The BKD Way: A Different Model for Client Service
By Tom Carlson
In the 1960s, much like today, most professional firms of lawyers and accountants had a standard business model. The senior partners — the rainmakers — had the client connections and made most of the money, and the younger partners did most of the work. In company parlance, there were finders and grinders.
But this model bears the seeds of its own destruction. Senior partners, having worked their way to the top after 30 to 40 years, want to slow down. Their strength is their client base and they tend to guard those contacts jealously. Typically, they are reluctant to have the younger associates develop strong relationships with their clients. When you are not looking, the young Turks might leave the firm and take your clients with them. It's no fun starting over again when you are 60.
Then there is the perspective of the young associates and, in particular, the smart and hard-working ones. They expect to start out working 55-hour-plus weeks, but they will only continue at that pace if they believe there will be a payoff. If those prospects dim, the best talent leaves the firm for greener pastures. The result: many firms end up with worn-out senior partners and associates who are only B-Team contributors.
Nearly sixty years ago, Baird Kurtz & Dobson (now BKD LLP) was a small regional accounting firm with many of these characteristics. The eight-partner firm generated less than $500,000 annually.
Today, BKD LLP is the 13th-largest accounting firm in the United States, with annual billings of more than $600 million and with 40 offices in 18 states. A four-story LEED-class office building at the corner of St. Louis Street and John Q. Hammons Parkway houses both the Springfield office and the national headquarters. The firm presently boasts approximately 2,700 partners and employees; 250 client-service personnel based locally and another 100 in its national headquarters. The firm's current CEO, Ted Dickman, commutes to Springfield from his Indianapolis office.
Clearly, much has changed in the past 60 years. The transformation began in the mind of a young accountant who started with the firm in 1948, Hearld Ambler.
A former partner of Ambler, Dick Pendleton, who practiced in the Springfield office from 1965 to 1979, remembers those early days. "One day, in the early '70s, I was in Hearld's office and he said to me, 'Dick, I think I have a flair for administration,' " Pendleton recalls. "He saw a need and wanted to fill it." What an understatement.
Ambler, 95, remained active in local charitable causes into 2018. For many years he oversaw the accounting for Friends of the Zoo served on the board for the Southwest Missouri Office on Aging. When he was not doing tax returns pro bono, he enjoyed relaxing by going fishing.
He is slim with a full head of gray hair and clear piercing eyes. While neither boastful nor arrogant, he is confident and factual. Even after all these years he remembers the beginnings of the firm well.
Ambler wanted the firm to change its traditional business model.
Here was Ambler's challenge: How to make the firm more profitable so it could recruit and retain top talent. The firm had to become more efficient, it had to attract great clients and it had to establish a career path for its accountants. To accomplish all that, he had to persuade fellow professionals to cede authority and to give up their security of personal client relationships. In short, he had to overcome some very basic impulses in human nature.
Over the next few years, the firm formalized the following policies:
- BKD will recruit, train and retain top talent;
- Senior partners will train young associates to take over their jobs;
- The firm will hold fewer meetings to handle administrative issues; that task will be performed by the administrative partner (such as a benevolent dictator — my words — chosen by his peers);
- Partners must retire at 65 to make room for the next generation.
At the time, BKD had offices in Joplin, Kansas City and Springfield. The three founders — William Baird, Wade Kurtz and Claire Dobson — originally worked together in Wichita, Kan., but in 1923 came to Missouri. Kurtz and Dobson established an office in Joplin where their expertise in mining was in demand, and Baird went to Kansas City.
In the 1970s when Ambler started agitating for changes, Baird and Kurtz were no longer with the firm. But Dobson was still "the King," Ambler said, but he had slowed down. In Springfield, Wayne Henderson had more seniority than Ambler but was willing to give him some leeway.
"Wayne was very good at letting me do what I wanted to do, although he wouldn't let me dominate him," Ambler said.
Hearld was focused and determined: "If I could not sell the idea to the partners today, then I would bring it up tomorrow." In short, either through persuasion or exhaustion, the Springfield office eventually ceded administrative control to Ambler.
"In those days, the firm's other two offices in Joplin and Kansas City were doing their own thing," he said. "After about 10 years, people started noticing the growth and questioning what was going on in the Springfield office."
"I knew that the secret was to get top-notch people to come and stay," said Ambler. With the support of his partners, Ambler became the de facto CEO. He standardized the operation of the office.
"We set up a central accounting system and instituted rules about work habits," he said. He persuaded his partners to overcome the natural human impulse to protect their financial security by granting younger accountants access to their best clients. They had to agree to retire and make room at the top. For that to work well, the senior partners had to train the associates to replace them.
Bill Kirkman was there in the early days. "Hearld truly believed that if you put two and two together, you could make five. He saw that if you were really good at this, and Joe was really good at that, and I'm really good at managing, then collectively we can make the firm grow. Hearld was a man of few words. He was so smart that people knew he knew what he was talking about."
