by L. Gary Boomer
It has been said many times that people are your most important asset. The statement is only true if you have the right people.
Think of your firm as a busload of people. Many firms do not have the right people on the bus and, worse yet, many are in the wrong seats. This applies particularly to many people who have attained partner status.
The challenge of every managing partner is to identify individuals who don’t belong on the bus and escort them off and then identify the strengths of the individuals that remain and get them into the right seats.
We are starting to see many firms address the issue of "under-performing" partners. It is a difficult problem, but if you want a great firm, you must address it. Ignoring the problem is not a responsible alternative.
Jim Collins, in his most recent book, "Good to Great," provides insight into how companies go from being good to great. There are many lessons to learn and all apply to the accounting profession.
All progress starts with the truth. Most firms have people taking up seats that shouldn’t be there and, if the truth were known, they don’t really want to be there. They probably would be happier in another job, but may fear that they will have trouble getting one with comparable salary and benefits.
To be a great firm, you must avoid promoting mediocrity. The task of getting the wrong people off the bus may be easier than getting the right people in the right seats. The road will have political, emotional and legal traps.
When confronted with this, the tendency of most partners is to bury themselves in client work and avoid confrontation. This is exactly the wrong approach. Another approach is to analyze how this has happened. Do your analysis quickly and move on with the task.
A typical reaction is that the current problem has been accented by the fact that fewer graduates are entering the accounting profession; therefore, many firms are accepting people with lower standards.
My response: What criteria did your firm use for accepting people into the role of partner? Most firms readily admit that many people were made partners for the wrong reasons and now they regret the decision.
When considering the issue of fewer available accounting graduates, perhaps you should do what the large firms have been doing for years: hire the best people and train them.
The largest firms hire accountants about 25 percent of the time and the rest of their hires come equipped with other majors. The reverse is true in the small firms.
Diversity is often not a term even considered in the smallest of firms. In fact, many of the small firms look like cloning factories.
Collins states that is it more important to determine "who" and then "where" you are going. Training continues to be a major issue in most firms.
The largest firms no longer train the profession for the rest of the firms; they strive to retain the people they train. It is time the profession reinvents itself to become attractive to the best and brightest.
The following are some steps that must be taken:
- Create a learning environment
- Bill for value and not by the hour
- Teach people how to manage
- Increase starting salaries
- Implement incentive compensation programs
- Manage the firm with a chief executive
- "Cull" the herd annually
- Build teams
- Retire obsolete partners
- Use technology as an accelerator
- Focus on the core economic engine
- Show passion
- Be the best
- Utilize two-way mentoring
- Eliminate marginal clients
- Develop a culture of discipline
- Develop successors
Much of this may sound familiar. The new part is that you can’t do one or two things and expect significant results. You must do them all and you don’t have a lot of time.Attitude is a critical factor in determining who wants and who deserves a seat on the bus. You should not give tickets to people just because they have seniority.
Many people perform the way they do because they have been allowed to under the existing management structure. The partnership form of management in many firms has allowed this.
It is time for the partnership to go as a management strategy. There are better ways of managing a firm.
If you are serious about being a great firm and outperforming the competition, then you should document your values, communicate the vision to the entire firm and reorganize with a professional management team. Also, don’t be afraid to write the check because that solves some problems.
To some this may be overwhelming and they will choose to ignore the warning signs. They will continue to struggle in chaos and eventually self-destruct.
Consolidation is happening at a faster pace today than it was three years ago. You just don’t hear about the mergers in the press like you did when American Express, H&R Block and CBiz were rapidly acquiring firms.
You can become a great firm and acquire others or you will become a candidate for acquisition. Once acquired, people will be assigned seats on the bus and some will be asked to leave.
Acquiring to become a great firm does not work. Some of the consolidators have proven that. You must be a great firm and then acquire.
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