and demand as well for a place to start.

#3. Obtain a high-level understanding of all factors within a firm that have a significant impact on the ability to build a sustainable integrated non-traditional services practice

See my Pyramid of Success diagram that shows all the qualities and/or characteristics EVENTUALLY needing to be present if a firm wishes to realize long-term success in this area. PLEASE NOTE… all of these factors do not have to be present to begin building these services, however, they will need to be addressed and in existence at some point in this building journey.

#4. Identify a couple of your “Early Adaptor” traditional service partners and/or managers that are highly respected in the firm and help them align and launch your most opportune new service practice

I cannot emphasize this very important step enough. The strong majority of traditional accountants are, at best, “curious followers” that are most comfortable embracing new things when they see others they highly respect having success. So don’t beat yourself up. Build early success, “celebrate” your successes with strong, consistent messaging and you will be pleasantly surprised at how fast the “curious followers” will jump in and begin participating. So much easier and faster than trying to get everyone involved trying to figure it out before you really know what you are doing.

#5. Hire and align the leaders of one or two new non-traditional services you wish to launch and help them align with your “Early Adaptor” traditional service partners and/or managers

This, too, is a very tricky and important step in this early-launch process. I will not cover the new hire and integration process here, but will simply say that if these first one or two early lead hires do not go well, it is easy for all the “curious followers” in your firm to become naysayers and rain on your parade. Again, this step is not easy, but if you do your homework on culture fit and the new leader’s ability to coach and teach others as they offer, build and integrate their new services, the rewards will be bountiful.

#6. And finally, as you begin realizing early success, begin coaching and teaching your traditional staff AT ALL LEVELS on how to have more meaningful client conversations, which eventually helps them become better “general contractors” of relationships.

Once again, this is a very important step in gaining early momentum with building and integrating new services. This should include professionals at all different experience levels. You can tie this coaching and training directly into a person’s “career path” as well, which helps them focus on growing-up to become better “general contractors” of client relationships–the lifeblood that integrates and feeds the non-traditional service practices. When this begins to happen and early success realized, you will be amazed at how fast your firm can gain momentum in this new more valued services movement.

There is another very important point I need to mention here. I strongly believe the building of what we refer to today as non-traditional services is really the foundation for the redefined wider definition of the firm of the future’s traditional services. And I am not talking about twenty to thirty years from now. More like ten to fifteen. When you build these new services of People, Process, Technology and Strategy (PPTS), and bring in new and different talent to do so, it simply catapults the energy, excitement and learning process of your typical accountants from entry level through manager that want a different future profile to model themselves to and are excited to learn and grow by doing new things–many of them that are being done by the non-traditionalists today. You are seeing in firms today that are really figuring these new services out how their traditional accounting staff are picking up and taking the lead on strategy, operations, metrics, dashboard and analytics work–all work that is really engaging them and widening their horizons for the future.

Introductory Interview with Greg Barber - Part 1 of 3

Andy: So tell me a little about your background and why you are jumping back in with your new advisory practice after your stints as a managing partner for two significant firms.

Greg: Well, I guess I am a glutton for punishment. No, seriously, I always knew I was going remain active in the profession after my recent “retirement” as the managing partner of Schenck in 2018 and thirty-nine years in public accounting. I just cannot sit still and believe I have a lot to offer firms looking to grow and widen the breadth and depth of their services. Besides the most recent swell created by the pandemic, I strongly believe the building of more valued services is the most significant challenge that lies ahead for at least the top 200 firms today. It’s big. And from what I continue to hear from leaders and other advisors to our profession, I believe they too would agree with me.

