Are We Like the “Big 6”?
Jan 17, 1994
We were talking in our office the other day about the “Big 6” accounting firms and their problems. One of our newest staffers just joined us from a Big 6 firm, and, believe me— those companies have problems.
I believe the Big 6 firms are doomed. We never cared much for them in the design industry— they certainly don’t seem to do much business with any but the largest A/E or environmental consulting firms, and even then, only audits or tax return preparation.
Why is that? Certainly one reason is the Big 6 accounting firm’s billing rates seem astronomical to the typical engineering or architectural firm principal (who also sells his or her time for a living). Another reason is that most engineers and architects are wise to the benefits of specialization. They are selling their specialized knowledge and expertise to their clients every day. Why should they do business with a high overhead, non-specialized Big 6 accountant when there are so many other alternatives?
The woes of the Big 6 firms have some interesting parallels to the problems of the big, generalist A/E and environmental consulting firms. Yet, I talk with principals in design firms almost every day who are hell-bent on going down the same path as the Big 6 firms. What lessons can A/E and environmental consulting firms learn from the mistakes of Big 6 accountants?
Big 6 accounting firms are filled to the brim with unproductive, disconnected principals. A/E, consulting engineering and environmental consulting firms do not have a monopoly on dead weight. Just like the largest, do-everything-for-everyone A/E and environmental consulting firms, the biggest accounting houses are laden with top management that isn’t selling, isn’t doing, and isn’t managing, yet still searching for a job number they can charge some time against so they don’t look too bad to their peers on management reports.
Big 6 accounting firms are, just as their name implies, big. They have lots of glitzy marketing materials, support staff of all kinds, a huge network of fancy offices in prestigious locations, incredible computer systems, and, all of the resulting overhead. Just like the largest A/E and environmental firms, size does not necessarily equate with quality. Sometimes I think all it leads to is more disconnected employees who feel no passion for their work, their clients, or their firm. All this overhead is what makes the Big 6 firms so expensive, especially when you consider what the client is really getting.
Because they aren’t specialized, Big 6 accountants turn out “cookbook” products. I’m constantly harping on how a lack of specialization impacts marketing. But more important than that is how it impacts service. Professional service firms that aren’t specialized give no unique insight to their clients, chiefly because they have no unique insight to offer. And these generalists follow a cookbook that may not be applicable to the situation at hand. Anyone who has ever worked in the building design end of the business knows of a firm that designs every building the same. Whether it’s a hospital, school, or hotel, they all look like they came out of one single factory.
Generalist firms like Big-6 accountants are inherently less efficient than specialist firms. In reality, generalists have to learn how to do each new job as they go along. They haven’t developed a standard operating procedure for how the job will be accomplished, and if they have, it’s probably wrong. Because of this, their quality is erratic, and they systematically become less and less profitable over time as they lose more and more focus.
Big, generalist firms are less likely to rewrite the rules and innovate. Like most big companies that have been around a while, Big 6 accounting firms have a lot to lose. So do the people working in them. The typical partner makes a tidy living and has significant value in his or her equity. As a result, these people (and those who aspire to be one of them some day) are not inclined to take risks or innovate, either in client service or internal management duties. The same thing is happening in the largest A/E and environmental consulting firms.
Just as I have come out strong as an avid believer in the benefits of focus and specialization, I have also always believed in the old adage: “Stop, look, listen, and learn.” Sometimes, we need to stop for a moment, look beyond our own little world in the A/E and environmental consulting industry, listen to those in other similar worlds, and see what we can learn from them.
Originally published 1/17/1994
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Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.