Episode 80: What is the Concept of Having a Deep and Narrow Team Structure?

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In this week's episode of The Wize Guys Podcast,  Ed Chan, Jamie Johns, and Tim Causbrook share the concepts of a deep and narrow team structure for every accounting practice.

Find out why leading is important, the ideal process for a new team structure, how managing people could help, and the analogies behind having a successful team.
 Watch as the right business structure paves the way for career progression, competitive client rates, and beneficial returns on investments. So, are you ready for a business revolution? Let's get started!

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Transcript

Ed Chan: 0:01

You've got to master leading yourself. So that's about self-discipline, that's about experience, that's about controlling your feelings. So you've got to lead yourself.

Brenton Ward: 0:14

From Wize Mentoring is The Wize Guys Podcast, a show about accounting and bookkeeping practice owners and the many stories, lessons, and tips from their experience of transitioning from a time-pull practice to a business that runs without them. I hope you enjoy and subscribe.

Tim Causbrook: 0:35

This is probably my favorite topic out of Wize Mentoring and it's definitely the one that, apart from the Fab Five, it's the one that I've seen transform my business the most, so I'm really, really passionate about this. I've got plenty of questions that we're going to throw Ed and Jamie's way. We're looking at deep and narrow teams and if you've been with us for a while now, this is probably something you've heard us bang on about a lot here. It's a simple concept, but there's so much you can get out of it. So just to dive in now, I've got you on, ed. Where do we start in teaching the deep and narrow team structure? Just for a bit of context, the deep and narrow structure was designed based on your business philosophy, ed, of putting the right people on the right seat of the bus. What we'd like to focus on today is helping practice owners teach their teams about the structure and transition to the structure and basically, where do we get started? What's the best order to address this as burn owners ourselves? Yeah.

Ed Chan: 1:30

I guess you've got to get on board with it, you've got to really believe in it, because if you're a bit hesitant about it, then your staff will pick up on the hesitancy and they'll push. The less convinced you are, the harder to push back, and the more difficult it is for you to move forward. The whole concept of it is your ability to scale, because before coming from a background of doing the work and then when we start our own business, you know we just jump in there and do the work, and then as the work gets busier and busier, we just hire somebody and what I call throw bodies at the workload and we just keep hiring more and more bodies and then we end up with a very flat structure and that won't allow you to scale and you won't make any money because it's very clunky and you'll find a very difficult to find staff and so forth. So this is a huge amount of problems that are associated with that flat structure. So in order to explain it, I'll give a little quick, little background, just in case some of the members are new and that they don't understand the concept. But it's about managing the traffic flow. So what kills accounting firms is the amount of traffic that comes into the business and, unlike you, know a lot of other businesses out there. They don't have as much traffic. And to manage that traffic because a lot of our traffic you can't charge for you know questions and inquiries and that kind of thing and that comes through by phone or email. So you'll just, you know, bog down in just answering questions and you don't make any money. So the idea is to manage that traffic flow and you're going to manage it sensibly, efficiently, and effectively in order to make money and to scale your business. So I broke that down into communication traffic, where you're dealing with people and communicating with them and talking to them, and then there's production traffic, where you know you've got to get down and do the work and so forth. So we need to separate that out. The best way to explain it is a bit like a.

Ed Chan: 3:36

For those of you who play sports, I'll use the football analogy or, for some of us, refer to football as soccer. Somebody in the soccer team or the football team has a position and those positions require skill sets that are conducive to those positions, and if you play someone out of position, then the team's not going to function very efficiently. So in a soccer team, you've got a winger, you've got a fullback, you've got people at the forwards who score the goals. So if you put a winger who needs to be really quick in a goalie position, then you're playing him or her out of position. And if you put a goalie who's got really good reflexes out on the wing but he's really slow, then the whole thing doesn't work and you, as the owner, are the coach. So you've got to know your people and put them in the right position. So now that's a brief summary of what the deep narrow team is.

Ed Chan: 4:29

So now I'll go into the topic for today, which is how you get your people engaged with this whole process. We're going to get some challenges moving forward, and this is what we've experienced with the many years of me doing it and also now that we're coaching other firms, things that we've experienced. Some of the pushbacks you're going to experience, well, obviously from the team, and you need to, as I said earlier, be very, very convinced about this to be able to move forward and bring your team with you and generally the challenges along these lines. Some might feel very frightened by the thing because you know they're not sure of what it all means. So you've got to really get in there and educate them. They don't understand, so they might have a lot of questions and we might take that as being negative or being negative or pushback, but it's just that they just really don't understand and I've explained this in a way of you know there are early adopters, middle adopters, and late adopters. The early adopters get it and they will embrace it. For the middle adopters, you need to explain it two, three, or four times. And the late adopters you need to explain it 10 or 20 times before they get it. And people learn differently and sometimes the light comes on, you know, at a particular time when they're ready. And so often you know it's been said to teach your peers when the students are ready.

