Mid-size accounting firms are beginning to expand their advisory services. This activity, which can make strong business sense, can present some structural and cultural issues that may be easily overlooked. Accounting firms have titles and structures that differ meaningfully from those of advisory/consulting firms.
Titles such as senior, supervisor and manager that are pretty universal in accounting firms do not fit the expectations of consulting firm staff. Similarly, a typical mid-size accounting firm may have as many as seven levels of progression from entry level to partner. Consulting firms more commonly have four or five such levels.
The nature of the business is also different. While accounting firms have “annuity” work for clients such as annual audit work and tax returns, consulting firms need to generate fresh projects each year, with outsourcing services serving as their only potential annuity income source. And, while project work is less secure, the engagement size for this type of work can easily be much larger than the typical engagement at an accounting firm. These aspects can have a substantial impact on how consulting partners in accounting firms should be admitted and paid.
Leaders of accounting firms that build successful advisory businesses understand these issues and give their advisory service lines the flexibility to structure titles, progression levels, talent management & development and other key features and processes in a fashion that will permit the consulting businesses to thrive.
It should be noted that advisory businesses that are limited to general business advice, litigation support and forensic work fit well into existing accounting firm structures. Not so, however, where the advisory services include IT, cyber security, data privacy and similar offerings.