Employee engagement isn’t an issue in hard times…or is it?


Tough times call for tough measures, and employee engagement and well-being may be considered ‘soft’ topics.  However, if you have been forced to reduce staffing to minimum levels, service delivery may be severely impacted if you lose anyone else.  In ‘tough times’, productivity and profits are crucial, and the emotional buy-in and commitment by your employees, to your business objectives, becomes even more of a priority.

It is no surprise that employees who experience a sense of belonging, purpose and integration within their workplace, are more likely to be motivated and produce quality work for your business.

Research has proven that highly engaged employees are less likely to be affected by change and, in times of uncertainty, engagement can serve as an anchor.


So how do I engage employees …with no spare cash?

Effectively engaging your employee does not have to cost you a cent:

  1. Demonstrate and Encourage Sound Leadership

Nothing matters more than good leadership.  We develop connections with people and our managers/supervisors are an important part of the equation.  Consider who you have leading your teams – do they… Inspire? Communicate the vision? Provide effective feedback? Lead by example? If you answered No to some of these questions it might be time to develop who you have at the helm.

  1. Deliver Recognition and Feedback

Recognition does not have to be in the form of monetary rewards.  Your employees are well aware of the market downturn, with the majority grateful for their job and not expecting the bonuses or salary increases they may have received in the past.  However, you can demonstrate you value your employees by being generous with your praise for quality work or noticing additional hours worked.  Look out for employees who go the extra mile and provide recognition and feedback where it is due.

  1. Provide Interesting Work

In today’s market, training and development budgets are almost non-existent. Develop your employees by challenging them with new work and responsibilities outside of their current role?  If you have made some roles redundant, offer remaining staff the opportunity to be trained to learn and take on some of these duties?  Presented in a positive way, this can be extremely empowering for an employee, validating trust and their position in the business as well as enabling you to observe their capability, and future potential.

Author: Warner Consulting Australia Pty Ltd, Alliance Advisor with ATL Network

How can remuneration benchmarking impact your bottom line?

Australian Money

The changing Australian economy has resulted in a greater focus on operating costs for many businesses.  Employees are often an organisation’s greatest resource, and typically they also represent the largest cost to the bottom line, so paying appropriately is critical.

Why conduct remuneration benchmarking?

Remuneration benchmarking is a powerful tool that can provide you with the information necessary to answer the following three questions critical to sound financial and employee management:

1. Am I paying legally?  
Employee entitlements including minimum base wages are set by the applicable award, or if the employee is not covered by an award, the National Minimum Wage.

Minimum base rates increase annually on the first pay period on or following 1 July.  This coincides with many organisational pay review cycles, making this the perfect time to benchmark and ensure your pay levels are legally compliant.

2. Am I paying consistently?
In matters of remuneration an individual’s skills, experience and performance, should result in reasonable differentiation.  However, often other factors such as negotiation abilities and length of service can influence remuneration levels, leading to disparity within groups of staff performing the same role.  Not only can this have a negative impact on financial management and sustainability, employee engagement and productivity may also be affected.

3. Am I paying competitively?
Paying at market rate is not just for attracting quality applicants; it also ensures key employees don’t ‘jump ship’ for an increase, and that your remuneration levels and practices are sustainable.

When using market data, consider the industry, role and region carefully; comparing an Office Manager working in a small professional practice to one working for a large corporation is like comparing apples to oranges.

What about outliers?

What do you do if your employees are well below or above the benchmark?

1.  Assess the reason for the anomaly
You should always consider an individual outlier, case by case. If they are well below the benchmark, is it because they are missing a required qualification? Or underperforming?

If they are above the benchmark, is it because they are a top performer? Because they are due for promotion? Or perhaps they were hired during a peak in the market?

If there is a valid reason for the employee being below or above the benchmark, there is no requirement for immediate action. However you should still work toward bringing the individual in line with the rest of your employees.

2. Is there a training or performance issue? 
The ‘How’ of dealing with outliers is not set in stone.  An immediate pay rise is only necessary if the employee is below the applicable minimum wage or well below the market.  However, action will need to be taken if the employee in question: needs to be performance managed; should be on a training plan; needs a promotion; or if a conversation to reduce the pay level needs to be conducted.

3. Is this sustainable?
Your top performer may be worth every penny, but is it sustainable to give them a pay rise if they are already significantly above the average?

