The Wize Way

Episode 144: What is the Concept of Having a Deep and Narrow Team Structure?

• Wize Mentoring for Accountants and Bookkeepers • Season 2 • Episode 144

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In today's episode of The Wize Way Podcast for Accountants and Bookkeepers, Tim Causbrook and Ed Chan share the concepts of a deep and narrow team structure for every accounting business. 

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. 

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Brenton Ward:

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- poor practice to a business that runs without them.

Tim Causbrook:

This is probably my favourite topic out of Wize Mentoring, and it's definitely the one that, apart from really the Fab5, it's the one that I've seen transform my business. So I'm passionate about this. I've got plenty of questions that we're going to throw Ed and Jamie's way. way 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.

Tim Causbrook:

I've got you on, Ed. Where do we start in teaching the deep and narrow team structure? And 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, and most of the attendees today will have been exposed to the deep and narrow team structure. As I said, 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 firm owners ourselves?

Ed Chan:

Yeah, 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 back. And the less convinced you are, the harder it is to push back and then the more difficult it is for you to move forward. The whole concept of it is your ability to scale, because you know, we've all come from a background of doing the work and then when we start our own business, we, 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 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 it very difficult to find staff and so forth. So there are a huge amount of problems that are associated with that flat structure. So in order to explain it, I'll give a quick little background, just in case some of the members are new and they don't understand the concept, but it is.

Ed Chan:

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're just, you know, bogged down in just answering questions and you don't make any money. So the idea is to manage that traffic flow and you don't make any money. So the idea is to manage that traffic flow and you've got to manage it sensibly efficiently and effectively in order to make money and 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. Oh, Tim, are we having some technical problems? I seem to have lost everybody on this call.

Tim Causbrook:

No, everyone's still here. I've just stopped sharing. Jamie's just going to take over sharing for a sec, all good.

Ed Chan:

All good, yep, no problem. And then there's production traffic, where you know you've got to get down and do the work and so forth, and so we need to separate that out. And the best way to explain it is it's a bit like for those of you who play sport and I'll use the football analogy or for some of us who refer to football as soccer everybody 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, quick summary of what the deep and narrow team is. So now I'll go into the topic for today, which is how you get your people engaged with this whole process, and you'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, the things that we've experienced. So 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.

Ed Chan:

Some might feel very threatened 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 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 or three or four times and for the late adopters, you need to explain it 10 or 20 times before they get it. And people learn differently. Sometimes the light comes on, you know, at a particular time when they're ready. So often, you know it's been said the teacher appears when the student's ready.

Ed Chan:

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 flat teams and you know. And you won't be able to scale your business if you run flat teams and you know and you're going to struggle to, to grow and you end up working very, very long hours and not get the return and the lifestyle that you need. And you're gonna. You're gonna also 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:

Now, a typical problem that I've always experienced is at the client manager level. The client manager is the person who is in charge of the team, but they communicate and do all the advisory, do the face-to-face meetings, they handle all the communications with the clients. 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 front of their clients and talk to their clients and advise them on advisory, on explaining the results and those kinds of things, then they're not going to get referrals. And often they don't do that and they say to you 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 and 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:

So that's one of the biggest challenges I've seen to change the senior client manager's thought process. You know, take the finished work and go see the clients with it. So, 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. So 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, you know, doing it all themselves. So they'll have this attitude of, oh, it's quicker, if I just did it myself, or, you know, 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:

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, you know it's going to go around in round circles. Of course, the other challenge is that you know they're doing very, 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 you know, if you don't have the right resource mix and the team or the senior client manager is not managing the work, pushing the work down, then you end up at the end of the job having the right time off and that's a symptom of not managing the resource mix properly, not 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:

And I use the analogy of a triangle and it's a bit like, you know, 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 spent on a particular job should be done by somebody else who's you know more of a junior at a lower cost structure, at a lower charge-out rate. 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 level. And at the very tip of the triangle is where the client managers should spend their time doing advisory. Face-to-face meetings, structure strategy work with the client. Face-to-face meetings, structure strategy work with the client. So that's the invoice to the client should be made up of that production triangle.

Ed Chan:

If it's the other way around, where the senior client manager is doing most of the work, and the triangles flip 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 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 properly so everybody wins. So the client gets his work done at a competitive rate, your staff gets challenged and you know work on their careers and get 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 narrative facilitates the win-win-win.

Brenton Ward:

Thanks for tuning in. If you liked this episode, please remember to subscribe and leave us a five- star review. For more practical, Wize tips on how to build a business that runs without you, head over to wizementoring. com/ podcast to download a free copy of The Accountant's 20- hour Workweek Playbook. We've included a link in the show notes below. See you in the next episode!