As The Accounting Firm Business Changes, Associations Fight To Remain Relevant

"I think a lot of associations started in the late 1970s or early 1980s basically as drinking clubs. Members could get together in a really great exotic place with peers they don't compete with, get a little CPE, and have a great time in the name of business. Associations are nothing like that anymore.

- Association executive who asked not to be identified

Rapid firm growth. Globalization. The emergence of more innovative, profit-minded firm leaders. Diversified services. SOX. The warpspeed evolution of technology. These are some of the factors that are changing the business of accounting firms, and accounting firm associations pedal furiously to keep ahead of the current.

Now more than ever, associations are under more pressure to demonstrate value, anticipate member firms' future needs, provide worldwide resources, and to be available for assistance at the touch of a button. Members are demanding not just education and marketing support, but services that can directly impact their bottom lines, such as help with proposals and lead generation, meaningful referrals and finding opportunities for member firms to collaborate on bigger jobs.

"Member firms are viewing their association relationships with an eye to value. Are firms receiving value from the association higher than the dues they are paying? Members must receive value from the association in excess of their dues," says Patrick McFarland, executive director of The Network, an association sponsored by Seattle-based mega-regional firm Moss Adams, which is a member of Moores Rowland International.

IPA research bears out those statements. We surveyed directors of 30 accounting firm associations to get their opinions on the state of associations today, how they've changed, and their future viability. Whereas 10 to 15 years ago the emphasis was on staff training, infrastructure resources, CPE and marketing education, today's concerns center on building international influence, collaboration among members, knowledge sharing, creating common cultures, competing with larger firms, and branding. A stunning 40% of the executives expect there to be fewer associations in the next two years than exist today. (see table, page 5.)

Associations Face Seismic Shift In Member Priorities

Recent changes in associations at the most obvious and basic levels reflect these demands: the emergence of new groups such as Leading Edge Alliance and the tentatively named Global Alliance; mergers of existing associations such as ACPA/Jeffreys Henry, GMN/Enterprise Network, and Polaris North America/PKF; and the evolution of for-profit specialty alliances such as RAN ONE, Upstream Academy and Boomer Technology Circles.

Association leaders can't ignore the reasons for such re-invention of the traditional association, says Art Goessel, executive director of Polaris IA International. He points to the new "Global Alliance," comprised of nine IPA 100 firms, as an example. "Those are big firms, most of which were members of an association, and in some cases, founding members. But they were looking for some basic things that they weren't getting from their membership: referred business; down-and-dirty meetings where they can share experience and expertise and get in and out quickly; international connections - and they want those things without the burden of high costs." (see IPA, December 2004.)

Small firms want the same things from their networks nowadays, Goessel contends. "They don't join associations for audit manuals and tax training anymore. Young partners who are starting their own firms today have been through leadership training and know how to run a firm," he says. "They're a different breed from those who started their own firms in the 1980s."

Issues Centered On Quality Play A Growing Role

The evolving global nature of the accounting business is having an increasingly significant impact on associations, with opportunities for multi-jurisdictional engagements and the looming prospect of uniform international standards gaining ever more steam. "I get a call every day from an international firm that wants to join our association," Goessel reports. One byproduct is members' maturing expectations not only of their associations, but of each other as well. In the parlance of the drinking club analogy, it's not enough to show up for the party with a six-pack anymore: There's less tolerance for those unwilling to help with the planning and clean-up. Association directors increasingly cite factors of quality - such as ensuring all members contribute to the group and establishment of client service baselines - as one of their biggest challenges. The firm that merely pays its dues and contributes little else, and the one that can't be counted on for quality referrals and work, is becoming less and less welcome.

"Successful associations are becoming increasingly stringent about the quality of their members. Therefore, weaker members are having to leave successful associations," says James Mendelssohn, chief executive of MSI, a London-based network of accounting and law firms. Adds Alric clay, CEO of Moore Stephens North America: "For networks to be strong, they must offer a true customer service baseline and offer the same service in Hong Kong as they do in Switzerland. As global associations make the move to compete, locating firms that reflect a similar service mindset becomes increasingly important."

Kevin Mead, executive director at IGAF, agrees. 'One example is our firm in Harrisburg, Pa. Previously, that firm operated within a 50-mile radius of Harrisburg. Suddenly, it's being asked to bid on jobs with international components. As a result, we've had to provide a framework to help our firms be competitive in those situations." IGAF rolled out service level agreements in March for clients referred between member firms. The document is primarily for the client: it details what the client can expect when handed from one firm to another, such as response time, confidentiality obligations, who owns the relationship, the reporting structure, and other points. "Our worldwide directors decided it would be a differentiator for us and our firms," Mead says. "It ensures a quality continuity process on the back end."

Associations' Futures Depend On Ability To Adapt

All these factors add up to a future that will see further diversification of the traditional accounting firm association and the blurring of some characteristics that originally made them attractive, such as geographic exclusivity. Consequently, association leadership will wrestle with ongoing challenges in an effort to remain relevant and valuable to their members and to compete with other innovative organizations.

"Associations that take their eyes off the ball and fail to stay in touch with their members' needs will find they must merge to survive, and new associations will spring up to address needs that are not being addressed by the current slate of associations," says Rudy Beilfuss, executive director of PKF North American Network. But the same challenges also provide associations with opportunity, says Maureen Schwartz, executive director of BKR International: "There are more opportunities than ever for local firms, but they'll need help to capitalize on them. Our job is to help them do that by being proactive, initiating different services and benefits, and providing the resources to help them make the most of opportunities."