It may be time for a realistic conversation. Explain the reason for a smaller or no pay increase, consider alternatives such as: flexible hours; training opportunities; or alternative benefits. It is critical that unsustainable increases are minimised, while avoiding demotivating the employee in question.

Outliers are an issue that will not be solved overnight. It is essential that you plan to bring individuals in line with other employees over a period of time, together with building in consideration for regular workforce increases.

At a minimum, remuneration benchmarking will ensure you aren’t at risk of prosecution.  At best it can have a positive impact on your financial performance and employee engagement. With the minimum wage increase just around the corner, now is the perfect time to start.

Interested in effective recruitment strategies: CLICK HERE

Author: WCA (Warner Consulting Australia Pty. Ltd)
WCA are an Alliance Advisor with ATL Network

Blame or responsibility: Knowing the difference can change your business

ActionWarren Buffet, perhaps the most successful investor in the world, got it wrong once, and some of his followers lost money by taking his advice. When he apologised to investors, a number commentators lauded his action, saying he was taking “responsibility” for his actions.

I disagree. While Buffet’s apology was a noble and honourable gesture it did not constitute taking responsibility. He was taking the blame.

What’s the difference between taking the blame and taking responsibility? My definition is quite clear. The parts of the word hold the answer: it is the ability to respond, whether it be to a problem, challenge, trend or future opportunity.

The evidence of responsibility is action. If someone claims they are taking responsibility, they are taking or planning action. The conversation is about action – they are focused on what action to take today that will make the future better. Responsibility is a forward looking, action-oriented concept.

Taking the blame – I’m sorry, it’s my fault – is not taking responsibility. In fact blaming oneself can be the ‘soft option’ and often substitutes for action and, in so doing, stifles taking responsibility.


Why the difference matters

Laying blame and taking responsibility are diametrically opposed; where one is, the other won’t stay long. Yet many managers act as if they are interchangeable. This creates problems for leaders; serious problems, when there are issues of bullying, for example. And the business can suffer too, due to the lack of an action orientation.

Blaming others has nothing to do with action and nor is it about the future. It is about the ego and making people feel guilty about a past event. Blame often leads to conversations of accusation, justification, excuses and back-side-protecting, not action!


What you say can change what they do

If this is happening in your organisation, and you want it to change, it starts with your conversations, as a leader (irrespective of your job title). Move the conversations away from blame toward action.

This means not only avoiding conversations where one blames another but also where people blame themselves – “it’s my fault”. Neither conversation is constructive. I cut people off when they move into the blame space by asking a very simple question: what are you going to do now to address the situation? This moves the conversation into a far more positive and productive space.

Focus your conversation on:

  • The actions needed to fix the current problem.
  • The actions needed to make sure the problem can never happen again.

Until both these are dealt with the problem has not been solved and responsibility is not complete.

If we have to delve into the past to be able to address the problem (and you will, in most cases) it can be easy to slip into a blame mentality. Avoid this by focusing on process – the process that created the problem. Don’t get drawn into the personalities.

It matters less what words you use, it’s the way it is said that counts. If you find yourself (metaphorically) wagging your finger at someone and saying, “you need to take responsibility for this” then it will be interpreted as blame. One of the most common blame statements I hear comes out of the USA – it happened on your watch.


Ability is important, too

So far, I have concentrated on the word ‘response’; but what about the word ‘ability’? Do your people have the ability to respond as the business needs. If not, what are you doing about developing their ability to respond?

If blame and responsibility are mutually exclusive approaches, which is it to be for you?

About the author: Warwick Cavell, an Alliance Advisor with ATL Network,  is a thought leader in communicating for results and strategy implementation. For over 25 years, he has helped leaders improve business performance by changing the way people communicate and work to solve problems – both internally and with their clients. He is a highly respected facilitator, coach, speaker and trainer, and author of regular blogs.

Complacency Breeds Complacency

Why Should I Worry?

Professional Complacency

When it comes to profit many firms are complacent. So long as the bills are being paid and I draw a reasonable sum each month why should I worry? That raises a most interesting question just how much is enough?

I frequently ask principals/partners in workshops to write down on a piece of paper just what they think their profit should be? Invariably there is a very diverse range of opinion and there should at least be some attempt by partners to come to agreement on a suitable amount. But the point I wish to make is that a large sum is inevitably left on the table. Complacency breeds complacency and as long as partners are reasonably satisfied a serious effort to change is unlikely. Yet most professional firms invest so little in areas like innovation, staff training, the latest technology, professional marketing, systems and procedures improvement, furniture and equipment, office presentation, and much more. If there is cash in the bank at the end of the month then a suitable drawing is on the cards!

So few firms complete a budgeting exercise that drives the firm. Ideally the overall firm budget for the year/s ahead should have a number of budgets branching off and supporting it where a serious drilling down is evident. I refer to the Personnel Budget, the Work-in-Progress and Debtors Budgets, the Capital Expenditure Budget that itemizes future investment in equipment especially information technology, the Training Budget that links into the skills audits and individualizes or tailors the training needs, the Marketing Budget, the Cash Flow Budget as distinct from the accruals Profit and Loss Budget, the Balance Sheet Budget, the Drawings Budget, and all of these should link in so that what if scenarios may be considered up front. The DuPont analysis is also an outstanding tool for assisting in these projections.

Detailed Drilling Down

Now I did say ideally and the reality is that this sort of detailed drilling down enables decisions to be made in advance and not on the run. For example, what percentage of our revenue should we outlay on training? What is realistic to enable us to grow our people and skills to reach the vision we have already determined in our Business Plan and strategies? In light of our growth projection what is a reasonable percentage to spend on marketing in order to achieve that growth. This should lead to what I refer to as laser beam focused marketing rather than the scattergun marketing that most professionals engage in (if any marketing at all!).

Rule of Thumb

Most professional firms work on the rule of thumb of 1/3rd, 1/3rd, 1/3rd, i.e. 1/3rd of revenue is taken up in overhead, 1/3rd of revenue is absorbed in wage costs and 1/3rd remains for profit  suggesting that professional firms should earn 331/3 % net profit but this is where the illusion of profit comes in. Because no adjustment is made for realistic commercial salaries for principals, or interest on capital and current accounts this simple formula can lead to complacency. And note that the interest is calculated at commercial rates and after regular, realistic revaluation of Balance Sheet items  especially Goodwill, Intellectual Property and other intangibles. my book, “Earn Your True Worth”  I explain in greater detail the options for calculating commercial salary.

A Reasonable Return ?

Where these adjustments are made in a commercial manner invariably I have found that Net Profit (before tax) drops dramatically to around 5% pa or less. Losses are not uncommon. In my experience listed corporations on the stock exchange generally seek a return in the order of 15-20% pa or more and they are punished in their share prices if they don’t, so accountability is very strong. It seems to me that this is a reasonable minimal guide for professional firms. Return on investment should also be examined (allowing for revaluation of the intangibles). Is the firm receiving a reasonable return on their investment after the above adjustments?

A True Costing System

So where is the net profit we should be earning? Waste is a big factor and time sheet recording for many professionals has made us lazy. There is a strong move to value pricing, i.e., a more serious examination of the value to the client and negotiation and management of expectations with the client. I am not advocating cessation of the time sheet system; I am simply advocating a return to the use of time sheets as a costing system that is a reference point only (as originally intended), not the means of calculating the bill. As already explained when professional firms have such low productivity there is something seriously amiss.

The Practice Cannot Run Itself!

You simply must take the management of your professional practice at least as seriously as you do when attending to the needs of your largest client. My book will provide you with an approach to truly earning what you are worth but you must be willing to take action, apply resources and make decisions. The practice cannot run itself! And avoid being misled by the illusion of strong profit.

David Connell, Co-Founder, ATL Network.


Time to decide

I recently received a very strongly worded email from a practitioner who complained that my views as to the demise of compliance work in accounting firms was completely wrong! I replied explaining that I have never held or expressed that view.

So long as we have politicians there will always be compliance work and we have reason to get excited every time they use the word ‘reform’ of the tax system because inevitably it means more work for us and of course more tax being paid!

HOWEVER, what I have been writing about is the need for change in fully adapting to a fast changing world where there is no ‘business as usual’. The evidence is in and in this last year especially many signs have emerged of practitioners facing some very big decisions …now…not sometime in the future. This is definitely not a time to be complacent, procrastinate or be a laggard – refer Diffusion of Innovation Theory and graph below:

 Early Adopters V Laggards

As you can see from this graph 50% of businesses and practitioners tend to be ‘late’ or ‘laggards’ when it comes to innovation and change. All too often we are just too busy being busy to notice change!

