Accounting Today - November 15, 2010

The importance of ‘famous persons’
tomorrow’snews
Move over, generalists — the specialist is on the rise
By Jennifer Wilson and Krista remer
in this Generational Viewpoints, rlB llP ( www.rlb.ca), a Guelph, ont.-based accounting firm with
over 60 employees, shares views on firm specialization from the perspective of Gen X partner
Jason Gibbons, born in 1974, and Baby Boomer partner michael manera, born in 1959.
We asked them to consider the following question: “How important is specialization by service
line or industry to the future of your firm? Why?”

GIBBONS’ GEN X VIEWPOINT:

I would classify specialization in an accounting firm in two areas:

1. Specialized area of knowledge.

2. Industry focus or niche.

In my view, the driving force for knowledge specialization was necessity. The pace of change and complexity of technology, taxation laws, accounting standards, industry regulation, and business is accelerating. Simply put, the world is changing so rapidly that it is impossible to keep current in every area. In order to be relevant and provide the level of expertise necessary, you need team members with specialized knowledge in one or more areas.

As a Gen Xer who came up through the ranks of a midsized public accounting firm, it was clear that “knowledge specialization” was the key to success. In fact, the last four partners admitted in our firm were highly specialized. In my view, the “specialized area of knowledge” was identified (and understood) as a key driver to firm success.

Now, as a new partner, I will only consider admitting another partner if this individual adds to our firm’s bench strength. Specialized knowledge is required to broaden the scope, breadth and value of our services provided to clients. I see knowledge specialization as the first step to building the foundation of a healthy and successful firm.

The second step in specialization is industry focus or niche development. Although this is similar to a specialized area of knowledge, it is more focused on developing “famous persons” in certain industries. This industry-specific knowledge becomes a magnet to prospects and prospective alliance partners who want to benefit from dealing with our firm and the individual(s) with this specialized expertise.

Clients are becoming more sophisticated, requiring more industry-specific advice — and they are willing to pay for it. Being able to deliver this specialized advice differentiates our firm from the typical “compliance provider” and makes us a “trusted advisor” instead.

This type of specialization should increase profitability by providing economies of scale and justifying premium billings as we become invaluable to our clients’ businesses.

For these reasons, I believe that specialization is absolutely required for a firm to flourish into the future.

MANERA’S BOOMER VIEWPOINT:

Specialization by industry is a critical component to the future of any firm that wants to be profitable and grow in today’s marketplace.

Since my first year working at RLB in 1981, I have seen many trends and changes. When Firm growth occurred during this period, but the introduction of computers in the 1980s and the increased complexity of the tax rules created technology specialists and tax partners as specialists by service line.

Specialization by industry was the more subtle trend that accelerated during this period. As a firm, RLB was an early entrant into the PKF North America Network of accounting firms. We were introduced to the concept that firm growth correlated with “famous persons and niche markets,” which is a concept that holds to this day. Specialization is really a function of the fact that clients rank knowledge of their industry as the most important factor in determining which accountant to engage.

In the 1980s, almost all of us would have been engaged in doing the work for municipal clients, medical clients, construction clients, and so on. In the environment today, the clients’ needs in each of these areas are significantly deeper. The government reporting for municipal clients is more complex, medical clients are allowed to incorporate and represent a more complex engagement than in the past, and builders have integrated their operations so that most of them also develop property, which is also more complex than in the past. Even other service providers, such as lenders, have adopted industry specialists over this same period of time.

Again, I believe that specialization by industry will be one of the keys to the future of the firm. A client must feel comfortable when they trust us as their advisor. We provide that comfort when we specialize in their industry and understand their industry issues. AT

This column is facilitated and edited by Krista Remer, the Generation X consultant, and Jennifer Wilson, the Baby Boomer co-founder and partner of ConvergenceCoaching LLC ( www.convergencecoaching.com), a leadership and marketing coaching and training and development firm that specializes in helping CPA and IT firms achieve success. To have your firm’s generational viewpoints considered for a future Accounting Tomorrow column, e-mail us at krista@convergencecoaching.com.

Recently I asked what people saw as the
biggest difference in leadership style
between Millennials and Baby Boom-
ers. I received this response from Chris
Farmand, a CPA from Jacksonville, Fla.,
on Twitter (@cfarmand): “Expectations
are poorly communicated & motivations
are WAY misunderstood.”
When I asked him to elaborate, he
sent this e-mail: “Boomers can’t manage
Millennials. It’s not that they don’t want
to, they can’t. ... We speak a different lan-
guage. The result is an industry of Boom-
ers and late [Gen] Xers who can’t retain
young workers. We have had unprec-
edented access to information our whole
lives, unlike Boomers who are satisfied
with the Sunday paper. This information
has empowered us to learn and do great
things. If you haven’t noticed, Boomers
have control issues, which work very well
if they have an office full of Gen Xers.

“Money isn’t as important to Gen Y
as it is to Gen X. So where is the connec-
tion? What motivates Gen Y? Challenge,
validation, collaboration, a feeling of
being needed in the office. When all a
Gen Y has to look forward to are the daily
timesheet and a $500 Xmas bonus …
zzzzzzzzzz. They’re outta there.”
I love e-mails like this. While some may
disagree with Chris, I appreciate his frank
opinion. This is how dialogue begins and
transformation happens — when people
dare to speak their perspective and truth
as they see it.

Accounting Tomorrow is all about breaking down generalizations and myths about people of different age groups, yet each age wave has its own characteristics. The key is to capitalize on what each generation has to offer and learn from each other.