Ray Marano

Friday, 30 May 2003 06:52

Trimming costs

Lawyers can be expensive. Even lawyers will admit that much.

A troubling matter for in-house counsel, according to a recent study of large corporations by law firm Kirkpatrick & Lockhart, is that the need for legal counsel and the legal workload is likely to grow in the future, thanks especially to issues surrounding corporate governance.

The study found that more than 80 percent of survey participants are satisfied with the value of the work they receive from their outside counsel. Respondents also indicate, however, that controlling the cost of outside counsel is their most difficult financial challenge.

In uncertain economic environments, law firms, like most other businesses, are reluctant to add staff, yet at times find the need for additional professionals.

Karl Schieneman, managing director and co-founder of Legal Network Ltd., believes that his firm has a technology solution that can help law firms and their clients keep costs under control. Legal Network offers legal management consulting and temporary and permanent placement for attorneys, paralegals and support staff.

Schieneman has developed modeling software that can calculate the cost to firms of using outside contract versus full-time professionals. The software, StaffRite, allows the user to apply a variety of metrics, such as the firm's hourly rate and the duration and type of project, to create scenarios that can give them a clear picture of what their costs will be in either case.

The StaffRite software uses national data to make comparisons. A law firm may be trying to decide whether to hire permanent staff for a project or use contract professionals. For instance, a mid-sized law firm may bill $150 an hour, while a contract employee might cost $125 an hour.

If the law firm uses a contract lawyer for the project, it can reduce the client's cost, increase its own profit or achieve a combination of both.

"In a time when people have to be more and more efficient, this give firms and clients a model of what's a fair way to staff efficiently," says Schieneman.

Schieneman, an MBA grad of Carnegie Mellon University who holds law degree from Pitt, also developed software that aids in recruitment of legal talent. The use of technology, says Schieneman, has been a cornerstone of the firm.

Says Schieneman, "We've always been very automated, from our billing software to our recruitment software." How to reach: Legal Network, www.legalnetworkltd.com

Tuesday, 29 April 2003 05:20

Two problems, one solution

You might be inclined to call the relationship between Development Dimensions International and Community College of Allegheny County a marriage of great convenience.

DDI saw a huge yet hard-to-reach market among small and mid-sized companies for its leadership and work force development training products. CCAC had a need to acquire such training products for its clients, mostly smaller businesses with limited budgets.

For Bridgeville-based DDI, it was a question of scale. DDI's sales force works most efficiently by contacting a limited number of large employers -- among its clients are HCA Corp. and BASF Corp. -- then selling products and consulting services broadly to those organizations, which often have complex needs on many levels. To expend the resources required to close deals with smaller firms, however -- those with fewer than 500 employees -- isn't nearly as cost-effective.

That segment of the market is growing, however, so about 18 months ago, DDI's CEO, Bill Byham, directed Jane Whitmore, DDI's manager of strategic channel development, to launch a full-court press to recruit community colleges nationally.

One obvious target was CCAC, which delivers training to approximately 60 client companies. For CCAC, pairing with DDI was a good match, says David Just, dean of the Institute for Corporate & Professional Development at CCAC.

"Smaller companies usually don't have access to this kind of training," says Just.

The coursework focuses on skill-building, targeting effective leadership essentials such as managing performance and productivity, building mutual trust, personal and group effectiveness and decision-making. CCAC customizes the curriculum to fit the specific needs of each employer and delivers it through trainers certified by DDI.

The relationship also makes sense, says Just, because of DDI's name recognition in the region, a factor that adds credibility for local businesses. DDI has been developing and offering such training since Byham founded the company in 1970.

To smooth the path for businesses, CCAC can often identify grants and other sources of funding for training that will cover some or all of the costs, says Just.

DDI currently has relationships with schools in several states, including North Carolina, Florida, Illinois and Wyoming. The demand for content is strong, says Whitmore, adding that hardly a week passes when she doesn't close on an agreement with a school.

And there's an economic incentive for the colleges, because they are looking for new revenue streams to offset funding cuts or restrictions in other areas. For DDI, it seems that the picture could hardly be more optimistic.

