Performance management consultants


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Performance management consultants

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Performance management consultants

  1. 1. Performance management consultantsDuring my travels in the eastern half of the United States and Canada providingconsulting services to small businesses, it never failed to surprise me when I heardrepeatedly from clients that their expectations were for their public accountants toprovide organizational performance improvement services to them as part of theirongoing relationship. But when questioning these small business owners as to whetherbasic analytical, planning and profit improvement activities were being provided by theCPAs, the answer was always a reluctant no. Having had an earlier career as a publicaccountant, I explained to the business owners that the consulting services had not beencontracted for with the CPAs, and that the CPAs had primarily agreed to providecompliance services, including the preparation of the annual financial statements andentity income tax returns. I further explained that having obtained a Master of Science inAccountancy degree and having taught at several colleges, it was clear to me why theirpublic accountants were not offering management consulting or organizationalperformance improvement services to their small businesses.As you know, an accounting education is primarily focused on the recording,categorizing, summarizing and reporting of financial data in a manner that reflects thestandards prescribed in Generally Accepted Accounting Principles, which are developedand published by the American Institute of Certified Public Accountants. This mission isno insignificant matter. Without public accountants available to report financialinformation in a standardized way, third-party users, including banks, vendors, andgovernment agencies, would not be able to get a clear and unbiased view into acompanys financial performance and condition. So having been trained to reportfinancial data, the public accountants have mostly focused on compliance services astheir primary domain.Training and SkillsHowever, as I have provided consulting services to clients over the past decade I haveoften reflected on why public accountants do not weave management consulting servicesinto their service mix. It is clear that accountants have much of the training, analyticalskills, and core competencies necessary to help businesses solve their performanceproblems and increase the profitability and value of their organizations.The world of business today depends greatly upon data to measure performance and gaininsight as to what types of products, processes and personnel provide value to theirorganizations. As a former accountant I know the trap that I and many other professionalscan fall into. That is, accountants, as professionals and experts in the field of accountingand finance, often assume that their technical and problem-solving skills are possessed bymany others. In other words, they often devalue their level of knowledge and expertisebecause it has become somewhat familiar and easy for them; therefore they believe others
  2. 2. must possess these skills as well. This belief is obviously not true. Having workedalongside consultants who do not have sound financial backgrounds I can tell you that thelack of the kind of in-depth financial knowledge that CPAs possess puts them in a leagueof their own in the consulting arena. The connection between a businesss performance onmultiple levels in an organization and the resulting impact on the financial results is arelationship that is unambiguous to accounting professionals, but often unclear to non-financial professionals: it is more difficult for them to connect the dots.Having this insight into how businesses work and how their performance is reflectedobjectively in financial data and reporting is a large prerequisite to becoming an effectivemanagement consultant. Another way of describing this condition would be to label it asfinancial literacy. I have often told clients that their financial statements, particularlywhen viewed over a multi-year span for trends, really tells a story about the companyssuccesses and failures, financial strength, and resilience to future unknown events andeconomic conditions. Having an individual who can teach a client not only how to readand interpret financial data, but also how managements decisions and actions can affectthe organizations performance for the better, is an invaluable and essential resource.Where Accounting Ends and Consulting Begins...In explaining how my role as a management consultant differs from my former role as aCPA/public accountant, I have shared with clients that since public accountants areprimarily focused on compliance services, the use of clients financial data usually stopswith the publishing of the annual financial statements and tax returns. They may view thefinancial statements and tax returns, and therefore the data within them, as the finalproduct (you could refer to the report generation or compliance process as datamanufacturing, and once the data is manufactured, the process is complete). It isunderstandable that the public accountant would view the data this way. And it isimportant that they do take this prospective as compliance providers, because withoutaccurate financial data, consultants and other users of financial information cannot tellhow well a clients business is performing, or how serious the financial condition of thecompany might be. In fact, without reliable financial information, organizationalperformance consulting services cannot be delivered because there would be no way tomeasure the impact of the steps in the improvement/consulting process.But as a management consultant, this same financial data is generally where my servicesbegin. Consultants do not view the data as an end product, but instead as a resource and astarting point for organizational performance improvement. Financial data is like alanguage for business, and it translates the companys activities, and successes andfailures, into objective code that measures the true economic results. Therefore, in orderfor public accountants to add consulting services to their skill set, it will be necessary forthem to view data not only as an end product in the compliance process, but also as aresource for performance measurement and improvement.Why Would a CPAs Client Want Him to Provide Organizational ImprovementConsulting Services?
  3. 3. There are several reasons why it would be an advantage to your clients for their CPA toprovide consulting services to them. They include your knowledge of the organizationand its products and services, your understanding of the owners temperament andmanagement style, the trust that the owner currently has in you, the level of quality thatyou will be able to provide once you have been trained in sound consulting techniques,and the flexibility that you will have in the pace at which you deliver the services andfacilitate change.Your Knowledge of the OrganizationIn your role as a public accountant you have observed your clients business over time,albeit from afar (not intimately as a management consultant would). You have thereforearrived at some possible conclusions as to why the clients business may not beperforming to the standards that either you or he thinks is possible. However, becauseyour observations have been somewhat casual or indirect, your conclusions may or maynot be well-founded. So you will need to do the due diligence involved in the businessanalysis process. But even though your assessment may not be correct, you have at leastbecome familiar with some of the managers and employees, and you will also have apreliminary idea as to what the owner thinks the problems are derived from. Of course hisobservations and beliefs will need to be vetted too. So although you will not know thetrue causes of the companys problems, you will know that one of your first goals will beto confirm or dispel yours and the owners perceptions of the organizations limitations.Products & ServicesLikewise, after having dealt with the client for a few years you may have an idea as to thegeneral level of quality of the products and services that he provides. This may bethrough your own experience or through the experiences of friends, neighbors, or fellowbusiness associates. This awareness will give you a head start in assessing theorganizations image in the marketplace.The Owners Temperament & Management StyleHaving a general idea as to the owners temperament and management style will enableyou to adapt how you communicate with him regarding issues and possible operationalchanges. You will not need to explore these aspects of the owners behavior like you willneed to with a new client. This will take a level of uncertainty out of the contractnegotiations.The Owners TrustAfter having dealt with the owner over a few years you will have gained a level of trustwith him regarding your integrity, that is, doing what you say you will do for services atan agreed to price.Quality Expectation
  4. 4. You will have already demonstrated a level of quality and consistency through yourcompliance engagements, so the client will know what you consider to be qualityservices, both in terms of technical performance as well as timeliness. This will provideyou with a certain level of credibility right from the start.The Pace of ChangeAlthough there may be some accommodations required to adapt your consulting practicearound your tax/high season schedule, you will be able to deliver the services at a pacethat is comfortable for the client, enabling him to learn and adopt concepts at a rate thatdoes not disrupt his business in a negative way. That approach is not always adopted byout of town consultants who prefer to concentrate the consulting services over a shorterperiod of time to meet their own control and travel expense needs.Will Your Reputation as a Public Accountant Positively Impact Your Image withReferral Sources?Commercial loan and workout officers at banks and commercial attorneys continue to beleading referral sources for not only compliance services, but management consultingservices as well. Having already demonstrated a level of professionalism and quality withthese individuals will serve you well when they become aware that you will be providingorganizational improvement services.If you were one of these referral sources ready to recommend an accounting firm to aclient, would you refer the client to a firm that provides only compliance services, or onethat provides organizational improvement services as well? Most likely the latter, becausealthough the client may not need improvement now, there will be some comfort in havinghim served by a firm that can deliver the improvement services at a later date, if needed.At Client Performance Solutions we have a well-structured, effective and efficient modelfor transferring management consulting skills to CPAs. The process is progressive andinvolves not only the technical requirements, but also the interpersonal aspects offacilitating and promoting positive organizational change in small businesses.In SummarySo based on all of these reasons, would a CPA make a great candidate for managementconsulting services? Yes! CPAs can make a smooth transition into providingorganizational improvement services, and they definitely will be able to help the smallbusiness improve its profitability and value! : Over 200 ebooks, templates, forms forperformance appraisal.