How Accounting Firm Partners Delude Themselves
When you look your firm in the mirror, what do you see? We all know people who have themselves convinced that the way things should be is the way they really are.
Some of them, we’ve discovered, are partners at CPA firms. Here are some common answers to questions we’ve posed that illustrate my point:
- Does your firm have a succession plan?
Typical partner response: Of course we do!
My take: The acid test for being allowed to say “yes” to this question: (1) Is your plan in writing? (2) Is someone responsible for the plan being implemented? (3) Is the plan working? The reality is few firms under $10M have a written succession plan and their partners lack the energy and desire to do the heavy lifting required to move the firm to the next generation. The main ways that firms are executing their succession plans are sending partner potentials to formal, curriculum-based leadership development programs and providing proactive mentoring to staff. Few firms under $10M are doing this…well.
- Is mentoring of staff a factor in your firm’s partner compensation system?
Typical partner response: Yes. It may not be easy to see or measurable, but it’s there. Our partners couldn’t manage large client bases unless we were good mentors of our staff.
My take: A saying I have heard recently from several MP’s of Top 100 firms: “You get what you measure.” A strong mentoring program isn’t created simply by doing other things and assuming there is a positive spillover effect on staff. Mentoring should be measured. Partners should be able to state, by name, partners or staff that have advanced in the firm under their tutelage. Each partner who has mentoring responsibilities should have a mentoring goal.
- What are you doing to increase profitability?
Typical partner response: We’re cutting staff and overhead expenses. Naturally!
My take: CPA firms never have been and never will be lavish spenders. Firms that go on cost-cutting “witch hunts” are refusing to face reality: that he biggest causes of disappointing profits are the partners’ lack of practice development, unproductive personnel and low billing rates.
- Why do you keep firing your marketing directors?
Typical partner response: They didn’t bring in any business!
My take: First, marketing directors shouldn’t be hired to personally bring in business. That’s the job of the partners, managers and business development directors. Second, a strong underlying reason for firms’ dismal track record for marketing director tenure (19 month average) is failing to treat them as integral members of the management team, involved in strategic planning and apprised of major firm performance measures. Read more on CPA Practice Advisor.