Says Whitmore: "There's a need, a willingness and an openness." How to reach: DDI Inc., www.ddiworld.com; Community College of Allegheny County, www.ccac.edu

Friday, 28 March 2003 10:58

Thrive with your boots on

For lots of entrepreneurs, the biggest hurdle to launching their own business is a shortage of cash.

And there's little doubt that a lack of the green stuff has killed more than a few fledgling ventures before they've had a chance to get off the ground.

At an MIT Enterprise Forum, Bill Claire showcased how he and his partner, Karen Puchalsky, bootstrapped their software company and IT services provider Innovate E-Commerce with less than $10,000 in start-up capital in 1997 into an Inc 500 company with nearly $4 million in sales and more than 40 employees.

Claire warns, however, that bootstrapping isn't for the faint of heart.

"It's the most difficult, painful, and potentially the most financially ruinous thing you could do," he says.

Here are some of the strategies the partners used to bootstrap Innovate E-Commerce:

* Pick the right partner. Choosing a business partner with complementary skills can help cover your needs. If your skill is in sales and marketing, for instance, you might do well with a partner who has strong administrative skills.

* Find prime customers. A few marquee customers with strong credit histories can solidify your success, while just a couple that turn out to be slow-pay or no-pay can wreak havoc with your finances.

* Bill frequently. Give customers a discount for paying early. Bill monthly, twice a month, even weekly, to accelerate payments and increase cash flow. Getting clients to pay part of the bill up front can give you cash to fund your operations, and getting into the customer's billing system early makes subsequent billings and payments more expedient.

* Use smart marketing. Claire says articles placed in trade journals can produce better results than expensive ads. And don't squander funds on fancy brochures and sales materials. Innovate E-Commerce produced inexpensive sales and promotional materials that could be printed cheaply on a laser printer and replaced when necessary.

* Hire and compensate employees wisely. Avoid hiring friends unless they have the skills the job requires. And, keep people costs in line. Claire suggests offering company stock in lieu of a base salary and tying compensation to revenue-producing activities.

* Work with good advisers. Innovate E-Commerce identified professionals with strong credentials who were launching their own practices. While they had substantial skill, they were able to charge less for their services than a large accounting or law firm might. How to reach: Innovate E-Commerce Inc., www.innovateec.com

Friday, 28 March 2003 10:55


I attended an event recently where a panel of corporate CEOs addressed issues revolving mostly around chief executives building lasting reputations for themselves and their companies.

The audience, assembled in a program by the Pittsburgh Technology Council's CEO Network, was made up mostly of their peers.

Work-life balance was one issue, and all of the panelists agreed that achieving it is a difficult proposition. One of the CEOs acknowledged that the demands of his job contributed to the crumbling of his marriage. Another emphasized the value of having the right spouse, one who understands the pressures top executives face.

The CEO of a technology company said one of his firm's core values is life-work balance, and that it helps employees achieve it by offering flexible work schedules and the option to work at home. Another spends "quality time" with his three children, disguised as fun for them but a way for him to find out what's going on in their lives.

The bosses on the panel likely would encourage everyone in their companies to balance their lives and apportion adequate time for their families and personal enrichment. Yet, by the nature of their personalities and the demands of their positions, some CEOs themselves find it hard to be anything but workaholics.

If a CEO is to set an example for everyone else in the organization, working 70-hour weeks hardly seems like work-life balance.

A lot of us, let alone CEOs, can't stand up at 5 o'clock, punch the clock and walk out of the office. There's always that last fire to put out, another e-mail to answer, one more call to make.

Most people I know work a lot of hours at their jobs, their personal interests, volunteering, taking care of their families. Balance for them is some time with the kids or their spouse, a round of golf at a public course or a quiet afternoon reading a book.

If you expect to be home every night at 5 o'clock for supper, a CEO slot probably isn't for you.

Harry Truman, a CEO admired by many, recommended that anyone looking for a friend in Washington should get a dog. CEOs who want more balance in their lives might have to look for another job.

The rest of us might be content to just walk the dog.

