Managing the bottom line: how process improvement helps CPAs.

• Author: Hostetler, Dustin

[ILLUSTRATION OMITTED]

What comes to mind when you hear "manage the bottom line?" Do you think about controlling expenses? How about asking employees for more chargeable hours? While it's fiscally responsible to manage and control your costs, and in theory, more chargeable hours lead to greater revenue, there is another way to manage the bottom line--improve your processes.

The manufacturing industry has been using the Lean Six Sigma methodology for years. The concepts have now begun making their way into office and service processes, including those of CPAs. The desire to improve efficiency has led CPAs to this breakthrough process improvement tool set.

Lean Six Sigma uses a team-based problem-solving approach, lead by skilled facilitators (certified: Black Belts) who apply tools to each unique process and situation. Starting with a thorough measurement and analysis of the "current state" of the process, the team identifies where efficiencies are being lost and uses Lean Six Sigma techniques to improve those processes.

CPA processes are rife with inefficiencies. Historically, attempts to increase efficiency start with new technology and end with telling people to work harder. With this mindset, it's amazing that staff turnover isn't worse. We should be telling people to work smarter, not harder.

THE MISSING LINK BETWEEN TECHNOLOGY AND EFFICIENCY

Technology is great, right? After all, it provides significant value and efficiencies. But is it being used in a way that optimizes a process' performance? The two must go hand-in-hand.

Firms often buy new software because the salesperson told them how much it would improve efficiency. But in some cases, the software actually conflicts with process efficiency. If the software adds steps to the process that don't add value for clients how is your process improved?

And while firms continue to invest in new technology, staff members complain about inefficiencies or chaos in their offices. It's because of not looking at work from a process mindset. Lean Six Sigma is the missing link between technology and an optimally efficient process.

Recently, while assessing an East Coast public accounting firm, I met with the partner in charge of one of their satellite offices. From his comments, it sounded as if they had the most efficient office and processes on the planet. There were no problems. No bottlenecks. Staff members were working hard, but being efficient. This firm has invested in all of the newest...