It’s no accident that the banking system is in chaos. The signs had been there for a good while, few people noticed them at the time for what they were. Many, like me, just had a gut feel that something wasn’t quite right but we couldn’t quite put our finger on it. It’s now coming clearer, just (although there’s still a lot of fog around). The same can be said of the current state of the accountancy profession. I am getting that same feeling in the pit of my stomach. I can’t quite put my finger on it, but I just know that there’s something wrong, that major change is afoot. I suspect it will be next profession to suffer, with what it does and how it does it brought into question as we go into what I now believe will be the mother of all downturns.
Accountants have typically, at least thus far, have been largely insulated from the worst the real world can throw at them by the mix of their work – it’s no accident that lawyers, who enjoy far less regular ‘complaince’ work, have come under far more pressure and earlier. But compliance work, like any commodity, is price sensitive and when times are hard its price can only go one way. People are always looking for more for less, sometimes they focus onl on price, the ‘better’, less problematic clients focus on service, they want the best of service at the right price (we cannot complain as we all do it, just look how cars have improved over the last 20 years). Having high levels of compliance work will not be enough to shelter accountants from the worst of what is to come.
This means accountants will have to change what they do and how they do it or see their best clients vote with their feet, their average fees fall, their practice slowly die, their dreams of growth, merger or sale in tatters.
Here are my views on the lessons we in the accountancy profession need to learn from the experiences of the banking professions if are are to avoid similar things happening to us all.
- A combination of arrogance and defensiveness is not an attractive attitude when those around you are struggling and see things differently from you. Believing that everything’s fine, that you don’t have to change, will change their view of you, for the worse. This will make it far easier for them to move or focus exclusively on price;
- Many in banking simply ignored the need for strong interpersonal skills. All the professions tend to attract people who are not ‘people persons’, who gain comfort from systems. In concentarting on processing transactions, they often fail to do what is necessary to create long term relationships with people based on mutual trust. How people do business is changing, there’s more choice, people are starting to more discerning as to who they deal with, and this is with people whom they trust implicitly.
- Bankers actually believe they were the savious of the universe, that they were very, very clever. As a result they were too busy in the day job making money, too self-focussed to notice the bigger picture or the long term implications of their actions. They stopped asking questions of themselves and others, including the people at the head of their respective organisations. This focus on the short term only caused a hole which threatens now to engulf the whole banking sector.
- Bankers and lawyers assumed that there would always be enough work coming in, that the market would always be there and it only went one way. They assumed that they’d never have to work too hard to get that work, because it was enough just to be good at what they do (and I’d question that of the banks!).
- They relied more on client apathy and a small number of service providers to retain clients rather than doing all they could to provide a truly memorable and positive client experience.
- Nothing is forever. Everything is cyclical. Every business, yes even banks and lawyers regardless of how big they are, are ‘metoo’ businesses. It’s impossible for metoo businesses to maintain high earnings indefinitely, unless in some way they are taking unfair advantage of their clients. And that cannot last forever. Operating in a small niche can help. But even then that may not last forever. The banks didn’t see things as booming, a bubble that couldn’t last forever, they they failed to see the bigger picture, to plan for the longer term. The same happened with the lawyers. Neither focussed enough on long term client relationship management, they focussed on short term profit goals. Bubbles are very difficult to see at the time, but become obvious when looking back. All accountants are meetoo businesses. They haven’t exactly seen spectacular times, but they will seem so when looking back.
- Improved technology, the advent of new products and new ways of doing things have to be harnessed, focussed, for them to work long term. Not all such ‘improvements’ are for the long term good, they can often have unintended consequences down the line. Such improvements cannot be ignored, but they should not become an end in themselves: the basics underlying how business should be done remain constant, but can somethimes be hidden underneath the thin veneer of ‘improvements’.
- Big is not always best. Being a one stop shop for everything doesn’t work, ever, for 99.99% of us. The banks merged because they perceived there was a demand for a one stop shop for everything. Solicitors are going through a similar process, the jury is out on many of the mergers. People don’t believe a one stop shop works, they want quality, they don’t think a one stop shop will provide that. We don’t trust anyone who says it does. Building a sustainable niche works far better, and for the longer term.
A few questions for you:
- What are you not noticing? What alarm bells are ringing for you?
- Have you an open mind to change or actively driving major changes within your practice? If you are merely hoping to move a little faster than your competitors, or slug it out in the hope of being the last man standing, what makes you think it’ll work?
- Are you getting carried away by just how clever you are, by how clever what you are doing is? Have you stopped thinking abouIsn’t it time to get back to basics?
- Are you creating a client experience second to none, and I mean none, in all respects? Do you treat your clients as you would like to be treated if you had booked a special weekend away with your other half? With the same attention to detail?
- What are you doing to improve your own and your staff’s interpersonal skills? (why don’t I ever see any accountants at any such training courses?)
- What assumptions are you making, which could fall apart at the seams? What makes you think that major client will always be there?
- What questions should we be asking of the people at the head of our governing bodies?
- Do you know what your clients really think of you? If not, why not?
- What do you do to engender absolute trust and honesty with your clients? What’s not being said?
- Which of your clients are you servicing (and probably pretty poorly) who are a pain? Who divert your time from being spent on more profitable work, supporting clients who pay the right amount and on time? Who divert you from doing the work you enjoy? Who divert you from spending more time developing your practice? Who prevent you from spending the time you’d like with your loved ones? It’s your busines, why do you allow it?
- Are you relying on client apathy to retain your best clients? Ask yourself, what would you do if your local pub, golf club, etc did the same?
- Is changing and improving technology something you are ignoring or harnessing for your own and your clients’ good? Is it driving you or you it?