Friday, 28 March 2003 10:36

Lorna Nicholson

The Bid Sheet may be a nonprofit venture, but it is, nonetheless, intended to pay dividends to contractors who use it. The intended beneficiaries, mostly minority and women contractors, often have limited resources for tracking down business opportunities, yet they are the ones who most need help in getting a toehold with prime and general contractors.

Many are behind the curve when it comes to being connected to the Internet and e-mail capabilities, so a paper document like the Bid Sheet, sent by mail or fax, is often the most effective way to disseminate contract information.

"In Southwestern Pennsylvania, the contracting business is very competitive and complex, and even more so for small businesses, in particular, minority and women business owners in the building, construction, professional and service industries," says Lorna Nicholson, president of Contract Management Services and founder of the Bid Sheet.

Nicholson launched the Bid Sheet in 1997 to help minority and women subcontractors get on track with projects going out for bid. She bootstrapped the effort, sent it out by mail and fax to minority contractors and built a list of 3,000 subscribers.

The Bid Sheet serves as a clearinghouse for bids that are within the reach of small contractors. It is designed to disseminate information about available contracts between $50,000 and $500,000 in value.

Now, with the help of a $5,000 grant from the PNC Foundation, Nicholson has spun the Bid Sheet out as a nonprofit. She is hoping to expand its reach and, by extension, the reach of subcontractors who often find it difficult to land work with prime contractors.

Smart Business sat down with Nicholson to talk about the Bid Sheet and how it serves it clients.

What gap in the contracting process does the Bid Sheet attempt to close?

It is the only local publication of bids and contract notices targeted exclusively to small and mid-sized businesses in the building, construction, professional and service industries.

It is categorized by trades and services in a comprehensive, accurate and easy-to-understand format. It enables and encourages quick turnaround response from small businesses while allowing for sufficient lead time to solicit, prepare and submit bid responses to upcoming bids and proposals from the majority/privately owned companies, prime contractors, government agencies and other major sources.

Why are minority contractors at a disadvantage when it comes to securing contracts?

Bids and contract information are not distributed effectively nor in a timely manner to encourage or allow small businesses to solicit and respond successfully to bid requests.

Legal bids and contract notices must be and are advertised in three local Pittsburgh newspapers but on varying days, depending on the paper.

Most small businesses are intimidated by large projects. Some reasons are the capital needed, bonding and insurance requirements, manpower and start-up cost necessary to even begin the project. As such, rarely do they try to bid on any of these projects listed in the larger publications.

The sheer size of these projects makes it extremely difficult for most small businesses to bid on them, especially as prime or subcontractors in the trades and services.

Some large projects out for bid are snatched up early on by larger prime construction contractors because they subscribe to, are members of or might learn of upcoming project information from local publications that carry an array and abundance of major bids and contract notices. The cost to subscribe, however, can be enormously expensive for the average small business.

How does the PNC Foundation grant help to overcome these problems?

We can make sure that (more of the contractors) are contacted. Small contractors need information. They're out in the field, they make a choice every day to be in their office looking for bids or on the job.

So this enables them to be on the job and have (bid) information come to them every Friday morning before noon. We want to make the Bid Sheet simpler and easier to access by the region's small business owners, via weekly faxes, e-mail, Web links and telephone.

We are developing a working relationship with Kinko stores to have the Bid Sheet printed at each of its 12 locations throughout the region for pickup by businesses we currently mail to.

Does the Bid Sheet benefit anyone else?

What is nice about this is that it serves the general contractor who is looking for minority and women contractors. They can give us a call, they can send us their bids instead of making calls, maybe trying to reach a subcontractor who is not available or has changed his number, maybe even is out of business.

They put the information on the Bid Sheet and they'll get the calls from the subcontractors.

You said tone of the obstacles for some minority contractors is the lack of a connection to modern communications technology. That's bound to change, so how are you planning to keep pace with the Bid Sheet?

