New roles for firm administrators.

The firm administrator's role has evolved into a position very different from what most firms first created. A decade ago most firm administrators were office managers responsible primarily for overseeing the support staff, ordering supplies and researching equipment purchases. Administrators have expanded this position to one that provides valuable new services to firms-- and, in many cases, brings in added revenues and opportunities.

Many of today's administrators serve as chief operating officers. They manage the firm's cash and finances, time and billing, collections, employee benefits and policies, recruiting, professional liability insurance, computer systems, equipment purchases, office relocations and marketing. This article describes some of the many ways in which practices are making the most of their administrators' abilities.

HUMAN RESOURCES 

Many administrators are the communication link between all levels and departments, allowing them to take a proactive approach to problems and keep morale high and turnover low. As one partner said, "Our firm administrator talks to all of our staff daily and deals with problems before they grow."

Administrators also perform cost cutting. Bill Leach, the firm administrator for Katz, Sapper & Miller, Indianapolis, reviews staffing expenses as a member of his firm's human resources strategic planning committee. By deciding to hire permanent part-time accounting staff, he reduced schedules from May through December, which has lowered compensation and benefits costs by at least 8% and as much as 18% a year. In addition, recognizing that bad hiring decisions can be very expensive, Bill attended a training session to learn how to administer and interpret the Predictive Index, a valuable personality profile diagnostic tool for use in hiring decisions and evaluations that is available to administrators from D.B. Scholl Inc., West Chester, Pennsylvania.

In some firms, using specially developed software, administrators track the flow of clients' yearend tax returns from receipt of data to final return delivery. The software is usually developed in-house by the administrator working alone or with the firm's computer systems expert. It allows the staff to do their jobs more efficiently, controls the scheduling of overtime and gives partners a better sense of what work has yet to be done.

Administrators also provide billable human resources services to clients, For example, they may

* Help clients in employment searches for controllers, bookkeepers and other personnel. Many firms charge a flat fee for this service, others bill by the hour.

* Create personnel manuals and assist in implementing personnel policies--such as those on sexual harassment--and in complying with the Americans with Disabilities Act and the Family Medical Leave Act.

* Speak at firm-sponsored client seminars on human resources topics.

* Offer employee benefits consulting. These consultation services include the sale, implementation of and training for section 125 plans, particularly the premium-only plan kits and dependent care kits. They may also help clients sort through health insurance programs to locate the best one for their needs.

* Set up and implement 401(k) plans.

COST MANAGEMENT

Finding ways to eliminate waste and minimize expenses is a regular consideration for most administrators. In some cases, they have increased cash flow by campaigning for the acceptance of credit card payments. Others obtain free airplane mileage, hotel rooms and other services by using a corporate credit card. Many administrators review the billing with the partners, not only to ensure all services and costs are properly billed but often to recommend potential write-ups for additional services and to recognize value-billing opportunities. As advisers, they provide partners with a different perspective on how to serve clients.

Bill Leach and I, concerned with the rising costs of traditional health insurance programs, researched and installed self-insured health plan packages for our firms. We both used plans that included insurance-funded catastrophic coverage, thus minimizing our firms' total exposure. Bill's firm (115 employees) saved $60,000 annually. My firm--with 25 to 30 covered employees--has saved at least $20,000 for each year we have been self-insured. The savings are measured against what a traditional indemnity plan would have cost (see "How Firms Contain Costs," JofA, June 95, page 62, for more on self-funding).

At Reali, Giampetro & Scott, Youngstown, Ohio, Randall Melvin created and developed a detailed cost analysis program to monitor which clients and services were the most profitable. Many administrators routinely provide a "flash sheet" allowing partners a quick review of the firm's status. These weekly reports may compare actual billable hours and production dollars at appropriate realization rates for the prior week against budget, checking account balance, credit line balance, cash requirements for the coming week, accounts payable and new business generated.

Administrators also introduce and implement new approaches. For example, Ray Shevenell of Berry, Dunn, McNeil & Parker, Portland, Maine, decided to spearhead the adoption of a total quality management program at his firm while he was firm administrator (he is now the firm's human resources administrator). According to one firm partner, the program "increased individual productivity and overall operational efficiencies and encouraged new business development with existing clients. And it developed new client relationships."

TECHNOLOGY

Practitioners struggling to keep up with new technologies frequently rely on administrators to bring them up to speed. Joe Gale of Warren Averett, Kimbrough & Marino, Birmingham, Alabama, became his firm's in-house computer consultant, which reduced the expense of hiring an outsider for minor problems. He also provides staff computer training. And, by working closely with clients, he is able to recommend the best possible resources and products to serve their needs.

Joe also initiated a computer purchase program that allows employees to buy their own computers and modems with firm assistance at a considerable savings. This enables staff to work from their homes if their children are sick or other difficulties prevent them from coming into the office. The obvious benefit is fewer lost billable hours.

