Why the Capacity Problem is Not a People Problem
At the recent Digital CPA conference I had the pleasure of sitting in Jennifer Wilson’s session, “Solving the Capacity Problem.” This is an issue that hamstrings public accounting firms, and I think defining it clearly is important. The problem is that there is too much work and not enough people.
Jennifer began the session by asking the audience how they have tried to solve the capacity problem. Responses ranged from investing in recruiting to developmental strategies for young professionals to outsourcing work. These were interesting perspectives, and all of these practitioners seemed to be on the same page as to the solution: more people. However, I found this answer unsatisfying, as I feel it will not truly solve our problem.
More people makes sense if you think of the capacity problem as a balancing act: the way to tip the scales would be to add more people. However, I think that the key element we miss in discussing the capacity problem is the cause of it.
Because the cause of the problem is neither an issue with clients nor an issue with the types of projects that are taken (and, in my opinion, it’s not an issue with the people we have), the capacity problem is rooted in the way that work is being handled and a failure to innovate processes.
When you examine the capacity problem’s cause, you realize that solving it by adding more people is insufficient and unrealistic. The growing trend across higher education of deferred enrollment is leading to smaller hiring pools each year, and the more acute problem in public accounting is younger professionals leaving the profession altogether. If you’re looking for more people, the reality is that they are not coming.
To be clear, I don’t think investing in recruiting, pursuing outsourcing or working hard at staff retention are not vital for a CPA firm; they are crucial, and the topics discussed in Jennifer’s session were, I feel, truly useful in helping firms become better. But I fear the industry will be let down when it doesn’t solve the capacity problem in a satisfying way.
The Right Approach
In another session, Jim Bourke, Jotham Ty and Lesley Mast discussed the need for automation to create value. What was interesting is that in a session about value creation for clients, the capacity problem came up. Jotham referred to a CEO who had a simple initiative for his team going forward: instead of finding a person for a task, find a way to automate that task.
This idea is taking most industries by storm, and while public accounting is aware of it, we are too slow to adopt it. I hope we change that, though, because the truth is there is a growing number of fantastic technologies that will help address capacity in CPA firms far more efficiently than recruiting, training and maintaining staffing. I know because I have witnessed it first hand.
The benefit of working at a tech company started by a CPA firm is that I have seen how implementing automation systems across the firm creates capacity for staff. Yes, the workflow system we have developed is key, but also this firm has created automation around billing and engagements, client data gathering and hosting and using tools like SurePrep, Electroneek and others to help automate tasks and free up time. In fact, when an employee left unexpectedly, the firm wasn’t worried about how the work would get done, because they knew they had the capacity to handle it without overwhelming the team.
People were key in this process: finding the right staff to help develop these systems, implement them and keep them up. People are an essential part of developing and implementing automation, and automating tasks is what will make the capacity problem an opportunity for firms across the country.
Resisting the Guinea Pig Fear
We have heard this time and time again: CPAs don’t want to be guinea pigs. They want to know that a system or a process works; they don’t want to test it and have it fail. But for our industry to innovate and take on new challenges, we must be willing to take a step into the unknown.
“But what if it doesn’t work?”
Ask yourself: How well is what I’m currently doing working? People are stressed out, overworked and physically and mentally unhealthy. A key question in innovation is “What can we do better this year?” I think the public accounting industry is ripe for improvement, and I believe that the industry currently has the right people in place to take control of these issues.
If you care to talk more about how we have innovated or strategies we’ve implemented to create capacity improvements, please reach out to me on LinkedIn. I’d love to talk.