How TQM worked for one firm.Several years ago, we realized our early leadership in the computer field had diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. and our 20-person firm was becoming indistinguishable from other CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. firms. As the managing director (we don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. use the title "partner"), I attended a total quality management (TQM (Total Quality Management) An organizational undertaking to improve the quality of manufacturing and service. It focuses on obtaining continuous feedback for making improvements and refining existing processes over the long term. See ISO 9000. ) seminar in 1990 in the hope it would provide us with a new focus that would improve our competitiveness and our client service. (For an overview of this subject, see "TQM and CPA Firms," JofA, Jul Jul abbr (= July) → jul Jul abbr (= July) → juil Jul written abbr Jul July. .93, page 59.) CUSTOMER NEEDS That seminar encouraged us to put greater emphasis on continuous conformance con·for·mance n. Conformity. Noun 1. conformance - correspondence in form or appearance conformity agreement, correspondence - compatibility of observations; "there was no agreement between theory and to customer expectations and needs. In the past, we had measured our success as most CPA firms do--without much input from clients and often in terms that had no real significance for them, such as number of new clients, total billings, etc. Furthermore, in the initial client proposal meetings the proposal team set high goals without regard to the prospective client's desired service levels. On examination, though, we found that once hired, we rarely kept all those promises. We were continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. setting ourselves up for a fall. For example, we typically offered to perform analytical reviews Noun 1. analytical review - an auditing procedure based on ratios among accounts and tries to identify significant changes limited review, review - (accounting) a service (less exhaustive than an audit) that provides some assurance to interested parties as to the of and calculate ratios for internally generated client financial information. Frequently, though, we had difficulty getting the information from the client and delivered the product late. We disappointed the client in a service its managers never would have asked for if we hadn't had·n't Contraction of had not. hadn't had not hadn't have offered it. Later, as part of the TQM process we asked clients--which are mostly closely held A phrase used to describe the ownership, management, and operation of a corporation by a small group of people. In a closely held corporation, the same people often act as shareholders, directors, and officers, and no outside investors exist. businesses--what they wanted. Their real needs usually were very simple and easy to satisfy, such as prompt delivery of financial statements or the opportunity to meet with us and talk about business. The TQM process we implemented was an attempt to fill those needs and create the kind of change that would make us more profitable and service-driven and enable us to provide higher quality services. EMPLOYEE TRAINING Although much of the TQM literature is still centered around manufacturing, we found it applied equally well to our firm. We did, however, hire a consultant who helped us understand TQM and how to implement it in a service-oriented Different ideas of service-orientation are found in different domains.
He suggested we send all our directors to a one-week quality management training program at 3M in Minneapolis Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. , but we opted instead to schedule two and a half days of training for the entire firm spread over six weeks at our own office because we would lose less client time and fewer billable hours Billable Hours is a Canadian comedy series, which airs on Showcase. Set in the fictional Toronto law firm of Fagen & Harrison, the series focuses on three young lawyers struggling to balance their expectations in life with the difficult realities of building a career . We scheduled the training after October October: see month. 15, the final extension deadline for individual taxes, to minimize pressure on the staff and delays in service delivery. Everyone in the firm participated--we hired a temp to answer the phones during the sessions. We found it very beneficial to gain perspectives from owners and clerical staff on the same issues. We began by selecting topics, such as communications, and then we split into groups to identify problems and possible solutions. We eventually created the firm's vision statements during these sessions. (The terms "mission statement" and "vision statement" sometimes are used interchangeably INTERCHANGEABLY. Formerly when deeds of land were made, where there Were covenants to be performed on both sides, it was usual to make two deeds exactly similar to each other, and to exchange them; in the attesting clause, the words, In witness whereof the parties have hereunto , but we prefer the latter because we believe it describes us at a certain point in time.) Carl Jenkins Carl Jenkins or Karl Jenkins can refer to any of the following people:
In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. facilitator and create a process for training new staff. We still turn to our outside consultant at times to stay focused, but we felt so strongly about TQM's potential that we hired a full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full non-CPA, Lucy Lucy Nickname for a remarkably complete (40% intact) hominin skeleton found by Donald Johanson at Hadar, Eth., in 1974 and dated to 3.2 million years ago. The specimen is usually classified as Australopithecus afarensis and suggests—by having long arms, short legs, an Douty, as director of quality services, once Carl Jenkins had launched the process. She heads our TQM efforts, trains new employees in TQM principles and researches and proposes further advanced training when needed. We found that our focus on TQM enabled our firm to achieve a number of positive goals. PROCEDURAL AND ORGANIZATIONAL CHANGE We made major changes in how we do our work and how we communicate with customers--both internal (firm members) and external (clients). Improving communication. We have stepped up our efforts to communicate regularly with clients, in part by encouraging relationships between employees and client personnel at all levels, not just between business owners and directors. We also spend more time listening to clients and less time talking. Client surveys. To develop customer loyalty, we solicit feedback through client surveys, a new step for us. They are conducted at the end of each engagement and used to improve our work and gauge existing clients' interest in other firm services (See exhibit 1 on page 75.) EVIDENCES OF SUCCESS All firm members helped develop our "evidences of success," which are indicators of where we are in relation to our goals. The goals are considered from the points of view of clients, employees and firm owners, and the evidences are common-sense common-sense adjective sensible, sound, practical, reasonable, realistic, shrewd, down-to-earth, matter-of-fact, sane, astute, judicious, level-headed, hard-headed << OPPOSITE foolish indicators. As an example, client satisfaction is one goal, and one way to determine it's been achieved is to see if clients are paying their bills on time. If they are, common sense indicates they probably are satisfied. Here are some examples of the initial goals we set for ourselves in our five-year strategic plan: For clients: 1. Ensure that satisfaction is rising by achieving a rating of at least 93 out of 100 on client surveys. 2. Improve client satisfaction, as evidenced by * A 50% reduction in client-initiated billing adjustments. * A 30% improvement in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying days outstanding. * A 200% increase in referrals from clients. * A 50% improvement in the client retention rate. For employees: 1 . Decrease turnover rate. 2. Work to improve satisfaction by 10% each year. Our basis of comparison is an initial satisfaction survey of current employees to gauge their feelings about the firm. 3. Lower absenteeism ab·sen·tee·ism n. 1. Habitual failure to appear, especially for work or other regular duty. 2. The rate of occurrence of habitual absence from work or duty. . For owners: 1. Over the next five years, achieve * A 200% growth rate in number of clients and revenue per client. * A 200% increase in per-shareholder profits. 2. Gain recognition by winning the Malcolm Baldridge National Quality Award for outstanding achievement in quality service in the small business category. QUALITY IMPROVEMENT PROJECTS During our group training session, we brainstormed and came up with 52 possible quality improvement projects. We decided to tackle the top 5 projects and set up teams to determine feasibility, develop budgets and create timetables and action plans required to accomplish each one over the next year. The projects are to 1. Network office computers. 2. Develop a strategic account process for managing client relationships. 3. Improve the time and billing process. 4. Improve the firm image. 5. Manage the overall TQM process itself. Of course, the first four points are part of the process, but our consultant advised us to include this so TQM would remain in the forefront of our activities. QUALITY STEERING COMMITTEE steer·ing committee n. A committee that sets agendas and schedules of business, as for a legislative body or other assemblage. steering committee Noun The quality steering committee meets once a month, which forces us to make progress toward our goals. After some trial and error, we staffed the committee with directors and managers. It first had been made up of directors, with rotating ro·tate v. ro·tat·ed, ro·tat·ing, ro·tates v.intr. 1. To turn around on an axis or center. 2. spots for a manager and a staff member, but we found short rotations offered too little time for input while long ones limited the feedback we got from other staff. We receive outside input from the quality improvement teams, which are made up of staff at different levels. QUALITY ANNUAL PLAN Our annual plan is both a business and a quality plan for both areas that covers goals created by all of our departments. It includes the evidences, or indicators, of success and serves as a game plan for the entire firm. The quality side is developed by the director of quality, with input from the quality steering committee, and distributed to all employees for input. It is reviewed monthly by the director of quality and summarized at the firm's annual yearend meeting. We use it to measure our progress and report on the results. Each year, the plan is reviewed by the quality steering committee and changed as appropriate. NEW SERVICES Our own success with the process has made us recognize that this new approach is a service we can offer clients and other CPA firms. We are surveying our clients' TQM needs by distributing TQM awareness surveys that cover their possible needs (see exhibit 2 on page 78). We ask clients to fax them back to us and, using the information we glean glean v. gleaned, glean·ing, gleans v.intr. To gather grain left behind by reapers. v.tr. 1. To gather (grain) left behind by reapers. 