We have an e-mail address, and we're looking at getting a Web site. Contractors will be able to pull a bid and tap into it. A lot of our contractors are not on the Web yet. They've got faxes and minimum e-mail, that's all. We're linked to the Web through the Small Business Development Centers at Pitt, Duquesne and Seton Hill. How to reach: The Bid Sheet can be contacted by e-mail at bidsheet.cms@verizon.net and is linked to the following Web sites: Duquesne University, www.duq.edu/sbdc; Seton Hill University, www.e-magnify.com/news.asp; University of Pittsburgh SBDC, www.sbdc.pitt.edu

Thursday, 27 February 2003 09:42

Earning their wings

Thinking about becoming an angel investor? It could turn you into the devil.

There's at least that possibility, as several angel investors pointed out at a recent MIT Enterprise Forum program.

Angel investors are acknowledged as the key to getting a fledgling venture off the ground and prepared for successive rounds of financing, but the nature of the relationship between entrepreneur and investor can create conflicts that strain the arrangement.

Angel investors acknowledged that entrepreneurs and angels have ample opportunities for conflict and disagreement, to the point where the angel finds it necessary to replace the company's founder if he or she doesn't produce the results promised or expected.

Here are a few common complaints from entrepreneurs and the way angel investors respond to them.

* "Most "investors are too proactive."

Angels say they bring more to the table than cash; they offer business savvy, professional connections and management expertise.

"In all honesty, I don't think that I would want to invest in a deal where an entrepreneur just wanted a passive investor," says Steve Robinson, general partner in Robinson Venture Partners.

* "I don't see eye-to-eye with the angel investor."

An angel deal is like a marriage, angels point out, and both parties need to have a clear picture of their respective roles in the relationship.

"The most important thing is to understand each other before you tie the knot," says Robinson.

* "Angels give me no credit for my past sacrifices of income or other assets."

"You are entitled to sweat equity," says George Fechter, an angel investor, "and it should be defined and it should be recognized retroactively."

On the other hand, the entrepreneur is sometimes too eager to reward his lawyer, accountant or other professional friends with the angel's money, says Bob Capretto, an angel who has been investing in technology ventures for three decades.

"The entrepreneur must also appreciate the risk that the angel is taking, and I'm not sure that's always the case," says Robinson.

* "My plans for this business became a draft for the angel's business plan."

Few people get everything right on the first try, say the angels, so business plans often need revision as conditions change.

"A good business plan is always a living, changing document," says Robinson.

While entrepreneurs and angel investors may be at odds at any given turn, they do seem to agree on at least one thing.

Says Fechter: "The investor should be interested only in what's good for the business, as should the entrepreneur." How to reach: MIT Enterprise Forum, www.mitforumpgh.com

Thursday, 27 February 2003 09:05

A big chill?

The Sarbanes-Oxley Act of 2002, enacted by the U.S. Congress and signed into law by President Bush, is arguably the most far-reaching legislation affecting financial services, corporations, accounting, auditing, financial reporting and professional services firms since the U.S. securities and exchange laws of the early 1930s.

Moreover, some analysts say, given the looming global presence of the U.S. financial markets, its provisions and the regulations that give it practical application will have a major impact worldwide.

But the sweeping provisions of the law are raising concerns in the business community. Bob Kampmeinert, chairman and CEO of Parker/Hunter Inc., wonders if it will cause business leaders to shy away from making bold business decisions or, at the very least, have a chilling effect on the entrepreneurial spirit.

"I get concerned that entrepreneurship and risk-taking is taking a hit," says Kampmeinert. "Regulators are making people look over their shoulders."

And while the law affects public companies more than private firms, the current tenor of public opinion and political pressure could bring more intrusion by the government into the activities of private businesses, as well.

"I predict that, if the pendulum keeps swinging, the government will find some avenue into somehow regulating the private companies," says Kampmeinert.

Thursday, 27 February 2003 09:00

A matter of timing

Having a lot of time to plan an event is a luxury, but not one you'll always enjoy.

Perhaps you need to stage an event quickly to energize your employees or get in front of current or potential clients and customers as soon as possible. You may want to strike while the iron is hot, and a special event could be the best way to have the most impact on your target audience.

Even if you don't have a lot of time, there's no reason you can't put on an effective meeting or conference, says event planner Shelly Tolo. The most important thing when planning your next meeting on a tight schedule is to nail down the date and location, as those will drive many of the decisions that follow, including who will provide services such as catering, audio-visual equipment and bar.

