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Tax Practice Development

Tax firm leaders seek to improve efficiency rather than focusing on staffing concerns

Samantha Mansfield  Consultant & Leadership Coach / ConvergenceCoaching, LLC

· 5 minute read

Samantha Mansfield  Consultant & Leadership Coach / ConvergenceCoaching, LLC

· 5 minute read

More tax & accounting firm leaders now say it's more important to improve efficiency than it is to secure or retain new talent

There has been a noticeable shift in the priorities of tax & accounting firms, with the size of the firm impacting the area of focus, according to a survey that was conducted for the Thomson Reuters Institute’s 2023 State of the Tax Professionals Report. There is no question that firms nationwide have been struggling to find qualified talent, but survey respondents from midsize tax & accounting firms (those with between 4 and 29 professionals) noted that it was more important to increase efficiency than to find new talent.

Perhaps we are seeing a reaction to the potential for economic recession, or these respondents are looking for alternative solutions to solve the capacity challenge they have been facing. In either case, midsize firms ranked efficiency as their top strategic priority with more than one-third (36%) of such respondents ranking it number 1, a 15 percentage-point increase over the 2022 survey.

And its’s not as though tax & accounting firm leaders haven’t begun to automate. One-third (33%) of all respondents “automate up to 25% of their tax workflow” and another 23% automate between 26% and 50% of their tax workflow, according to the report. Leaders of these firms clearly see the potential for getting more efficiency from their existing systems and processes. In fact, when asked to rank their investment priorities for the next two years, more than two-thirds (69%) of all respondents cited improving their current workflows and processes near or at the top of their list.

To achieve new levels of efficiency leaders will need to innovate and execute well-planned projects. Yet, as the report notes, “more than half of firms at all levels said they did not have a designated person whose role was to drive efficiency.” Minus this leadership, unfortunately, most initiatives will fail.

Employ project management principles to discover efficiencies

There are planning methods that enable firms to accomplish strategic initiatives like this amid all their client work. They can leverage project management techniques to help them become more efficient. Some immediate steps they can take include:

Assign a leader — Given the need to drive this change, firm leadership should look to appoint someone to wrangle these initiatives. That person does not need to be on the leadership team. In fact, tax & accounting firms across the country are beginning to incorporate project management principles, and in some cases credentialed project managers, to keep their projects on track. Some are identifying team members who have strong communication, organization, and people skills and who can quite effectively manage the process and the people needed to make a project successful.

Define the vision — Any effectively run project begins with a vision. To set up a team and task them with finding efficiency in the tax workflow is quite ambiguous; and the team leader, or sponsor of the project, will need to collaborate with the project lead to define the actual vision. While they are not defining the solution — that is what the project team will discover — they are defining the desired end-result, so the project team can recognize it when they achieve it. For example, one stated end-result could be “the project creates enough efficiency that the firm can offer advisory services to clients without having to add talent.”

Document the requirements — A step that should not be skipped before diving into exploring efficiency options is requirement gathering. This takes place at the beginning of the project when the timeline and budget for the project are agreed upon. The objectives for the vision should be documented, including what resources will be required (both in personnel and technology). These details are the framework for defining the scope of the project. Poor requirement gathering is responsible for up to 40% of project failure, according to the Project Management Institute’s 2021 Pulse of the Profession Survey.

Be agile — When running a project, there are multiple project management methods from which to choose. Traditional methods do all the planning up front, and then execute each stage of the project in succession. Depending on the project’s length, the environment, needs, and technology could change during the course of the project. Today, more organizations are looking for agility in their project methods. The Agile method incorporates shorter sprints of progress in which feedback is collected earlier to ensure the objectives are being met and the desired result will be delivered. As tax & accounting firms strive for greater efficiency, they should test more frequently and elicit feedback throughout the process — in this way, firms can incorporate software enhancements as they are released and better leverage their staff’s knowledge and skills.

Prepare to go-live — Once the efficiency gains have been discovered the project is still not complete. The project leader will need to coordinate the go-live (or roll out) of the new procedures. This phase of the project will include slightly modified communication and training plans from the initial project charter as they will focus on people outside of the project team. When planning for go-live, make sure to think through the change management plan to help those professionals that may be newer to the vision to acclimate quickly. Though the benefits of greater efficiency should be incentive enough to change, most people are hesitant to change their daily routines. That’s what makes the change communication plan so crucial to the project’s ultimate success.

As tax & accounting firm leaders drive for greater efficiency faster, they should incorporate the principles that project managers use and begin to share the workload for managing projects with others who have complementary skills. Successfully achieving efficiency gains will also support the achievement of their next most critical priorities — client service and growth — so the quicker firms address their efficiency question, the better.

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