Accounting Today - May 2012

Get your firm pulling together

By RoBeRt J. Lees and august J. aquiLa

Your partners need to commit — and so does the whole firm

Our advice on how to resolve the performance issue comes from our work over the last 20 years in all sizes of firms across Europe, the U.S. and Canada, and confirms what we all intuitively know — the more the partners are engaged in the firm’s future, the better they perform. So, before you can work on performance, you need to work on getting your partners involved and committed to the firm’s future. Partners won’t be committed to the future if they haven’t had any involvement in deciding what it should be. And if they aren’t committed, they essentially work for themselves, not the firm.

Partners are the culture in a professional services firm — what they believe, what they reward, what they do, and how they do it determines what and how things get done. And if they don’t believe in what the firm is doing, they will never be effective role models who think of the firm first and actively bring the whole of the firm’s services to their clients.

4. Ineffective or nonexistent partner performance reviews.

5. Performance systems not tied to strategic initiatives.

6. Lack of successful firm leaders.

Most firms consider these six challenges to be merely “touchy-feely” aspects of running a professional services firm. They take time to implement, and the common response is, “We have clients to serve and this stuff just detracts us from our real job.” But unless you embrace these challenges and get your partners actively engaged and performing for the firm and its future, you may find yourself without clients and a viable future.

1. Un-motivational firm vision. More firms now have a vision and a strategy in the hope of engaging partners and employees — but the partners aren’t always involved in their creation and often don’t buy in to the vision. This can be because the vision isn’t compelling enough or because the partners are more interested in their own practice, rather than a real firm. This type of professional services firm is usually referred to as a “siloed” firm and never succeeds in bringing the full capabilities of the firm to bear.

A vision tells us what we want to be in the future, not what we are today. Perhaps we have a vision of being a cross-border accounting firm. The problem with most visions is that they do not provide a powerful picture of what the firm will look like five, 10 or more years from now. Most visions are neither motivating nor audacious. And often they lack a larger sense of purpose. Do partners understand and see what the end game looks like? Do they think they are putting steel girders together or building a bridge? Building a bridge is more inspiring than just welding girders together. Visions must be compelling. They have to create excitement and enthusiasm, and engage the partners and employees.

2. Lack of clearly defined core values. Most partners we know can’t recite their firm’s core values. That’s a problem. A more serious problem is that the list of core values you often find on the firm’s Web site doesn’t

no one would ever question that a firm’s success is ultimately
tied to its partners’ performance. and yet improving partner
performance and getting the partners to work across practices
are the key issues facing the majority of firm leaders we talk to.
CHALLENGES

In our work, we have identified six major challenges that firms need to address to engage their partners and ensure that everyone moves forward together. They are:

1. Un-motivational firm vision.

2. Lack of clearly defined core values.

3. Lack of clarity around what being a partner means.

Rob Lees is a founding partner of Moller PSFG Ltd ( www.mollerpsfgcambridge. com), a consultant to professional service firm leaders worldwide, and co-author of When Professionals Have to Lead. Reach him at rob.lees@mollerpsfgcambridge. com. August Aquila is an internationally known speaker, consultant and writer, chief executive of Aquila Global Advisors (www. aquilaadvisors.com), and co-author of Compensation as a Strategic Asset and Client at the Core. Reach him at aaquila@ aquilaadvisors.com or (952) 930-1295. © 2012 Rob Lees and August Aquila. All rights reserved.

mean anything. Core values should define the parameters of partner and employee behavior. They should provide guidance on how individuals in the firm are supposed to act.

Core values are much more than minimum standards. They inspire those in the firm to do their very best at all times. They are the common bond and the glue that unifies and ties the firm together. Each firm, first, needs to identify its core values. Next, they need to be defined. Finally, partners and employees have to identify representative behaviors and live them every day.

3. Lack of clarity around what being a partner means. There are a lot of different reasons to make someone a partner: unique talent, need to fill a position, succession planning, etc. What many firms lack today is clarity around what being a partner means.

The following characteristics are found in those firms that have embraced a one-firm concept. Their partners:

;Put the firm first;

;Are team players, not lone wolves or prima donnas;

;Live the firm’s values;

;Share their clients with others;

;Are accountable for their own actions and don’t pass the buck;

Go out of their way to help others;

;Have staff who want to work with them;

;Have the highest degree of personal integrity;

;Treat others with respect;

;Can laugh at themselves; and,

;Are willing to embrace change and stretch

outside of their comfort zone.

Only if partners are clear about what is expected of them can firms expect them to perform as the firm wants and needs — and not how they want. It’s also key that the firm reinforces what it wants by only making the “right” people partners and taking action if partners visibly ignore the firm’s values.

4. Ineffective or nonexistent partner performance reviews. Managing partners always ask us what it takes to achieve sustained, consistent partner performance. While the answer is easy — maybe simplistic — the implementation is difficult for most firms. To consistently get uplift in partner performance, it is necessary to have written annual partner performance goals and an effective performance management process. A survey conducted in the U.S. by the PCPS Division of the American Institute of CPAs found that 85 percent of the respondents did not have written goals for their partners. And 99 percent of partners we know say that they do not have an effective review.

You can’t expect a change in performance if partners do the exact same thing they did the previous year. You have to be clear about what you want and make sure the partners have the capabilities to deliver.

5. Performance systems not tied to strategic initiatives. It’s not necessarily the performance system itself that’s the issue, it is what the system rewards that is critical. If your system currently rewards entitlement criteria (seniority, equity interest, etc.), then you can’t be surprised if some partners don’t take accountability seriously, aren’t good citizens, and don’t put the firm first.

However, if you reward partners for their competency — their skills and their results — as well as their integrity and intent, then you can start moving toward a culture that uplifts partner performance. If you are serious about rewarding those who help the firm achieve its strategic initiatives and its vision, then compensation must be tied to individual and team results. The key for a good compensation system is to have a balance between individual and team goals and between production and capacity-building goals.