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Most firm leaders believe strategic planning is important, but where firms often fall short is execution – particularly when it comes to holding partners accountable.
Partner accountability can be a delicate area, but it’s necessary for firms looking to turn a paper plan into measurable steps forward. And while managing a crushing workload amid an unprecedented labor shortage has dominated the concerns of MPs over the last few years, a lack of partner accountability lurks in the background.
Matt Rampe
Charles Hylan, managing director of The Growth Partnership, calls it a gigantic, but largely silent problem for many firms. Hylan and Matt Rampe, partner at Rosenberg & Associates, agree that in firms of about $15 million or less, partner accountability is nearly non-existent. Even though partners don’t like it, creating a culture of accountability is a firm imperative, Rampe says. “It’s not easy but it’s worth it.”
Hylan and Rampe, consultants who specialize in strategic planning, recently spoke with IPA about the inherent (and understandable) reasons why partner accountability is so difficult to achieve and offered recommendations for turning this potentially unpleasant project into an exercise in partner unity.
Partners typically resist accountability for the following reasons:
- They fit the stereotype. CPA firm leaders, as a rule, don’t like conflict, even if it’s positive conflict. “What I always say is accountants become accountants to account,” Hylan notes. They don’t go into the field to sell services or manage other people or engage in difficult conversations.
- They want to run the show. As Rampe put it, “They didn’t become partners in CPA firms to become somebody’s employee.”
- They’ve been “over-metricked.” Rampe says some partners have experienced accountability done wrong – with tight targets, long hours and unreasonable expectations – and they don’t want to go through it again.
- They don’t know what they’re shooting for. On the flip side, if expectations are muddy or communicated poorly, partners tend to do what they’ve always done, he says. “People can jump up and be very dependable if we’re very clear about what we want from them.”
- They don’t care about the money. Financial rewards or penalties are often too small to motivate partners to change their behavior. Average equity partner compensation for firms of $10 million to $15 million is $561,000, according to the 2022 IPA Practice Management Report, and $618,000 for all non-Big 4 firms. Rampe says partners may think, “If you’re going to ding me $20 grand for not doing that, just ding me. I don’t even care, It’s not worth my time and attention.”
To Get to Accountability, Start at the Beginning
Success originates from clearly articulated vision/mission/values statements that form a firmwide strategic plan, Hylan says. While most non-Big 4 firms have long-term goals in their strategic plan – 77% according to IPA’s latest data – it’s less common in smaller firms. The most recent Rosenberg Survey of 293 firms, most of them between $5 million to $20 million, found that 74% of firms engage in a strategic planning process. That leaves a significant number without a guide for the future.
Hylan believes firms operate most effectively with a strategic plan that is buttressed by annual goals created by individual partners and finalized by the MP. Partner performance plans should include both quantitative goals (achieving 90% realization or bringing in $100,000 in new business, for example) and qualitative goals (such as holding quarterly mentor meetings or managing the audit practice), Hylan says.
While partner performance plans may be where true accountability lives, they’re not a universally adopted tool, particularly among smaller firms. IPA data shows less than half of all non-Big 4 firms (49%) use them. The percentage of firms with partner performance plans hits a majority only after the $20-million mark.
Hylan says firms can be viewed as shared-vision firms, with partners agreeing on how the firm will evolve and how to get there, or shared-services firms, with partners working separately but sharing staff and overhead. “Firms that have high accountability and a shared vision means that everything you do is firm-first behavior, and you need accountability to have that. They go hand in hand.”
Quarterly one-on-one meetings provide the structure to discuss whether partners are crushing their goals, failing to pull their weight or something in between. This is where potentially difficult conversations can arise, but that’s not a bad thing, Rampe says. “I tell people we’re going to go off the rails at some point where things won’t go the way we expected, and that’s OK. That’s life. That’s real.” The value of monthly check-ins lies in the ability to adjust immediately rather than let issues fester.
It’s More Than Structure, It’s Mindset
Getting buy-in for an accountability system takes skills in persuasion, but it may not be as difficult as it seems. A third-party facilitator can help reduce the friction. Leaders who understand the level of upfront work needed can ease the process as well. Rampe, paraphrasing researcher and author Brené Brown, says it’s far better to spend a reasonable amount of time dealing with feelings and fears that arise with change than spending an unreasonable amount of time managing dysfunctional teams.
He says some firms don’t even have partner meetings because they didn’t go well in the past. “I get it,” he jokes, “but maybe that’s not the answer.”
Ultimately, the responsibility for building the firm, creating new services, acquiring other firms and improving the culture lies with the partners, Hylan says. “If the partners are not being held accountable and they’re running wild, then partners are going to do what they feel is in their best interest and not necessarily in the firm’s best interest. They’re not necessarily the same.”
This article originally appeared in the May 2023 edition of INSIDE Public Accounting Monthly. To subscribe, click here.
