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Dec 16, 2019

Varying Types of Personnel Needed to Ensure Long-Term Firm Success

The rate at which technology is changing the CPA world is also changing the sorts of professionals CPA firms need to succeed. Getting this personnel formula correct is doubly important when you are a practitioner nearing retirement and looking to replace yourself. To discuss the new CPA firm landscape as well as the individuals needed to ensure long-term success after an owner’s departure, we met with Ira Rosenbloom, chief operating executive for Optimum Strategies in Spring House, Pa.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor


As the CPA world continues to evolve due to technological developments, the sorts of professionals that need to be on staff at CPA firms will continue to change. Organizationalists, technologists, clientologists. These are just some of the people you need within your firm if you wish to succeed in the future, and this need becomes doubly important if you are succession-minded and looking to replace yourself. To discuss the new state of the CPA firm as well as what you need to do to ensure success for your CPA firm long after your departure, today we welcome back to the show Ira Rosenbloom, chief operating executive for Optimum Strategies in Spring House, Pa.

Your piece mentions the accounting firm of the future, and I want to say right out of the shoot here that this piece was done for Accounting Today. A great article and they always have great stuff on there, so thank you to them. But the accounting firm of the future in there, it's mentioned as an aside. But has the way accounting and accounting firms are changing affect the people you need to look for when you're looking to replace yourself?

[Rosenbloom] There's no question that we're at a point in time where open-mindedness and being very creative about the team that you're going to be fielding, it grows in intensity in terms of its purpose on a daily basis. Technology is moving rapidly, and the nature of employees that used to be satisfied with certain types of tasks is not as available. So the challenges are quite different. Many practitioners have great clients and they want to be able to perpetuate their practice, and their choice, if they had it, would be to remain independent. So having the right team is all about keeping your independence. And I've done a fair amount of speaking of late about how one retains their independence and these types of people are very essential to that.

This piece talks about three different types of players you're going to want on your team. You alluded to them in the intro, but what value do organizationalists bring to the table?

[Rosenbloom] All of the types of people are extremely valuable, so I'm not going to say that one is more valuable than the next because it's a team. I guess the organizationalist is the person or the people who truly work the firm to create that team. They're the people who are going to appreciate the value of communications between the various service providers, the supporters of the service, the technologist as I call them, the clientologists. And I think there's a fourth person, which is the pragmatologist. So we've got to have your organizationalist looking at how this team will function. And is there an adequate bridge between all of our players and the newer types of players with the clients that we're getting and the client's demands and expectations? So the organizationalist is almost that portal to the internal and to the external, making sure that there's very solid communication going both ways and making sure that the processes are in place to be efficient, effective, and gratifying.

What about technologists? With the rise of technology and the profession, it would seem that position would only be growing in importance.

[Rosenbloom] No doubt it's growing in importance, but I know that many accounting firms are now moving quite successfully toward having a blended professional who has intense technological skills, but very strong accounting or better stated financial analytical skills. So the technologist is not just functioning in and around the wiring and the software and the accessibility of information. They're also working with what that end product should be and understanding the components of getting to that end product. So to the extent that technology can make us more efficient, can make the client better understand, and can make us more available to the client as the needs are presenting themselves, the better the technologist understands the financial component, the better that technologist is.

It's a position that is far more than just the technology piece, which obviously is setting the world on fire in many industries, not the least of which is accounting. But in the accounting world it's really moving toward a blended type of individual who can not only install but actually work with the software to produce an end product and appreciate where we could do better.

Clientologists, it would seem to be maybe be in the name, but in what area are they expected to serve? 

[Rosenbloom] So the clientologist is really your featured communicator and your featured hand-hold there with the clientele. Their role is to have a very good beat on what clients' concerns are, to be able to properly respond and to aggressively help clients get solutions and make an impact in their financial world, which will be long lasting. So they are the people who are going to rely heavily on the technologist and the organizationalist as they're fed the information.

Sometimes if somebody has a very specific expertise in some particular area, which might be, for example, due diligence or forensics or a particular real estate area of niches, any type of niche real estate being one of them, then that clientologist may also be doing some of the research and some of the work that is going to be relayed to the client. They're the one who is going to have the sensitivities that are necessary to have loyal and happy clients.

The fourth type of person that is important here is what I call the pragmatologist. Those are the people who might be doing high-level research, who are able to work on solutions and provide some very creative approaches, but may not be the best communicators, may not be the best people to mingle, may not be the best people to hold people's hands. But they could be terrific thinkers and project themselves and the firm as being properly knowledgeable in the particular areas, which would then feed the clientologists. So you're looking at a team of people who need to communicate and there needs to be a system, and a process where there are fixed intervals of working together and planning out the engagements and treating clients as a firm client, not the clientologist’s client. It's everybody's client and this is the team that's working on that client to create the better result.