2. , we now perform cost-of-quality analyses and activity-based costing In a business organization, Activity-based costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control. This is a necessary tool for doing value chain analysis. to help clients improve profitability and gain a competitive advantage. This is the kind of proactive approach we have found our clients really expect. With another consulting group, we also offer seminars in Boston that help participants understand how quality and profitability can be achieved, given the layoffs and cost efficiencies most companies have faced. VISION STATEMENT During our initial group training session with all employees, we developed our vision statement. It reads: "We are an acknowledged leader in business and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , recognized for our dedication to providing valued services to our clients, our employees and the business community by consistently meeting their needs and exceeding their expectations." This statement hangs in the reception area and appears in all printed corporate capabilities materials and all newsletters. We had it framed and gave one to each employee. It is a continuous reminder that our goal is service to both internal and external customers. THE COSTS Our out-of-pocket start-up Start-up The earliest stage of a new business venture. costs for training and implementation were just over $13,000 (see "Costs of TQM implementation" for a breakdown). Firm members also devoted a great deal of nonbillable time to the process, but nonbillable time is inevitable in a CPA firm. We believe we've simply shifted how we spend it from areas such as general administration, for example, to preventive maintenance The routine checking of hardware that is performed by a field engineer on a regularly scheduled basis. See remedial maintenance. preventive maintenance - (PM) To bring down a machine for inspection or test purposes. See provocative maintenance, scratch monkey. . One of the unexpected side effects Side effects Effects of a proposed project on other parts of the firm. of the training was the realization that several employees could not adapt to a culture that put greater emphasis on communication and client service than it had before. Ultimately, they made the decision to leave the firm. Prospective employees now are screened using a predictive index Predictive Index is a management tool for predicting, describing and measuring the work behavior and potential of individuals and groups at all organizational levels. It claims to provide assessment of performance drives, management styles, capabilities, potentials, interests and questionnaire created by another company that allows us to decide whether someone will function well in the job requirements we have established. As an example of how the survey works, prospective employees check a number of words they believe describe the way they are expected to act by others and words they believe describe them, such as helpful, brave, convincing, responsive, eager, generous and careful. Their responses are compared with the job profile we've created. We survey prospective employees before initial interviews and proceed only with those who possess the right profile, experience and recommendations for the position and the firm. Because our commitment to TQM involves a great deal of time and energy, the cost of hiring personnel who can't work with our approach is extremely high. Our new procedures give us some assurance that candidates meet our specifications. CHANGE--THE UPSIDE Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside TQM isn't easy and it does take commitment. Change is disconcerting dis·con·cert tr.v. dis·con·cert·ed, dis·con·cert·ing, dis·con·certs 1. To upset the self-possession of; ruffle. See Synonyms at embarrass. 2. even to the most committed participant. But the process has given us a focus on our clients, on what they expect from us and what they do not want. It has forced us to look critically at our services and ourselves and to find ways to improve performance and profitability. We've also had to provide a means to improve the firm's work quality and solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. relationships with clients. We believe it has given us the edge on our competition. We have been able to expand during tough economic times when many CPA firms have contracted. The process definitely has worked for us. EXECUTIVE SUMMARY * THE LEADERS of a 20-person Boston CPA firm turned to total quality management (TQM) when they realized their early leadership in the computer field had diminished and the firm was becoming indistinguishable from others. * THE STEPS THE FIRM took to implement TQM included 1 . Get an introduction to the concepts by attending a seminar. 2. Once committed to the process, hire a consultant to train firm members, choosing the most cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. training option. 3. Designate des·ig·nate tr.v. des·ig·nat·ed, des·ig·nat·ing, des·ig·nates 1. To indicate or specify; point out. 2. To give a name or title to; characterize. 3. an in-house TQM monitor; later in the process, the firm decided to take the step of hiring a full-time director of quality services. 4. Make changes in areas such as procedures and organization, firm quality management and new employee selection. 5. Develop new services to offer clients. * THE PROCESS PROVIDED the firm with a new focus on clients and forced it to look critically at its services and find ways to improve performance and profitability. Firm leaders believe it has given their practice an edge on the competition. EXHIBIT 1 A sample client survey Macdonald, Levine, Jenkins & Co, PC Individual tax preparation client satisfaction survey This survey relates primarily to your experience with us during the tax preparation process. Feel additional comments about your experience with MLJ MLJ Malayan Law Journal (Malayan Law Journal Sdn Bhd) MLJ Marching Lumberjacks (Humboldt State University) MLJ Morris Coyne, Louis Silberkleit and John L. at the end of the survey. We will use your input as we continue to improve our methods and processes here at MLJ. That is wh important to get your feedback, both positive and negative. Thank you for taking the time to help us 1. Overall, MLJ's service [ ] Exceeded my expectations. [ ] Met my expectations. [ ] Was below my expectations.