If proximity to the core group you want to attend is primary, that has a major influence on location. On the other hand, if a particular type of accommodation is desired, like recreational facilities, the availability of such features might have more influence in determining location and date.

Finding a space with a big impact in a short time frame may take some imagination, but the rewards can be substantial, Tolo says. You might have difficulty finding or may not prefer a traditional space, like a hotel or a boardroom, and if that's the case, Tolo suggests investigating nontraditional venues.

"Remember to look to nontraditional meeting spaces that will have a big impact on your guests," Tolo says. "These spaces also can establish a theme that will help to drive the rest of the planning."

Nontraditional venues include:

* Museums

* Science centers

* Historical buildings

* Golf courses

* Country clubs

* Sports stadiums

* Theaters

* Colleges or universities

* Public parks

* Retreat centers

* A space at the charity your company supports

* Movie theaters

* Incomplete floor of an office building

* New facilities in a construction phase

However, when considering nontraditional space, Tolo advises, include in your decision factors like distance to the venue, availability of parking, hours of operation, fees charged, if any, and handicapped accessibility. Also check to see if the facility offers on-site catering or if it allows you to use your own vendors, if you prefer.

And if you need audio-visual equipment, don't forget to find out whether the venue can provide it.

If your selected space has a predominant theme associated with it, go with it, Tolo suggests. Decide on what meals and refreshments you will provide and meet with the caterer. If audio-visual equipment, tables and chairs are not available, hire vendors you have used before to make it easier on yourself.

And if you are really tight on time or understaffed, consider hiring a meeting or event planner. Professionals can work with you to simplify and speed up the planning process and ensure the success of your event. How to reach: Shelly Tolo, shellytolo@zoominternet.net

Friday, 31 January 2003 06:33

Tim Kane

You may have a telework program at your company and not even know it.

"We do an annual state-of-the-workplace study here, and what I can tell most people is that anywhere from 8 percent to 20 percent of your organization is probably teleworking on an ad hoc basis without having a formal program in place," says Tim Kane, founder and president of Kinetic Workplace, a consulting firm that guides organizations through the transformation of their work forces to teleworking arrangements.

He defines a teleworker as someone who works outside the office two or more days a week on a consistent basis.

Kinetic Workplace does most of its work outside of Pittsburgh, primarily for large employers. With a few exceptions, according to Kane, large local companies have not adopted telework in a big way. That's certain to change, he says, as demographic shifts and a shrinking pool of workers push employers to offer teleworking as a recruitment and retention tool.

"It's happening, and employees are demanding it," says Kane. "It's so easy to do that employees are wondering why employers aren't providing it."

Kane was selected last fall by Pittsburgh Magazine and the Pittsburgh Urban Magnet Project as one of its "40 Under 40," young members of the regional business community who are emerging as its leadership class.

Kane talked with SBN about the new generation of leaders, where he fits into that group and why telework is anything but a fad.

What was your reaction to being selected as one of Pittsburgh's 40 Under 40?

I was honored to be one of the 40 Under 40 group for Pittsburgh. They had a get-together where I met a lot of great, interesting people doing some interesting things.

The one sad thing, and I think we as a group are going to work on this, is that I felt bad because I only knew three or four people on the list. A lot of people were saying we're the 40-under-40, and if we're part of the leadership of Pittsburgh, we ought to try to get together on a quarterly basis or once or twice a year, at least.

Why don't these people know each other better, and why haven't they begun to make more of a collective impact?

I think we're all so busy. Work/life balance is so important, particularly to the 30- to 40-year-old generation, people with young kids today. I think there are more guys my age who are saying that they want to be around for their kids.

You want to balance the amount of time you're on the road traveling with time spent with your family. You start to pare down the list of things you can be affiliated with and you can dedicate your time to.

I think people generally want to get involved and make things better, but you really want to see the results of that. Last November I became the president of the International Telework Council. I probably put in about 15 hours a week on it.

It was a fledgling organization financially. It didn't have a real mission, a real vision. It was confused as to whether it wanted to go to the corporate groups or to the individual teleworkers.