It should be mentioned again, of course, that this team that is being put together, it's meant to replace you when you exit. What kind of foresight does it take to do this type of planning? Are practitioners often hesitant to do it because they're replacing themselves?

[Rosenbloom] I know that practitioners who reach a particular age understand that there needs to be a transition. And I know that the model that has been used is one of two approaches. We're going to join forces with another firm or we're going to promote from within, is not going to satisfy enough of the practitioners who are going to be looking for their exit. So they're going to need to be open minded. They recognize that they can't work forever. They may work longer than they had expected, but in order to allow for less pressure to have to do something you're really not comfortable with, they're going to need to be open to this kind of model. A model which is being used by firms that are not pressured by succession, but want to produce a better deliverable process and have people who perhaps will stay with them longer because they're being put to their highest and best use. Turnover is a terrible thing in any business.

So to the extent that you can diminish turnover by having happy and longstanding employees, that's a plus for everybody. And this kind of model is one that will perpetuate that. So you've got other people moving there perhaps quicker than the practitioner who's thinking about their exit or planning minded toward their exit. The sooner he or she can move in that direction, should they choose to marry a larger firm, it won't be totally out of kilter. They'll be somewhat more comfortable with the blending.

Once you've selected the people to be on your team, you have to develop them. How important is it to have a plan for how this is going to proceed and what does that entail?

[Rosenbloom] Well, you've got to, number one, have the job description. You need to understand what roles they're going to play and then you have to make the decision as to whether or not you have the resources internally to develop these people or whether or not you need to turn to outsiders to create their pathway and to get them learning and functioning in the ways that are necessary for your particular firm. No two firms are alike, but every firm is in the business of taking care of clients. But the client mix is different and the type of products that are generated, the deliverables could be very different.

So you've got to start with understanding the job description and the deliverable. Then you've got to be looking toward what is the future of the deliverable platform and are we going to be training people who can just function in the near term? Or are we looking now toward two and three and four years down the road? Because that is part of perpetuating our practice and that's all part of how you grow these people and develop them. But you've got to recognize that you have to make an investment, which is more than just time. It's real dollars that will create a more stable and stronger CPA firm.

I found this sentence in your piece particularly interesting. It said, "Advancement doesn't always mean moving from a lower to a higher position." Can you explain what that means in this context?

[Rosenbloom] In the traditional CPA firm, which was in the form of a pyramid, you started off as a staff accountant or an entry-level person in whatever department and then you were moving up those levels to ultimately get to the highest level. We have to have an environment where lateral is perfectly okay, where it's a matter of different stimulus, not necessarily moving up to ownership in as much as altered responsibilities and responsibilities that will create great results. But the pressure or the model of always moving up is not what is going to continue. We want people to continue to progress and ideally move up. But there's benefit in having people move from department to department being cross-trained, being able to take on new things. That doesn't necessarily mean that they're becoming the chief of the organization as much as they're becoming more well-rounded and potentially even more specialized in a particular area, but not necessarily having to take full ownership in as much as taking responsibility for their professional life.

Can you tell us a little bit about incentive and reward as it applies to building this team? Why is that so important?

[Rosenbloom] Everybody wants to have a group of people who are properly aligned in the end product and the firms have different end products. Some people contribute to one component, but unfortunately never know what happened later on. We want to create a system where they are in the awareness and they will benefit by staying glued to the projects and staying involved with the entirety. So where many a firm will quite appropriately have a bonus program or a goals program, the most traditional of which are tied to the individual performance, it is healthy to add a layer or more than one layer that addresses the totality of the performance and how well the team did in whatever their projects are. And indeed when someone does make their way to be an owner, the compensation that they're getting will also include a component, which is rewarding based upon the collective result, the totality of profit, not just the profit that you contributed but totality because we each are doing our share and there is this exponential component that comes about by having a healthy team.

When you're coming up with a plan like this to replace yourself, how important is it to not start too late and to make sure you monitor it as it goes to see if it's going to plan?

[Rosenbloom] You can never start too early, let's put it that way. And I think that the business world is telling us that and other accounting firms or many accounting firms are moving in this kind of direction, exploring, bringing in people who didn't necessarily go to school exclusively for accounting. So that I think is going to happen whether someone's intending it or not, the market is going to take them there. The need to monitor how well this is working is going to be something quite natural because it is so different from the normal mind-set. The inclination is going to be for the traditionalist to say, "Let me take a look at this. Is this really working because I was worried or I was anxious going into this." So the monitoring will be something high on their radar screen. And, of course, like with anything else, the better you monitor, the more granular you are, then the better the probability of seeing the results that you want and the sooner you can make modification or change, the more reliable the system will be.


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Podcast transcripts are provided as a summary of the conversation and have been lightly edited for the written medium. The transcript is not a verbatim representation of the interview.
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