Paul Nadolny of Dennis Nelson & Company, Rolling Meadows, Illinois, set up and administers a computer consultation company that markets and provides training for accounting and human resources software and hardware.

Bollam, Sheedy, Torani & Company, Albany, New York, has saved $15,000 since administrator Scott Linden designed a four-hour Windows training program for staff and partners. The savings are what the firm would have paid its network administrator to train all employees and new hires. Other administrators have increased firm efficiency by replacing publications with CD-ROM versions, which makes research more easily accessible to all professionals, eliminates costly filing expenses, tracks research time and bills clients.

PRACTICE DEVELOPMENT

Many administrators play a key role in the firm's marketing program, particularly if there is no marketing manager. Their active involvement makes them an obvious choice to interview marketing coordinators and representatives, and many work closely with these staff members. For firms without separate marketing personnel, administrators generate new and more profitable business and help build solid referral relationships. For example, some track all new business leads from outside referrals, such as attorneys and bankers, to make sure the professionals who recommend the firm are in turn recommended by it.

Some firms take their administrators to trade shows as part of the marketing team to get them out from behind a desk and in front of potential clients. Ruby Heiden of Froehling, Anderson, Plowman & Wasmuth, Minneapolis, created a profit center for her firm by assisting in seminars targeted to senior sales executives who sell to Fortune 500 companies. Her role in the seminars is to enhance the understanding of corporate financial analysis.

Other ways in which administrators turn know-how into billable client services:

* Bill Leach performs client relocation services developed from his experience in moving his firm and dealing effectively with contractors.

* Kathy Siegfried's experience as a paralegal led her to develop the law firm services group, a bimonthly seminar and a newsletter program for lawyers at Siegfried, Schieffer & Seitz, Wilmington, Delaware. Her firm has generated over $500,000 in litigation services work in one year through her seminars.

A KEY PLAYER

Many administrators are members of their firms' management teams and serve on all committees, including the executive committee. Some non-CPA administrators have become principals in their firms and have the same status as a partner.

When left to their own devices and encouraged by top management, administrators can offer innovative solutions to common practice problems. Managing partners would be well-advised to tap into this wealth of ideas and resources.

EXECUTIVE SUMMARY

* THE FIRM ADMINISTRATOR'S ROLE has evolved over the last 10 years into a position very different from what most firms first created. Employees who were once office managers now provide valuable new services to firms--and, in many cases, bring in added revenues.

* IN THE HUMAN RESOURCES area, administrators consult with clients on benefits programs and on hiring decisions.

* WHEN MANAGING COSTS, they might target the most profitable clients, seek travel savings or research and implement improved health benefits programs for firm employees.

* PRACTICE DEVELOPMENT is another key function. Administrators track referral sources or offer client seminars or services based on their own expertise gained running their firms.

* AS NEW TECHNOLOGIES EMERGE, practitioners struggling to keep up frequently rely on administrators to serve as their firms' in-house experts.

LINDA A. PAPPAJOHN, former president of the Association for Accounting Administration, is firm administrator for Santora, Starr & Baffone, Newark, Delaware.

CASE STUDY

A Hands-On Approach to a New Niche

There are more than 40,000 hearing-impaired people in the greater Detroit area, and most of them have problems accessing basic services such as health care and accounting. When Schmaltz & Company's firm administrator, Mary Bartlett, who is a deaf interpreter, pointed out the difficulties deaf people face, the firm's partners recognized an opportunity to help this niche market.

The firm's initial marketing effort was an enthusiastically received financial seminar at Detroit's Deaf Center. Partner Gene Patroske's presentation was accompanied by Bartlett's simultaneous interpretation; he was inundated with questions during and following the seminar. Members of the audience encouraged Bartlett and Patroske to continue their efforts on behalf of the hearing impaired. The firm has specialized equipment with a telephone-linked keyboard and screen to help Bartlett communicate with members of the deaf community. The total investment to serve the accounting needs of deaf clients was $750.

The firm also shares Bartlett's expertise with its other clients who may want to offer services to the hearing impaired. Because the deaf may postpone or avoid visits to dentists and physicians, health care clients were identified as appropriate businesses with which to share deaf communication techniques. Bartlett and Patroske approached a large dental practice and proposed helping the dentists make their services more accessible to the deaf; Bartlett trained the dentists and staff in sign language and the use of special communications equipment. Even before the training was complete, deaf patients began visiting the practice, which added 18 deaf families as clients in 1995. The dentists and their staff are excited about their prospects for the new niche market. According to one doctor, "This has been one of the better investments we've made in a long time." The package that the firm offers its clients includes sign language and communication equipment training, advertising consulting and marketing, offering an open house for the deaf community and scheduled followup training during the first year; the proposals for this package run between $4,000 and $6,500.