My background is a bit unique, which puts me in a good position to help firms. I started my career at Wipfli in 1980 in Wausau, Wisconsin on the audit side when the firm was about $10M in revenue. In 1992, after my second year as an audit partner, I broke away to begin building and integrating our firm’s non-traditional services practice (People, Process & Technology). By 2001, when our non-traditional services approximated $8M of our total $40M in revenue, I took the managing partner position and moved us into our first three major markets of Milwaukee, Madison and Minneapolis by the end of 2004. At that time, we approximated $75M and were ranked 25th in national firm revenue rankings. Shortly thereafter, the wheels began to fall off internally as certain partners in our older secondary markets became uncomfortable with the rate of change being driven by the needs of our major markets. By 2007, I handed my leadership roll over to someone else and eventually left the firm as I simply lost my drive and desire to stay. In 2013, I was asked to become Schenck’s managing partner and agreed to a five-year term to see if I could help transform them into a regional firm with strong industries and integrated non-traditional services. In 2018, as my five-year contract was expiring, we merged into CliftonLarsonAllen for various reasons.

So as you can see, I am a builder and change agent. I’ve seen and been through a lot from starting in the trenches, building and integrating non-traditional services, to sitting at the helm of two very different large firms. Because of my many years of experience in diverse settings, I strongly believe I understand what it takes to build things and implement change within an accounting firm today and look forward to sharing my knowledge and wisdom with firms looking to evolve.

Andy: Maybe before we go too much further with this interview, please explain how you define non-traditional services.

Greg: I am glad you asked that question, as I believe there are many different definitions within our profession today.

Definition of Non-Traditional Services

I have always defined non-traditional as it is basically defined by the Big 4. Back in the 90s, the service categories included were:

• People

• Process (Operations), and

• Technology

Quite often we have referred to this collection of services as the “three-legged stool” and/or “PPT.” This collection today in the Big 4 is pretty much the same, except now they have added “Strategy” as their fourth leg, so their stool is now a table referred to as “PPTS.” Over the past six or seven years, I have also referred to this collective group as “Business Optimization Services,” or “BizOps” since all four services focus individually and collectively on helping organizations “optimize” their resources, resulting in more efficient and effective operations.

Andy: Why do you think the need to bring more value-added services­–specifically non-traditional–is the number one issue today in our profession?

Greg: That’s a very good question with a few dimensions to my answer.

Why the Lack of Non-Traditional Services is the #1 Issue in Our Profession Today

#1. Current services do not address most significant business issues of today.

The strong majority of firms today do not have services that address the top concerns of most businesses today. If our profession was really on top of it, the strong majority of the top seventy-five firms would be capable of offering services that address the issues that have business owners lying awake at night:

Top Six Issues of Concern of Business Today

• New and continued growth opportunities

• Attracting, engaging-with and building strong teams of people

• Doing more with less and changing how they do things

• Providing employees with better, more timely information to do their jobs

• Protecting & securing proprietary and confidential information, and

• Identifying and managing risk

The four core categories of non-traditional services I previously mentioned–People, Process, Technology and Strategy­ (PPTS)–do address these top concerns.

I know our assurance, accounting and tax services do bring value, but sad to say, today they are not hitting this list of what causes client sleep deprivation. As a profession, if we were current, our services would–or at least be strongly integrated with–the non-traditional services of People, Process, Technology & Strategy (PPTS).

#2. Clients & lenders are so much smarter today

What drives this begins with today’s business owners and lead financial people simply being much smarter and more capable today than they were decades ago. Not only from within our client base, but also the financial sector that has been our clients’ primary source of capital. As a result, the financial sector’s demand for requesting clients’ financials, to either be audited or reviewed, has fallen drastically and is therefore no longer the driving force of a significant portion of accounting firm revenue. Even when this assurance work does surface today, it has become so price-competitive that it’s quite often a “lost leader.” So, if you do not have more valued services, such as PPTS with stronger profit margins to follow-up with, why even do the “lost leader” work? Scary proposition.

#3. Advancement of technology

The continued advancement of technology has also accelerated the level of “client intelligence” that has further added to the commoditization of our services. We all seem to see and understand this, but have not changed our service offerings fast enough to maintain our level of relevancy.

#4. Industry expertise is no longer enough

I believe our clients are finally telling us that just being an expert in their industry is not enough. Don’t get me wrong, having industry expertise is still very important, but it’s no longer perceived as a differentiator–it’s now a commodity. Quite frankly, we’ve ridden that horse way too long.