Many of today’s tax and accounting practices are struggling with strained firm capabilities. Is your firm among them?
Rising client expectations, an ever-changing regulatory environment, and the ongoing war on talent have left many of today’s firms grappling with strained bandwidth.
In fact, a 2022 survey by the Virginia Society of CPAs (VSCPA) found that the greatest challenges facing firms are being overworked and understaffed. “More than half of respondents confirm that capacity challenges are constant in their firms and organizations — and workforce recruitment/retention is the most critical professional challenge,” the survey stated. Unfortunately, this is impacting employees’ work-life balance and resulting in staff burnout.
Based on the findings, the top challenge for accountants is recruitment/retention, at 36 percent. This was followed by:
- Work/life balance (34 percent)
- Managing burnout (31 percent)
- Economic uncertainty (24 percent)
The question then becomes, how do firms manage strained firm capabilities? To help firms overcome the challenges, this article looks to answer this question and more.
What is firm capability?
Firm capability is the staff’s ability to successfully do the work that is expected of them by firm leaders. For instance: do they have the necessary skillsets? Are they hampered by mental burnout? Do they possess the traits, or aptitude, needed to effectively accomplish tasks?
What is the difference between firm capabilities and firm resources?
Firm capability refers to the staff’s ability to successfully do the work that is expected of them, while firm resources are the components a firm needs to conduct business.
Firm resources often include, but are not limited to:
- Employees
- Technology solutions and other business equipment
- Working space
- Capital to pay employees, obtain office space, purchase technology, etc.
What are the consequences of staff strain?
The accounting profession is no stranger to long work hours and hefty workloads, especially during busy tax season. However, the COVID-19 pandemic and ensuing economic uncertainty introduced another level of stressors that continue to impact employees. This is fueling staff strain for a growing number of firms and, unfortunately, staff strain comes with a host of negative consequences.
When employees are feeling strained, it can quickly lead to burnout, which is real and a far cry from just a buzzword. In fact, the World Health Organization (WHO) has officially classified burnout as an occupational phenomenon.
According to WHO, “Burnout is a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed.” It is characterized by three dimensions:
- Feelings of energy depletion or exhaustion;
- Increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job; and
- Reduced professional efficacy.
Staff strain can also erode morale across the firm and lead to higher rates of employee turnover. That’s a costly consequence that firms cannot afford to overlook, given the challenging job market and the hefty cost associated with hiring a new employee, which can be three to four times the position’s salary.
Clearly, this all impacts a firm’s ability to effectively serve clients and drive profitability. Therefore, it is important that firm leaders know the signs to help identify strained accounting staff.
How do you identify strained accounting staff?
So, what should firms watch for? How can they identify strained accounting staff? When employees are strained, they become disengaged and there are some red flags that firm leaders should keep in mind. These include:
- Lack of enthusiasm: When an employee is no longer passionate or enthusiastic about their work, or they are simply doing the bare minimum that’s required of them.
- A rise in absenteeism: Do you have an employee who is frequently calling out sick or is routinely late to meetings? Their increased absenteeism could stem from stress.
- Loss of motivation: If an employee lacks motivation and interest in learning new skills and growing within the firm.
- Increased emotional reactions: If an employee exhibits greater signs of negativity, or is more irritable, sensitive, etc.
- Elusive behavior: If an employee begins exhibiting evasive behavior, like not attending meetings, not replying to messages, or avoiding group activities.
- Decline in customer service: If projects are taking too long to finish or are not adequately completed, or clients are voicing concerns about subpar customer service, that could be an indicator that the team is stretched way too thin.
- Decline in profitability: If the firm is experiencing a decline in profitability, it is important not to overlook the possibility that employee strain is a root cause.
How to manage strained bandwidth in your firm
There are several steps that firms can take to help alleviate strained bandwidth. Let’s take a closer look.
Hire more talent (if possible)
This may be easier said than done in today’s challenging job market, but if the firm can find ways to expand the team, that will no doubt prove beneficial. The VSCPA survey found that more accounting firms are not only exploring remote hiring, but also outsourcing, and even offshoring. And half of the survey respondents said they are hiring non-CPA staff to expand capacity.
Encourage time off
Encourage staff to make their well-being a priority, especially right after tax season. This not only includes exercise and healthy eating, but also taking time off away from work to help them regroup and recharge. This can help avoid burnout.
Update technology
One of the most effective ways to expand firm capabilities is to invest in updated technology that maximizes automation and improves efficiencies. This eliminates time-consuming, inefficient tasks like manual data entry. The VSCPA survey also found that “the No. 1 tactic CPAs are using to address capacity is automation and enhancing work with technology.”
Leverage APIs
Take advantage of APIs (Application Programming Interface) to connect disconnected systems and drive greater automation. This saves time because data doesn’t need to be manually entered, and it can help alleviate stress.
Ease the workload with APIs
Leveraging APIs can be one of the easiest and most effective ways to help ease strained firm capabilities. The power of APIs and the benefits to be gained are not to be overlooked. The benefits include:
- Drives greater efficiencies and streamlines workflows through automation;
- Reduces errors associated with manually entering data;
- Further supports a firm’s advisory practice by connecting disparate systems;
- Enables professionals to work smarter and faster.
Learn more about how APIs can help transform your firm in our white paper, or, read about the top accounting issues facing the accounting profession in 2023.