One practitioner phoned me just before the Christmas break and expressed surprise that this year he expected he would have his tax lodgement program finalised by Christmas for the very first time. He was stressed though as to what to do with his staff for the next six months. A recent national survey has revealed for the first time a downturn in a number of KPI’s including revenue and has concluded that greater efficiency is now apparent in the processing of compliance work and this has created capacity. I agree completely and this is a trend that can only continue and compound.


For decades I have been ‘preaching’ about the huge opportunities and potential for accounting firms and I have been referring to these as a ‘field of diamonds’, i.e., at least 20 support services that practitioners can and should be providing to clients. A recent survey carried out by ourselves discovered that many, if not most, firms have a list of services highlighted on their website but ALL of the surveyed firms agreed that they were not actually providing these services in any significant way. By far and away the bulk of revenue is earned through compliance activity (including tax, audit, super funds, etc.) with about 10% described as ‘consulting’ or ‘special’ but arising from existing compliance activity. One firm did point out that it was just part of their service to provide inter-generational asset transfer support and advice but simply viewed this as part of their ongoing year-to-year support…without any specific processes or check lists.

Over a period now of around 30 years I have specialised in providing ‘future directions and solutions’ to accounting firms’, facilitation ‘practice makeover’ workshops, acting in a role of part-time chairman of many firms and generally supporting firms in practical ways. Prior to that I was for many years a practitioner, a senior equity partner, in Australia’s largest accounting firm. With this experience I have had the opportunity to make a number of important observations and one is that simply adding on or tagging on a new service to your practice rarely works. I have personally made this mistake in my own practice. I believed strongly (and still do!) that we need to constantly reinvent ourselves and look to new possibilities. I loved succession planning so in my practice I began to develop this as a service for the firm, rolling out processes, templates, etc. and before long referrals were coming in from banks especially for large assignments – let’s face it even today very few practitioners offer this service and I suspect I was the only practitioner in my region, at the time, actually doing something about it! Subsequently I left the practice to start what was known for many years as ‘ANZAN Professionals’. As I understand matters this succession planning service was dropped by my old firm because they either didn’t want to provide it or didn’t understand it! I have heard versions of this story in many firms many times over. It is now apparent to me that unless a new service is fully embraced by the entire firm with complete processes ready to go you may well be wasting your time.

So, what to do? “When circumstances change, leaders must themselves be able to see things in new ways”They must move beyond having their two feet stuck on the ground and lift themselves above the ground to see what is unknown. This is an easy statement to make but it is psychologically very difficult to do…Steven Segal. Many accounting firms have been established in an era of stability and growth and now they find it impossible to adjust to an era of disruption and destruction.

We need only consider the current changes to providing investment advice and the time limit placed upon practitioners of 30thJune next to comply with RG146 or face a very challenging time in servicing their superannuation funds for example. Accountants also have a professional and legal duty to provide their client with all necessary information on managing business risks. This will inevitably lead to the accountant informing the client of the need for various forms of insurance, such as Director’s and Officer’s insurance. Accountants are still obligated to advise what insurance is required to mitigate those risks and why but not what specific insurance products. I suspect that there is much confusion among practitioners in this area.


Financial Planning is an area where pressure has been applied for change and urgent change by accounting practitioners and I fear that many have missed the opportunity already.

Strategic Planning, Succession Planning, DuPont Analysis and forecasting, Advisory Boards, Outsourced (insourced!) CFO services, Waste Audits, Balanced Scorecard, Coaching and Mentoring, Human Resources (HR), Business Turnaround, Due Diligence, Purchase and Sale of Business, Mergers and Acquisitions, Valuations and much more, are all services with much potential but the biggest. Most difficult decision would be what NOT to do!

Over many years I have completed countless independent valuations for practices and overall I would suggest that returns are not as good as many practitioners believe. When ‘commercial’ adjustments are made for salaries (currently considered to be around $200,000), interest on current accounts, ROI (allowing for realistic valuations of Goodwill, etc.) ‘profit’ is reduced significantly and often does not exceed 5%. Investors in listed ASX companies have an expectation of a return of between 15-20% or the share value is marked down.