Now I see a return on the investment because it's attractive to a lot of companies. Now, it's viewed as the leading organization in the field.

If you're going to spend 15 hours a week in volunteerism, you're going to try to do something where you can get a return on the investment.

What do you think you can offer that group?

I think I have a pretty good understanding of what motivates businesses to locate in certain areas, how decisions are made in corporate America. Companies want things that will turn into dollars today as quickly as possible.

I think I have a good feel for, given my work in high tech and Kinetic Workplace, where the work force is going. I think I have an understanding of what companies are going to have to do to compete for talent in 2005 or 2006, when the baby boom generation starts to push out of the work force.

Why is there less cohesiveness among the region's younger potential leaders?

In today's business world, you can make things happen a lot faster, and I think people are accustomed to that. Business is moving very fast.

If you don't move at a fast pace, you're going to get swallowed up, and I think it seems like things move more slowly in a bureaucracy or government.

We can take a business, take a product from concept to development to implementation to maturity quickly these days because teams are formed, goals are set, you move forward and you get around obstacles. Trying to move a region, particularly one that has its roots in the turn-of-the-century industrial era, takes more patience.

You say you've found Pittsburgh to be behind when it comes to telework arrangements. Are there signs of change?

I thought last year when the (Fort Pitt Tunnel) closed that it would be the first time that downtown-based companies would say, 'OK, let's really develop formalized programs to get a significant portion of our people (based at home),' and it didn't occur.

There's still a lot of fear, a lot of discomfort around the idea. There are companies that are doing it; PNC has a very robust program, but by far, this is a very telework-reluctant city.

Is the situation likely to change?

It's one of those unstoppable things. We've got 20 million teleworkers in the U.S. right now, and by 2006, it's anticipated to be a third of the U.S. work force, about 50 million people.

You can't fight it. This is the No. 1 preferred perk among IT workers It's consistently in the top three among knowledge-based workers. Two out of three people would change jobs for the ability to telework.

When presented with two jobs having equal pay and equal benefits, one having the ability to telework and the other not, three out of four would take the job that allows them to telework. Today, there's more of an incentive for employers to do it than ever before.

The federal government is facing a major brain drain. Over a third of the federal work force will be eligible for retirement by 2006, and it's believed that 20 percent of them will take it up. Some of them are in the most senior positions.

The private sector mirrors that, but trails by a few years.

Hasn't the economic slowdown changed the picture?

Even though we have a rise of unemployment, as opposed to 1999, the HR departments are still looking at this as a major issue. The other thing is how telework is affecting corporate decision-making and how there are plenty of incentives for companies to offer telework options. How to reach: Kinetic Workplace, www.kineticworkplace.com

Friday, 31 January 2003 06:12

Trading spaces

Ken McCrory recalls an executive committee meeting at accounting firm McCrory & McDowell when he became irritated and snapped at a colleague.

"I turned to him and said, 'Look, why don't you do it; I'm really getting tired of this," says McCrory.

Mike McDowell tells of encountering employees in the McCrory & McDowell offices and not always immediately recognizing them.

"I'd ask, 'Can I help you?' and they'd say, 'I work here, Mr. McDowell,'" he says.

McDowell made such mistakes because he had taken an engagement on the firm's behalf as interim COO at a 350-physician medical services organization at Emory University Hospital in Atlanta and hadn't been around the offices much. Even though he was commuting weekly between Pittsburgh and Atlanta, his direct involvement at the firm, by necessity, had been limited.

Individually, none of the incidents was decisive in the partners' decision to make substantive changes at McCrory & McDowell and put in place a plan to leave a legacy for the accounting firm they had founded. But both point to them as indicative of the kind of experiences that accumulated over time and ultimately led them to a series of decisions over the past two years to determine the future of the firm they formed in 1983.

"I think it was time for a change, to re-energize each of us and also to prepare the firm for change," says McCrory.

And change was in order for another, more far-reaching reason. The partners realized that for the firm to survive into successive generations, it would have to hold on to the valuable human resources necessary to create a new strain of leadership.

Simply building the value of the firm and raking out cash in a sale would not ensure its continuation once McCrory and McDowell retired.

