MTPI: Mid-tier firms driving practice growth by putting people first

The inaugural Mid-Tier Power Index revealed those firms which are disrupting the marketplace in 2022, winning tenders and new business, and excelling in their Environmental, Social and Governance (ESG) strategies. In this report we take a closer look at what the leading firms have in common, and how they are driving practice growth.

Employee engagement

An overwhelming theme within the Mid-Tier Power Index (MTPI) is the emphasis that firms are now placing on their people. As a firm’s “biggest asset”, people can make or break the client experience and those firms which recognise the importance of employee satisfaction in providing the optimum service are thriving.

“We pay people for hours of their life and they can choose to spend those hours with us or with another accountancy practice,” says Jennifer Williamson, partner at Kreston Reeves. “These are people with a lot of choices at their disposal and because they’re choosing to spend their time with us, we have a duty of care to make their jobs as fulfilling as possible.”

Cooper Parry, the number one ranked firm in Accountancy Age’s MTPI, attributes its value-driven culture to why it consistently places within the ‘UK’s 100 Best Companies to Work For’ list.

“We are bold in our decision making and determined to put our people first,” Abi Bown, partner and chief growth officer, says, “If we get this part right, [staff] continue to be super productive, engaged, and energised.

“In a world that is becoming ever more remote and digitalised, applying a distinctly human touch and changing working practises is vital to attracting the best talent.”

For some firms this may mean a hybrid working culture, a four-day working week, or a considerable investment in employee mental health services.

With burnout being a well-documented, industry-wide problem, Menzies believes it is important not to deny when employees are feeling the pressure.

“The mid-tier is benefiting from work flowing out of the larger firms, who are pricing themselves out,” says Alison Pullman, HR director at Menzies. “We’re not having to work as hard as we have done in the past to gain business and that’s a wonderful position to be in if you have the resources to ensure that work is done in an appropriate timeframe.

“Menzies has always been a firm that respects work life balance but unfortunately there are times when people are pushed a little bit harder than we’d like them to be and it’s about managing that closely and doing what we can to alleviate some of that stress.”

Investing in future leaders

In addition to benefits and aligned values, career progression is top of mind for 2022’s professionals. A common theme within the MTPI is the number of firms offering professional development in-house.

According to Pullman, one of the major benefits of having the internal Menzies Academy is the opportunity for team building alongside the personalisation internal training brings.

“We are currently running an Effective Manager Programme for 15 aspiring managers who have come from seven different offices across the South East. Not only are they honing their skills but they’re also getting to know each other,” she says.

Professional accreditations may be rife within the sector but firms are finding that it is soft skills which require the most attention in 2022, which include communication, leadership qualities, and decision making. All are instrumental in developing a successful career path within the industry, according to industry experts.

“We don’t just say that people are our greatest asset, we invest heavily in them to give them the skills they need through our apprenticeship program, as well as supporting them on management and leadership pathways,” says Sharn Manku, HR director at Kreston Reeves.

Building organisational resilience

Despite the current economic climate, mid-tier firms are quietly confident of their ability to be agile and adapt to challenges quicker than larger firms – attributes that they believe will stand them in good stead for delivering on their clients’ needs in 2023.

Cooper Parry, which impressed the judges with its impressive growth plans, confirms that it is still on track to achieve three-fold practice growth in three years with a further five-fold growth by 2027.

“We’re always mindful of market and economic changes but committed to accelerated growth through two distinct routes: organic and M&A,” says Bown. “Constant market reviews are undertaken but we believe current economic climate might also create fresh opportunities. Our sweet spot is entrepreneurial, fast-growing businesses in the mid-market, as well as AIM-listed and private equity-backed bigger businesses.”

Throughout the MTPI we are seeing that the firms who take calculated risks are receiving the greatest payoffs.

Pete Fendall, strategic projects director at DSW Capital, believes the “market is ripe for disruption” supported by Dow Schofield Watts’ unique business model which offers its partners the chance to run their own business as the market undergoes a shake up and professionals rethink their priorities.

“Larger firms are under pressure due to changing audit regulations, which in turn puts their people under pressure,’ he says. “Covid has been a catalyst for a change in behaviour – professionals want to see a direct link between effort and renumeration, the flexibility to pursue the clients they want to work with and choose when they work.

“Our model offers them the freedom and flexibility to fit in with their lifestyle, whilst also achieving their career ambitions.”

It is also a time for firms to reconsider their business strategy and pin down the values that they wish to project into the market place, according to industry experts. After the pandemic, ECOVIS Wingrave Yeats undertook an exercise to work out what its purpose is as a business, which Stuart Hinds, partner at the firm, states has been “critical in driving the business forward”.

“The current economic climate is bound to have an impact on firms and their clients, but I think it will vary from sector to sector, and even from firm to firm, depending on what the firm’s area of focus is and services they provide,” says Hinds. “What we’ll start seeing in the mid-tier is a lot of firms revisiting their business plan and their strategy and repositioning their business so that they are providing the right services that clients are going to need over the next period of time.

“I also believe firms will continue to focus on their strengths and they will continue to stay true to what they believe in and invest in that. There are certain markets – audit for example – where we see good practice growth potential in the future and despite the challenges there will definitely still be opportunities for the firms willing to take them,’ he adds.

Advisory services key to practice growth

Lamont Pridmore, which ranked second in the MTPI, believes that future practice growth lies in advisory services, a view which has helped the firm soar to the top of leader boards despite not being a London-based firm.

“We took a strategic decision 10-15 years ago that this was going to be a major part of accountancy,” says Graham Lamont, CEO at Lamont Pridmore. ,“Today, approximately 75% of our business is made up of advisory which has led to us being a niche, boutique practice that attracts successful clients.”

As a family-run business, being able to offer an advisory service from “the cradle to the grave” and assist clients in not only keeping tax liabilities down and improving profitability, but on strategic wealth management, is especially important to Lamont Pridmore.

“It’s more interesting work than traditional accountancy services and we’re passionate that the future of this profession is to provide more advisory services,” adds the firm’s CEO.

Sustainability is another service line with huge potential as evidenced by the amount of financial interest in the sector from private equity, capital markets, and government subsidies.

“The area of sustainability is definitely a growing market, and I believe what is going to be required by accountants and advisors is going to change over time,” says Hinds. “We have decided to get into that market early and build our specialism and knowledge in that market so that we have an established client base and expertise as the market evolves.”

Regardless of area, it is firms which carve out a niche that can expect to see the greatest practice growth in 2023 and maintain their position within the MTPI next year. In concentrating on a particular speciality this can also alleviate some resources from competing with larger firms.

“We’re not looking for a head-on fight with the Big Four. We play to our strengths and will continue to operate in areas where we can be number one,” adds Cooper Parry’s Bown.

“That’s why we are focused on delivering world class client experience to mid-market entrepreneurial, fast-growing businesses, which are not the focus for many of the Big Four and nationals.”