You’ve probably heard us talk a lot about the concept of Smart Client Management recently…and for good reason. It’s not only helping accounting firms think through their existing client list, build their ideal client roster and create an incredible work-life balance, but it’s also helping them with prospecting and making sure they are saying “YES” to the right clients.
How? By proactively zeroing in on what clients need (i.e., advisory services) and focusing on providing more services to fewer clients, instead of taking any client who walks in the door. It removes the reliance on tax season revenue and helps you take back control of your firm by dropping services you no longer want (or need) to provide while keeping your client list focused.
However, if your workforce lacks diverse skill sets, you’re limiting the services you can offer your clients—and missing out on potential additional revenue streams. So, let’s talk about the importance of having diversity in staffing skills in the workplace.
Why does your staff need diversity in staffing skills?
Take a moment to think about your staff. Maybe you have several accountants on your roster, but not enough team members to handle day-to-day operations like data entry, answering phones, or support for other staff and clients.
You want to run a well-oiled machine, and you need the right people to do that. Here’s an example: Let’s say you have an accountant whose normal billable rate is $200 per hour, and your billable rate for data entry is $75 per hour. If they log two hours doing data entry, you should be charging $400, but instead, you’re only able to charge $150 because it’s tough to pass on that higher billable rate to the client for entry-level work. Who’s losing out on money? Your firm.
Now, let’s flip that coin. Say you hire an entry-level employee at $20 per hour, with your billable rate for data entry at that same $75 per hour. Working two hours, your cost is only $40, but your billable rate to the client stays the same at $150. That’s a much better margin for your firm.
When there’s no diversity of skills in your firm, it ends up costing you more money in the long term—and you end up underutilizing your top-level employees’ skills. So, how can you prevent this situation from happening at your firm?
Avoid being top-heavy
One challenge we see firms face is that they end up being top-heavy. What do I mean by that? As staff gain experience and their billable rates go up, firms don’t usually backfill those positions. This means experienced staff—that should be billing at a higher level—end up doing the work of a junior-level staff. As a result, firms end up writing off time and realization goes down.
When you promote your team from within, be sure to fill the positions being vacated by hiring the skill set as well as the person. In other words, if you have an administrator move into a new role—such as a bookkeeper—you still need an administrator. And if a bookkeeper is promoted into a new role, you still need a bookkeeper. So, hire accordingly.
Remember to lean in to the diverse range of skills your staff offers to ensure they’re doing the work they’re paid to do—and so your firm reaps the rewards of a well-balanced team.
Diversify your staff’s skill set
Here’s the bottom line: To practice Smart Client Management that’s truly smart, you have to hire the right people for the right jobs. A profitable firm depends on many factors, but a diversity of staffing skills and the right billable rates are two of the most essential.
For more information on Smart Client Management, download our eBook.