So this raises an important question in my mind – should practitioners, and I refer to ‘general’ practitioners or ‘compliance’ practitioners take on these new services at all? I refer again to my observation above re rolling out an all-of-firm supported service with fully established check lists and processes in place. One of the very positive developments in the last 2-3 decades has been the growth of specialist support services for accounting firms. As a further observation, in current times an 80/20 share of revenue seems to be a reasonably accepted share of revenue with these specialists (there are many variations of course). They get 80% for rolling out the service for your client and your keep 20% (including capital gain) effectively for the referral and you don’t have to stress about keeping up to date in yet another area of expertise, developing processes, training of staff and so on.  Medical GP’s have been doing this for decades perhaps it is time for the accounting profession to fully embrace the concept.

Many practitioners are currently anchored in everyday experience and cannot see new possibilities emerging and are taken off guard by change. Few are willing to leave their comfort zones and thus to stay in tune with the way circumstances are constantly changing. Leaving one’s comfort zone is an act of choice – a choice many practitioners are reluctant to make.

We have established Practitioner Networks across Australia and New Zealand as a means of enabling practitioners to keep up to date with change, for peer review, and for assistance in implementing change. Go to 2016 Advisory Thought Leadership Program.

The more we resist the changes that are constantly occurring, the more we marginalise ourselves, paradoxically leaving us outside of the main-stream in which change is occurring.  It is no longer possible to defer change in your practice – decisions must be made now – 2016 – and we have the systems and processes at the ready to assist you in determining your firm’s future.

I would love to receive your feedback – either leave your comments here below or email or phone me direct. Let me have your thoughts? Do you agree or disagree?


David Connell, Co-Founder, ATL Network

Mobile: +61 428 00 2010  |  Office: 02 69 22 6565

Email: david.connell@atlnetwork.com.au

How many accountants will make the cut?


A number of years ago I headed up a national network of consultants, most of whom were accountants in public practice. We ran annual conferences, and in one particular year I decided to engage a firm to carry out personality profiles for all those attending the conference. While it was hugely successful and created many great conversations, it was also notable for another reason.

Before the conference I met with the managing director of the personality profiling firm to give him some background on what we did and where our members came from. Our goal was, essentially, to develop business ‘facilitators’ and make them better business advisors as opposed to compliance accountants. As I explained this I received a look of astonishment from the MD. When I asked about his response, he explained: “I have done a lot of profiling of accountants over a number of years and this has shown me that, only 15-20% of accountants have the profile to be successful as facilitators. So either my stats are wrong or you have been successful in attracting a large portion of accountants with the ‘right’ profile into your network”.

When we did the profiles it was clear that the latter was true. Just over 90% of those who attended the conference came within the profile he nominated as being required to be an effective facilitator. While I don’t put too much faith in profiles – people can’t be put in boxes – this was a result that made me sit up and take notice.

How many accountants, I wondered, are going to be able to make it in the new world?

Technology is driving changes that are disrupting the structure of accounting practices, now and in the future. This has particularly impacted compliance services – the core work of most accounting practices. As prices drop through technology-driven price competition and as technology is able to reduce the requirement for a visit to the accountant, revenues and profits continue to drop.

In response, accountants have cut costs trying to protect profits. They’ve taken work offshore.

Others have adopted a more progressive strategy: to grow fees beyond compliance work by developing ‘value-added’ services and moving into business advisory services.

Many services of professional service firms, and the accounting profession is no different, are based on the professional adviser, being the ‘expert’, solving ‘technical problems’ for their clients. The basic communication style appropriate for this type of problem-solving is called ‘advocacy’ – the professional adviser advocates the best or the ‘right’ decision. The dentist tells you what is wrong with your teeth and what you need to do to resolve it. While you may seek a second opinion your role is to make the decision as to whether you want to go ahead or not. Apart from keeping your mouth open, you have a small role in the final solution. The dentist solves the problem for you.

Accountants who move into business advisory services encounter clients with a different type of problem – adaptive problems. Adaptive problems do not have such clearly defined solutions – what works in one organisation may not work in another; what works today may not work tomorrow. Staff loyalty is an example.

Adaptive problems are ‘evolved’ rather than ‘solved’. Once a tooth is filled the problem is solved; staff loyalty is worked on each and every day.

Adaptive problems are evolved by a facilitator who uses an inquiry conversational style.

The inquiry conversational style involves more than asking questions; it requires a different skill-set than what most accountants are used to. There is a key shift: while experts solve technical problems for their clients, clients solve adaptive problems (under the guidance of the facilitator). Adaptive problems not only require a different conversational style but also a different way of thinking about value, problem-solving and how the service is delivered.

By Warwick Cavell, Associate Advisor, ATL Network