By Dr. Yvette Taminiau, Dr. Stefan Heusinkveld and Britt De Roos Ma.
A central concern in the procurement of professional services is the difficulty for clients in assessing the quality of these services, even after they have been produced and delivered. In better understanding the way potential clients can be convinced of the value of a professional service firm, this paper focuses on the ways accountants deal with formal tendering processes. Based on 75 evaluations of one of the Big Four accountancy firms, this study sheds light on the relevant factors at various stages of the tendering process that are crucial for winning or losing a tender.
How do accountancy firms deal with formal procurement processes for professional services? The main reason for organization to use the professional services of an accountant relates to the legal requirement have their annual accounts audited and to receive an audit report from a chartered accountant (NBA, 28 March 2012). In recent years, however, the accountancy profession has come under increasing pressure. Due to intensified competition within the field of accountancy, more critical and demanding clients, and the influence of consultants within the large accountancy organizations, there is an increased focus on client relations (Gendron, Suddaby and Lam, 2006; Suddaby and Greenwood, 2001). At the same time, the introduction of the Dutch Law on Accountancy on 1 January 2013 seems to have made it increasingly difficult for accountants to build strong relationships with their clients. Indeed, the intention of this law is to generate more distance between the accountant and the client, through mandatory firm rotation – at OOB organizations – and the separation of auditing and advice. It affects the Big Four organizations 31 in particular (Deloitte, E&Y, KPMG and PWC). Because of the aforementioned legal developments, large clients avail themselves more often of a formal tendering process as a structured assessment method for the procurement of professional services (FEE, 2013; O’Mahoney, Heusinkveld & Wright, 2013; Kubr, 2002) in order to select their accountant. This tendering process is often described as consisting of different phases such as (1) the orientation phase, in which the client invites firms to write a proposal; (2) the intake phase, focusing on exploration of mutual expectations; and (3) the presentation phase. The successful completion of the various phases results in winning the tender and signing the contract. It is thus important to gain insight into client requirements within these tendering processes, given that winning tenders is crucial for the long-term viability of an accountancy firm.
In order to improve our understanding of the factors in the tendering process that determine whether or not a tender is won, we conducted a qualitative content analysis of 75 client reviews (53 commercial tenders and 22 European tenders) in the spring of 2012. The client evaluations are reports of interviews conducted with the client by an independent person who was not involved in the tendering process. The respondents with whom these interviews were held had positions such as: CFO, Head of Internal Audit, buyer, staff member of a financial department (Accountancy, Finance Director, Head of a Financial Business Unit, (Group) Controller).
FINDINGS AND DISCUSSION
The most important reason for rejection in the first phase involves an absence of personal ‘click’, a lack of long-term development in the client-accountant relation and a lack of visibility. In the early stages it seems important to focus on building long-term relationships and contact different client groups. In the second phase, insufficient matching with clients’ expectations (with regard to contents and specific clients’ needs) is a major reason for rejection. It is therefore crucial to develop an adequate view of the different client requirements by listening carefully, seeking dialogue with various client groups and showing empathy. Results show that in the third phase, not only is a low-quality presentation that lacks enthusiasm considered an important reason for rejection, but also uncertainty about the team composition and the ‘feeling’ with the lead partner. Therefore during the final phase it is of crucial importance to perform a presentation that shows confidence that will stimulate and challenge the client, that addresses the client’s specific needs and that offers customization. The team must be balanced in composition with the lead partner playing a primary role.
Our study shows that the client will not be satisfied with an accountant who only excels in performing an audit of the financial statements. Rather, entering into client relationships and managing the expectations of the client are central to surviving tendering processes. Therefore a key challenge for the Accountant would be to find a way to build effective relationships within the framework of more stringent regulations. Especially in the preliminary stages, improvement is often possible. Usually, relatively more energy is invested in the final phase of the tendering process, often due to time constraints, while substantial opportunities lie in the trajectory leading up to that phase. This can be done through all kinds of meetings. Also, relations can be kept informed of developments in the market by sending out sectorspecific publications. Moreover, accountancy firms could plan this task as a more regular part of their duties. A different reward structure from the one that is currently in place could encourage accountants to invest more time in tendering processes. In addition, more attention should be paid to the tendering process during the training of accountants.
This article is based on an original research paper published in MAB: Taminiau, Y.T.A., H.S. Heusinkveld and B. Roos. 2014. Het accountancytenderproces, en het belang van een gefaseerde klantrelatiestrategie. Maandblad voor Accountancy en Bedrijfseconomie, 88(4): 115-126.
Fédération des Experts comptables Européens (FEE). 2013. Auditor selection: Towards best practices. http:// www.fee.be/images/Auditor_selection_Towards_best_ practices_1310.pdf.
Gendron, Y., R. Suddaby, and H. Lam, H. 2006. An examination of the ethical commitment of professional accountants to auditor independence. Journal of Business Ethics, 64(2): 169-193.
Kubr, M. 2002. Management consulting: A guide to the profession (4th ed.). Geneva: International Labour Office.
Nederlandse Beroepsorganisatie van Accountants [The Netherlands Institute of Chartered Accountants, NBA] 2012, 28 March. Wat doet een accountant? [What does an accountant do?] http://www.eenaccountantzietalles.nl/Wat-doet-eenaccountant/ wat-doet-een-accountant/.
O’Mahoney, J. S. Heusinkveld and C. Wright. 2013. Commodifying the commodifiers: The impact of procurement on management knowledge. Journal of Management Studies, 50(2): 204-253.
Suddaby, R., and R. Greenwood. 2001. Colonizing knowledge: Commodification as a dynamic of jurisdictional expansion in professional service firms. Human Relations, 54(7): 933-953.