Is your accounting firm healthy or sick? And how can you tell the difference? There are several symptoms of a sick firm.
Below are the main ones I have seen over the years working with hundreds of firms:
Unclear or no strategy;
Lack of urgency;
Sluggish decision making;
Little or no accountability;
Ineffective execution; and,
Rewards not aligned.
If you think these symptoms are prevalent in your practice, read on. Overcoming this sickness takes more than a dose of pain relievers. Let's briefly look at the symptoms and what we can do to alleviate them.
1. Unclear or no strategy. If you cannot clearly articulate your competitive strategy, then you simply don't have one. If you don't know when to say "No" to a new proposal opportunity, opening a new office, acquiring another practice, etc., then you don't have a clear strategy. A clear strategy tells you what to do and what not to do. Many times the latter is more important than the former.
2. Lack of urgency. Too many firms foster a culture in which things can be done tomorrow. They really don't want to change. They may think that they are still very successful, not realizing that their success and position in the industry are slipping away. Firms that have a real sense of urgency get things done quickly, rather than creating one committee or task force after another.
3. Sluggish decision-making. Many times slow decision-making in a firm is the result of lack of trust or excessive politics among the partners. When trust is low, there are more water cooler discussions and meetings. Sometimes decisions take longer because there is lack of clarity as to who really makes the decision. Leaders either need to empower others to make decisions or ask for their input before they make the final decision.
4. Little or no accountability. The results of a proprietary survey I conducted with more than 400 accounting firms revealed that more than 75 percent did not have annual written goals for their partners. The word "accountability" in the accounting profession carries the same connotation as the word "sales" - both seem to have a very negative meaning for partners. Accountability applies equally to the firm's leadership and to the rank and file. If you expect others to be accountable, make sure that you are the role model.
5. Ineffective execution of the strategic plan. Execution can only come from the top. If the managing partner or chief executive officer does not have their heart and soul in making things happen, then the entire strategic planning process is for naught. There are two key activities that the leader needs to drive: setting the direction, and selecting other leaders who are passionate about where the firm is going. A managing partner of a Top 100 firm recently told me that he and his leadership team stood up before the entire firm to tell them what they had planned to do and that they would report on a quarterly basis their progress - or lack thereof.
6. Rewards not aligned. This is perhaps the greatest error that I see when helping firms design new compensation plans. There is one simple question to ask: Are your rewards aligned with your strategic goals? This first requires the firm to identify its mission-critical strategic objectives for the year and then look at its various reward elements (base salary, performance bonus, recognition program, perks, etc.).
You can't attack all of these symptoms at once. So start at the top of the list. Vision should drive everything you do in the firm. From there you can create a true sense of urgency, and start working on getting your team to do what they say they are going to do. It won't be easy and it's a regimen that you will always have to follow.
Get healthy today.
August Aquila (www.aquilaadvisors.com) specializes in compensation plan design, mergers and acquisitions, succession planning, and firm/partner issues. Reach him at aaquila@aquilaadvisors.com.
