My favorite strategic planning quote is from Roberto Goizueta, the legendary Chairman of Coca Cola: “To succeed, we have to disturb the present.” As the 3rd ever MP of Denver-based Hein & Associates (68th largest CPA firm on Accounting Today’s Top 100 list, with annual revenues of $46M), Brian Mandell-Rice, only a year and a half into his reign, has adopted a similar line, which he openly admits not being the author of: “If nothing changes, nothing changes.” Not many new MP’s would tinker with as highly successful a firm as Hein. (I can’t tell you their profitability level but trust me when I tell you it’s impressive). But Brian is truly driven by a philosophy of differentiating Hein from other firms.
Hein ranks among the top 25 firms in Denver, Houston and Dallas and also has an office in Orange County, CA. Thirty percent of their revenues come from the energy industry and they are ranked among the top 25 firms in the country for audits of publicly traded companies. Hein has 32 partners.
Mandell-Rice was guest presenter at my roundtable whose members comprise 90% of Chicago’s largest local CPA firms. This roundtable group has an insatiable thirst for learning how great firms are managed. Brian shared some of his firm’s pearls of wisdom at our July meeting:
One of Hein’s keys to their high profitability level is staff-partner leverage. Their partners’ average annual billable hours are only 976. They use the income partner position as a stepping stone to equity partner; all partners are expected to do practice development, though not at the same level. Another key to profitability is specialization, which makes it easier to bring in business.
Hein has embarked on an ambitious merger strategy after historically ignoring mergers as a growth strategy. They are simultaneously looking for mergers with smaller firms in their existing marketplaces – Denver, Houston, Dallas and Orange County, CA. They have hired an experienced consultant – Marc Rosenberg – to assist them. Firms interested in a confidential, no-obligation first meeting with Hein in their four markets should contact Marc at 847-251-7100 or firstname.lastname@example.org.
They are not afraid to fire partners and terminate unprofitable service lines, a practice unheard of at most local firms.
From a new staffer’s first day on the job, they are encouraged to participate in practice development activities, and more senior-level employees receive training in practice development. Evidence of Hein’s success in developing and retaining talent is the average age (45 to 48) of its equity partners and the fact that roughly 50% of their partners came up through the ranks. Hein has developed its own leadership program, taught by an outside consulting firm, The Growth Partnership, for managers through new partners.
The firm has a marketing committee comprised of several partners, including the MP. They work in concert with a high level marketing director as well as two business development professionals. The committee primarily functions as a think tank.
Hein isn’t afraid to try out new approaches. Their two business development people work in different ways. Says Mandell-Rice, “the Denver-based BD person is an accountant with a Big 4 background whose role is to make sure the partners are at the top of their game; it has improved the way our partners do things a lot. The Dallas BD person is not an accountant but rather a traditional sales professional who makes lots of cold calls. We’re not sure which is better but we’re willing to try both approaches.”
The above practices, combined with a philosophy that all partners must be committed to practice development, has established a strong marketing culture at Hein.
Hein is great at turning a potential negative into a positive. Take staff turnover, a small amount of which is unavoidable at even the best CPA firms. In the past few years, Hein lost some good young staffers to the dynamic oil and gas industry due to the lure of 50% salary increases. But Hein got several new clients out of this when the ex-staffers engaged Hein’s services.
How does Hein make its firm such a great place to work? As one would expect, they do many things including setting expectations for each new hire on day #1 and spending for training, starting with a staffer’s first day and continuously throughout the staff’s career at Hein. Another important practice is to show that the firm holds its core values sacred. One way Hein does this is to show staff as well as partners that the firm is serious about accountability: slackers don’t get big raises and transgressions of core values are not tolerated. Impressively, the firm recently fired one of its largest clients, which had 100% realization, because of the abuse this client heaped upon the Hein’s staff. Says Mandell-Rice: “Firms are better off having no core values than having core values that are not followed.”
Twenty-two percent of Hein’s equity partners are women, well above 15% national average. Per Mandell-Rice: “We’ve changed the perception; in the past, it was almost as if females had to show they wanted to be a partner more than a man.” Flexibility is a key to their success: “Our female partners told us they were not looking for concessions, just flexibility in how and when they work,” says Mandell-Rice. Hein’s flexibility programs are focused on movement of hours, not necessarily fewer hours. Hein’s attitude is: “Try it and if it doesn’t work, we’ll find a way to make it work.”
Hein’s philosophy regarding its partner retirement plan is innovative. Starting at age 51, a partner’s retirement benefits are funded. When the partner reaches retirement age, his/her benefits are 50% funded. “We try to build-in security for our partners’ futures beyond service to Hein,” says Mandell-Rice.