Ed Chan: 5:58

So don't get discouraged because you've had, you know, pushback, but you've got to have that conviction to keep prosecuting this team structure Because you won't be able to scale your business. Trust me on this one you won't be able to scale your business if you run the flat teams and you're going to struggle to grow and you end up working very, very long hours and not getting the return and the lifestyle that you need. It's got to also take time take time for your staff to fit into that role. So firstly there's got to be an understanding from them, they've got to be an acceptance, and then you've got to implement, and then it's going to take time for them to change habits and that's going to be different for different people.

Ed Chan: 6:42

Now, a typical problem that I've always experienced is at the client manager level. The client manager is the person that is in charge of the team, but they communicate and do all the advisory, do the face-to-face meetings, they handle the communications with the clients, and the biggest challenge that I've experienced and, Tim, you've experienced this in your own teams is that they misunderstand what their role is. Sometimes they enjoy sitting there and doing the work right, so they just sit there and do the work and that's not what we pay them to do. We pay them to spend most of their time in front of the clients, talking to the clients and growing their portfolio, and if they don't get in from their clients and talk to their clients and advise them on advisory, on explaining the results and those kinds of things, they're not going to get referrals. And often they don't do that and they say to you I haven't got time to do that. It's because they enjoy doing the work and all their time is taken up just sitting there doing the work. But they're overpaid for that role if that's what they like to do because you can pay someone a lot less money to do that grinding role. So you need to really lead.

Ed Chan: 7:55

So that's one of the biggest challenges I've seen to change the senior client manager's thought process to take the finished work and go see the clients with it, whether that's face-to-face in a meeting or by Zoom. They've got to explain that to the client, not just send things out to the client and go back to doing more grinding. That's a big challenge. The other challenge is that if they don't have a good production manager working for them, then they don't have any confidence in the production manager. So what they end up doing is doing it all themselves. So they'll have this attitude of it's quicker if I just do it myself, or by the time I've trained her, I could have just done it. And that's the wrong thinking. And you've got to help your staff get out of that thinking Because, again I find it, sometimes the owners of the business find it very difficult to do that themselves, let alone trying to get their client managers to do it.

Ed Chan: 8:52

So that's another level. Firstly, you've got to be able to do it yourself and then encourage and lead your client managers to do that as well. Otherwise, it's going to go round and round circles. Of course, the other challenge is that they're doing very low- level work at a very high cost because they'll probably be the highest- cost person in your team, and if you don't match the cost structure to the price levels, then you're going to end up having to write a lot of time off the job. So often if you don't have the right resource mix and the senior client manager is not managing the work, pushing the work down, then you're at the end of the job having to write time off, and that's a symptom of not managing the resource mix properly. Well, firstly, not having the right resource mix correctly and then not managing the resource mix, and it gets completely out of control. And then you start losing money from it.

Ed Chan: 9:51

And I used the analogy of a triangle. It's a bit like the food triangle, but in this case, it's a production triangle, where the largest part of the triangle is at the bottom, and at the bottom is where most of the time you spend on a particular job should be done by somebody else who's more of a junior. A lot of cost structure, a lot at a lower charge outrate. The middle of the triangle is where the production manager is. He or she checks the work and he or she spends less time on the job, but they're at a higher cost. At the very tip of the triangle is where the client managers should spend their time now doing advisory, face-to-face meetings, and structure strategy work with the clients. Your invoice to the client should be made up of that production triangle.

Ed Chan: 10:45

If it's the other way around, where the senior client manager is doing most of the work and the triangle flips the other way around, then you're going to end up having to write time off and you're also going to burn out your people because start client managers at that level need to be challenged and they're looking at their own careers. They want progression. They don't want to be sitting there doing bank reconciliations and that kind of thing. So you're going to end up losing your staff as well. So that's just complete mismanagement of the business, and so you've got to manage your business so everybody wins, so the client gets his work done at a competitive rate, your staff gets challenged and works on their careers and gets paid a decent salary. And of course, the shareholders need to win so that there's a decent return on investment, on the capital, of the investment of the capital of the business, of their money in the business. So the deep, narrow team facilitates the win-win-win.