In a new survey of the leaders of large tax & accounting firms, we see how fostering firmwide growth and adapting to clients’ needs are among their top concerns
Top executives of Top 100 tax & accounting firms today face numerous challenges that previous generations of accounting firm leaders could have only imagined.
These challenges — post-pandemic economic instability; a dismal business environment; increased competition for such essentials as talent, clients, and technological prowess; complex and all-encompassing global regulatory changes; new types of cybersecurity threats, and more — have greatly increased the level of concern that today’s tax & accounting firm leaders are enduring.
To delve deeper into this situation, the Thomson Reuters Institute asked top executives from several of the nation’s largest accounting firms to share their thoughts, via separate conversations over videoconference, on many of the tax & accounting industry’s most critical and challenging issues. In a new white paper based on these conversations, From automation and M&A to relationships and talent: Top tax & accounting executives discuss today’s leadership challenges and opportunities, we see that although these challenges are widespread and diverse, the central themes underpinning them all actually center around four key areas of concern — growth, efficiency, talent, and client service.
A balancing act
The new white paper shows that, despite all of the turbulence in the larger economy and in the tax & accounting industry in general, accounting firm leaders also are having to address common challenges around their day-to-day operations, which can often have powerful ripple effects. For example, many accounting firm leaders noted that their decision on whether and how to deploy advanced technologies, particularly automation of certain work practices, is a weighty one, implicating areas of talent, outsourcing, and client service in its wake.
Indeed, many leaders said that even once that basic accounting processes are automated, questions immediately arise on how to develop and nurture the next generation of firm managers and leaders, as well as advisors and consultants in order to best meet changing client needs and a myriad of advances in the accounting profession itself.
Overall, it’s the type of balancing act among several key directives that have many leaders reassessing how they do business and working to come up with more innovative practices to address these challenges head-on. “The two central tenets of our strategy were to serve our clients better and create better career opportunities for our people,” said Tom Watson, CEO of FORVIS, an accounting giant created earlier this year by the merger of two Top 20 firms, BKD CPAs & Advisors and Dixon Hughes, during the interviews.
Fundamental concerns at the core
Still, the conversations highlighted in the paper clearly show that fundamentals remain top of mind for many large tax & accounting firm leaders. Throughout the paper, these leaders stated strongly that their firms must grow, cash must be conserved, clients need to be satisfied, and employees still need to be hired, trained, and retained.
As we engaged in these separate conversations around how top accounting leaders are addressing the challenges they face, we saw that many of their responses fell naturally into the four basic categories we’ve mentioned: growth, efficiency, client services, and talent. And while many issues were discussed, time and again, many of the leaders we spoke with kept coming back to the central issues of these primary and overlapping challenges.
In fact, leaders elaborated on what specifically they saw as challenging around these themes, with remarkable congruence. Around growth, for example, leaders said they were being compelled to find the most strategic, effective way to grow the business; and with efficiency, it was how best to adapt to workflows, processes, and job requirements to accommodate new technologies. Clearly, these two key areas are intertwined, with decisions and actions taken in one area greatly impacting the other, often with mutually beneficial results… if handled correctly.
Interestingly, none of the executives we spoke with appeared to be pursuing growth for growth’s sake; rather they explained that their growth goals were inextricably tied to their desire to improve client services and create a more dynamic culture for their top talent. And in the critical area of client services, again the overlapping aspects of how best to prepare the firm and its professionals to adapt quickly enough to meet evolving client need while (of course) outpacing the competition were seen as vital to any future growth.
That leaves talent — the all-consuming recruiting, hiring, developing, and retaining of top employees in an increasingly competitive environment in which both technical and business acumen are sorely needed and much in demand. The concern around this area undergirds all others as rising talent costs are eating up resources that could be used for investment in technology-enable efficiency improvement among other initiatives. Yet, even as technology was cited by many leaders as a means toward greater efficiency, the understanding followed that any resulting changes in workflows, processes, and job responsibilities would have a direct impact on employees, and that impact must be factored into any technological value equation.
Overall, leaders were clear that even though hybrid working schedules and improving technology are current challenges, they cannot be seen as existing in a vacuum. Many leaders were clear that none of the solutions they’re currently envisioning are going to change the fact that, at its core, tax & accounting service is still a people business — run by professional people for the benefit of their clients, who also happen to be people. And as the white paper clearly maps out, the conversations with these tax & accounting firm executives suggest that no matter how technologically sophisticated a firm might become, the factors of client relationships, communication, leadership, and a strong foundation of trust are still as crucial as ever.
You can download the full white paper, “From automation and M&A to relationships and talent: Top tax & accounting executives discuss today’s leadership challenges and opportunities”, by filling out the form below: