by Sep 23, 2020 | Articles|
Recently I’ve had quite a few conversations with clients about when to hire the next person into their accounting firm and what role it should be. I hold the view that as a business owner you should always know what role your next hire will be and roughly when that will occur, but be open to being flexible as circumstances change. What we are talking about here is capacity and capability planning. Capacity is about having people to complete work and capability is about those people having the skills and experience that allows them to do the specific work in front of you. It could be you have quite a lot of capacity but for some types of work you do not have the capability needed.
The decision about when to hire is sometimes described as a decision about whether you hire ahead of or behind the curve. If you hire ahead of the curve you are typically hiring to have more capacity than you have an immediate need for. If you hire behind the curve you are typically waiting until your team is crazy busy and overloaded before making the next hire.
What I have observed over many years of working inside and with accounting firms is that the firms who hire ahead of the curve seem to be those that do best. Having said that I am not 100% sure I can establish cause and effect here. Have the firms been successful because they hired ahead of the curve or have they been successful for other reasons and that has allowed them to hire ahead of the curve? I suspect there may be an element of both, but when I have been inside firms I have always leaned toward hiring ahead of the curve and it has worked well.
One reason I have experienced for hiring ahead of the curve is when a really talented person appears. A person that you assess to be such a good cultural fit for your firm, and just too good a talent to pass up. In an environment when many firms grumble that finding good people is hard, it can make sense to grab such a “star” and hire ahead of the curve.
Another reason for hiring ahead of the curve is to create capacity to allow you to complete firm projects. In most firms growth and improvement comes from projects which are on top of your business as usual responsibilities. So getting projects done can be hard. Build some extra capacity into your firm for projects and I’m sure the return on that investment will be excellent.
The size of your firm can have a big impact on this. For example if you are starting out and have just yourself and perhaps an assistant then making that next hire is a big decision that in the short term may have a massive impact on your cashflow. On the other hand if you are the owner of a 10 or 20 person firm it will be usually much easier to make that next hire ahead of the curve as the short term impact will not be as significant. There is an old Latin saying often translated to “fortune favours the brave” which encourages courageous action on the basis that it will be rewarded. If you are a small firm it tells you to have confidence and back yourself. Create the capacity and you will fill it.
Coming back to the idea of capacity and capability planning, this is also be known as workforce planning. In essence what you are doing is looking at your business plan (you do have on right?!) and saying “so if that is what we are trying to achieve what will our workforce need to look like to achieve it and what is the obvious next hire for us to take another step closer to achieving it?” You are continuously projecting your organisation chart and proactively managing how it evolves to match the needs of the business.
One useful thing to do when considering your next hire is to review where the bottlenecks are now or will be soon, in your firm. For example you might say to me “the bottleneck is at the junior accountant level – we just don’t have enough capacity to get a lot of the basic compliance work done.” That being the case, the obvious next hire is likely going to be a junior accountant. Or you might say “the bottleneck is at the manager level as our single manager at present is not able to keep up with reviewing the work of others”. You might say the obvious next hire is another manager. In both of these cases the obvious next hire may not actually be the hire you should make. The reason for that comes from truly understanding the root cause or source of the bottleneck.
In the case of the manager the true source of the bottleneck might be that the manager is spending 40% of his or her time doing basic work that could be done by someone else less experienced and if that change was made the bottleneck is cleared. If that was the source of the bottleneck then hiring another less experienced accountant is more likely to be the right answer. In the case of the junior accountant it might be that each of your three junior accountants is spending a third of his or her time on basic admin tasks that don’t require any accounting experience at all. In that case your next hire might actually be a support person to take over all those non-accounting tasks and thus freeing up the accountants to do what they were trained to do.
Regardless of the size of your accounting firm here are two things to do:
- Once per month check in against your business plan and ask yourself if you need to be taking any action in respect of making your next hire or redeploying anyone in a different way or even working on exiting someone.
- Review any bottlenecks in your firm and identify the true source or root cause of them. In some instances this will guide you to make that next hire. In others it could be all about getting more efficient with processes.
If you do these two things then the question of when and what role to next hire will be answered.
One final thing – don’t even think about starting the hiring process until you have a position description completed.
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