Kirkman, who retired a few years ago after managing the Springfield office, said they hired the best people they could and gave them opportunities. In order to continuously provide those opportunities, the firm had to be willing to grow and thereby constantly increase opportunities.
I asked John Wanamaker, managing partner of BKD's Springfield, Branson and Joplin offices until 2018, about the profile for a BKD recruit. Generally, they are in the top 5 percent of their class. Starting out, they get a pay and benefit package commensurate with one of "Big 4" national accounting firms, and they are promised extensive job training and experience right off the bat. Generally, within two years, they will have specialized in a particular area.
Still, the odds of making partner in 12 to 14 years are small. Maybe one in 20. However, it has been the firm's experience that those who don't go for the partner brass ring find satisfying careers anyway. Some will stay as a non-partner accountant and have more time for non-career pursuits. Others are able to land such jobs as chief financial officers in companies that are BKD clients.
How did they do it though? You can lead a horse to water but you can't make him drink. You can, however, make him thirsty.
"The BKD Way"
By making the operations of the firm truly transparent, partners in other offices could see what their colleagues in the Springfield office were making. They got thirsty.
Each regional office had a large degree of autonomy. Each had to contribute its share of company overhead, but beyond that, profits generated at the local office stayed there. In the language of the day, you only eat what you kill. But because partners knew what everyone else was making, a common question would arise. "Why are those folks in Springfield doing better than we are?"
Short answer: They were practicing "The BKD Way." They weren't working more hours, but they weren't wasting time in administrative meetings. And they were adopting best practices in the profession to make them more productive.
The carrot of making more money for the same amount of time worked overcame the natural resistance of partners in regional offices to be managed. Merging with BKD became an attractive option for other CPA firms. The firm grew its footprint during Ambler's tenure in the '70s and '80s, merging with other firms in Nebraska, Oklahoma and Kentucky.
Ambler retired in 1986 with the BKD model now firmly in place. The core group in Springfield had found religion. Growth picked up with new CEO Jim Glauser, who expanded the firm's emphasis on the health care industry.
Glauser added to the BKD culture with his emphasis on confronting problems head-on and early rather than later. "If you've got to eat a frog, don't look at him too long," is a Glauser saying recorded in a book about the firm's culture called "The BKD Experience: Unmatched Client Service."
Bill Fingland succeeded Glauser after 10 years and became the CEO in 1997. During his 10-year tenure, the firm doubled in size. It was during his time that the firm developed the book detailing the elements that constitute the BKD culture. Now in its third edition, the 80-page book is given to every employee in the firm.
It receives praise from such luminaries as Super Bowl champion quarterback Joe Theismann. "This isn't just a book about a firm. It's not a book about accounting. It's a book about life. It's a book about life's experiences."
The seven chapters describe for the new employee the elements that constitute the "BKD Experience," which leads to the firm's goal of "unmatched client service."
Indeed, according to client surveys made by the retained researcher who has surveyed 16 of the top 20 CPA firms in the U.S., BKD comes out on top, says Wanamaker.
I asked both Fingland and Kirkman whether BKD made long-term strategic plans. Kirkman said that did not fit in with their model. If there was an arbitrary objective to reach a particular target, it carried with it the possibility of merging with a firm that was not a good fit.
Fingland agreed. "We never decided to grow really big." Attracting good clients and good partners drove the merger process, he said. If growth provided the right kind of opportunities for people, it was encouraged.
The success of many firms is grounded in the leadership skills of a charismatic leader. But when the leader leaves, he takes his skill set with him. Frequently, the firm withers if it can't institutionalize the culture and business practices that the former leader demanded. Fingland, like those before him, worked hard to prevent this from happening on his watch.
You have to keep the culture out front, he said. "Whenever there was a merger, I went to the new office and gave a presentation on our client service philosophy. I personally handed out the BKD book to each staff person. I made it clear before a merger the members of the acquired firm were expected to buy into the program: to do things the BKD way."
The terms of the merger could be restated this way. BKD will come in and solve your problem (retirement issues, additional expertise, more opportunity for younger partners) but you have to have a "willingness to be governed."
"In a merger, we were uncompromising on this point," Fingland said.
"We knew what we did, and we did it well, and that's what we expected from the merging company. The process had to be more than simply changing the name on the door."
Moreover, after the first several mergers, BKD had developed a lot of experience in solving the problems that a smaller firm was facing. For BKD, a problem that a particular firm was facing — retirement, management, increasing costs — were not problems of first impression. They had dealt with them before and could offer a solution that worked.
In the last 40 years there has been a consensus at BKD on the firm principles. Hire the best people you can, train them to take over your job, constantly create opportunity by unmatched client service, and require mandatory retirement so you are always making way for the next generation.
Fingland summed it up as a matter of values.
"You have to be able to play on three levels," he said. "1) Client service — and we were at the top of that game; 2) the firm had to do well because you had to perpetuate what you were fortunate enough to inherit; and 3) give back in your industry and community in time and money. You have to pay it forward."