A typical accounting firm independent of the corporate structure (partnership, corporation, etc.) is a tall vertical hierarchy from staff, up through managers to partners/owners. The hierarchy identifies the levels of responsibilities and oversight as well as the expectations concerning technical/professional skills required to complete the necessary tasks/projects at each level. This type of structure removes the various levels and chains of command a vertical hierarchy encompasses. Vertical hierarchy works for accounting firms as a whole as well as the tax and audit departments but should be adjusted when applied to an outsourced accounting department. We have found that the department should be structured as a flat hierarchy (see figure 1) to build and foster the strategy of cooperation, interchangeable team formation, and efficiency. Teams change based on the project need and expertise of team members; the structure allows more flexibility with workflow and decision-making.
Role of Partner:
- oversee department and relationship with clients
- bring in new business
- provide support
Role of Managing Supervisor:
- oversee and control workflow
- review deliverables
- respond to inquiries and issues from staff and clients
- schedule and track workload and project completion
- review processes and procedures with the staff and the partner and implement any changes when necessary
- oversee cross-training of staff
- institute relationship audit every 6/12 months
Role of Professional Staff:
- process accounts payable and accounts receivable
- record period end and correcting journal entries;
- perform bank reconciliations
- review entries for another PS
- prepare client deliverables
- respond to client direct inquiries
Role of Systems Specialist:
- not directly involved in the department
- used as a resource depending on the project/client needs
- provide training and technical support
- respond to customer and staff inquiries regarding use of software
- notify customers and staff of updates and upgrades
Why does a flat hierarchy work?
Technology allows for better management of workflow and communication between team members. Small team size and increased decision-making autonomy by team members reduce time to deliverable.
What are the drawbacks?
The flat hierarchy as described above requires a more knowledgeable and experienced professional staff that can efficiently manage their time and is responsive to a client’s needs. It also relies heavily on two-way communication between team members, management, and clients. i.e., it is dependent on having “the right people.”
This model can be applied to projects in addition to organizations and departments. Is it applicable to your activities? Or are you already using it and have found ways to make it more successful? I would love to hear from you. Email or call me at 703-836-1350.
Written by Rally Kamenova, Outsourcing Principal