"We'd be doing that because our objective was to maximize profits on an annual basis, knowing that when we retire, there's no legacy, there's no professional goodwill, there's no personal goodwill in the firm," McDowell says. "It just kind of melts away into something else and loses its identity."

The founding partners had an opportunity to do just that in the mid-1990s when they got an offer to be acquired by American Express, which at the time was buying up accounting firms all over the country. They considered it for a few months but ultimately rejected the proposal.

"I know we'd have felt a sting of guilt if we'd have done something like that and sold out to the detriment of the people who were here," McDowell says. "I don't think we could have lived with that."

Different experiences

By necessity, McCrory and McDowell wore a lot of hats in the early days of their firm, as do most entrepreneurs with limited resources and a small initial book of business. That has changed as the firm has grown, accountants have become more specialized and the accounting profession itself has undergone a transformation.

"The CPA business was real simple back in the '70s, and even throughout most of the '80s," says McCrory.

But alterations in the business landscape and regulatory reforms brought changes to the profession. Tax and audit work became near break-even services cast out to attract clients, with the hope of then selling them consulting and other services.

Accounting firms began to delve into additional practice areas, including investments and financial services, and the industry became more complex and specialized. The accounting generalist became less valuable, while specialization in narrow niches emerged as the discipline in greater demand.

McDowell, for instance, built a consulting practice, Diversified Medical Management, at the firm, largely to assist in the sale of physician practices to hospitals. McCrory & McDowell started Computer Resources, a computer networking and e-commerce solutions company, and Financial Advisors Inc., a financial planning and investment management company for individuals and businesses.

They came to realize that the career experience they had accumulated as founders and builders of the firm over nearly two decades, while valuable, was different from that which the younger people in the 52-employee firm had collected. As entrepreneurs, they had to be nimble and versatile, willing to take on a variety of work and clients to bootstrap the firm's growth.

That experience contrasts with that of the upcoming generation of professionals in the firm, who were employees, not owners, and tended to be more specialized in their skills.

"We grew up doing everything. Coming up the way we did together, life teaches you a lot of lessons," says McDowell. "One of the challenges that we've seen in this transition period is that they don't have the same background that Ken and I had."

Adds McCrory, "The entrepreneurs that found a company have a whole different set of experiences than the management team that comes later."

Making it rain and making it run

From the moment McCrory and McDowell hung out their shingle as partners, while their responsibilities overlapped to some degree, each took control of different sides of the business. McCrory, for the most part, handled the administrative side, while McDowell played rainmaker.

While McCrory did a share of the client development, most of his energies went into the day-to-day operations of running the firm. McDowell's primary focus as rainmaker was to generate new business.

One of the changes they've made in the past year has been to trade primary responsibilities. McCrory says he wanted to engage in business development and take advantage of contacts he has made through his volunteer activities serving on nonprofit boards. McDowell wanted to get closer to the management of the firm, something he hadn't much opportunity to do.

Extending governance

McCrory and McDowell decided that an exchange of responsibilities wasn't enough to prepare the firm for a transfer of leadership to the next generation, so they devised a plan to extend ownership in the firm to more of its employees (see sidebar).

And they decided to move some of the senior employees onto the firm's executive committee, originally comprised of the firm's five partners, to give them leadership experience.

The process brings two employees on to the six-member executive committee every two years and will continue until McCrory and McDowell themselves rotate out of the committee.

"The right thing to do"

McCrory and McDowell say they have settled into their new roles and feel energized by the fresh perspective on the practice that their current responsibilities provide.

When McDowell got a call recently to take an engagement at Massachusetts General Hospital similar to the one he had completed in Atlanta, he declined, even though it would have been a reputation-builder for him personally and for the firm's health care consulting practice.

"There's not a snowball's chance in hell that I'm going to do that again," he says, because he is satisfied doing what he is doing now.

McCrory says he doesn't miss the functions that were formerly his responsibility. And both are convinced that the changes are critical if McCrory & McDowell is to continue to grow.

Says McDowell: "Challenging ourselves at our ages to do something different every day from what we've gotten used to is clearly to me the right thing to do." How to reach: McCrory & McDowell, www.mccmcd.com