Strongly agree
Strongly disagree
5 4 3
2 1 N/A
a. Work was prepared effectively. [ ] [ ] [ ]
[ ] [ ] [ ]
b. Work was delivered on time. [ ] [ ] [ ]
[ ] [ ] [ ]
c. If there was to be a delay, I was notified. [ ] [ ] [ ]
[ ] [ ] [ ]
d. The director and staff were readily available when needed. [ ] [ ] [ ]
[ ] [ ] [ ]
e. MLJ personnel were prompt in returning my phone calls. [ ] [ ] [ ]
[ ] [ ] [ ]
f. I was able to understand explanations by MLJ personnel. [ ] [ ] [ ]
[ ] [ ] [ ]
g. I received adequate advice regarding tax planning matters. [ ] [ ] [ ]
[ ] [ ] [ ]
h. Advice given by MLJ personnel has proven beneficial. [ ] [ ] [ ]
[ ] [ ] [ ]
i. MLJ was receptive to hearing my complaints. [ ] [ ] [ ]
[ ] [ ] [ ]
j. MLJ's fee was appropriate for the service provided. [ ] [ ] [ ]
[ ] [ ] [ ]
k. The filing instructions were clear and helpful. [ ] [ ] [ ]
[ ] [ ] [ ]
3. Is a two-week delivery of your completed tax return acceptable? [ ] Yes [ ] No 4. Is the tax organizer we supply useful to you? [ ] Yes [ ] No 5. How can we improve our service? 6. What other services can we help you with? 7. Comments: 8. Would you recommend MLJ to other people? [ ] Yes [ ] No 9. Is there anyone we may contact now? Name: Phone: Name: Phone: Name: Company: Date: EXHIBIT 2 MLJ quality awareness questionnaire 1. The concept of total quality management (TQM) is an important element in my business. [ ] Agree [ ] Somewhat important [ ] Not important [ ] I'm not sure [ ] What's TQM? 2. Activity based costing (ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. ) is a tool of which I have a basic understanding. [ ] Yes [ ] More than a basic understanding [ ] Only a vague understanding [ ] First time I've heard of it 3. Cost of quality (COQ) is a tool of which I have a basic understanding. [ ] Yes [ ] More than a basic understanding [ ] Only a vague understanding [ ] First time I've heard of it 4. The concept of continuous improvement through problem-solving teams is important to our company's success. [ ] Agree [ ] Disagree [ ] Not sure of the concept 5. We have started our formal TQM process in the following areas. [ ] We have a formal assessment of where we are. [ ] Management has committed and developed vision statement, mission statement or both. [ ] We train employees in quality awareness. [ ] We train employees in problem solving problem solving Process involved in finding a solution to a problem. Many animals routinely solve problems of locomotion, food finding, and shelter through trial and error. . [ ] We have a formal quality steering committee or council in place. [ ] Written or updated quality manual/system documentation. [ ] We have an employee rewards and recognition system in place. [ ] We have implemented a vendor certification program. [ ] We use a statistical process control. [ ] We use cost of quality. [ ] We use activity based costing. [ ] We have a strategic quality plan. [ ] We have ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9000 certification. [ ] Other 6. Our progress toward world class quality can be described as follows: [ ] Progressing on schedule [ ] Progressing on schedule but not many results [ ] Not formally started [ ] Not paying back on our investment yet [ ] Don't know Don't know (DK, DKed) "Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. our improvement in dollars [ ] Only a passing fad 7. Our accounting/financial reporting systems are not providing effective product cost and/or process management information. [ ] True [ ] False 8. Our accounting systems are being modified/upgraded to provide more accurate product cost information. [ ] Yes, but we have additional needs. [ ] They provide all the information we need to manage our business. [ ] We con produce a lot of paper but not a clear picture of our product costs. 9. I think it's time It's Time was a successful political campaign run by the Australian Labor Party (ALP) under Gough Whitlam at the 1972 election in Australia. Campaigning on the perceived need for change after 23 years of conservative (Liberal Party of Australia) government, Labor put forward a to become more involved with TQM concepts. [ ] Yes [ ] No [ ] Maybe 10. Our company realizes the need for TQM and wants to make it successful. [ ] True [ ] False 11. We need a better picture of our process costs and product/service costs. [ ] True [ ] False 12. We need to take the following action. [Check all that apply)
TQM COQ ABC
[ ] [ ] [ ] Follow up with more information.
[ ] [ ] [ ] Get some awareness training.
[ ] [ ] [ ] Get some advanced training.
[ ] [ ] [ ] Need to get started.
[ ] [ ] [ ] Need to change gears and move
ahead.
[ ] [ ] [ ] Let's talk!
Costs of TOM implementation Hard costs: Firmwide quality awareness training $4,651 Facilitator training 4,415 Consulting and follow-up 4,146 Total over five-month period $13,212 Soft costs: Nonchargeable time But * Firms have this anyway. * Training was scheduled during slow periods. CONSTANCE LEVINE, CPA, is managing director of Macdonald, Levine, Jenkins & Co., Boston. She will be speaking at the American Institute of CPAs national small firm conference in Nashville, October 27-29. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion