Charge hours have been a primary measure of performance in many accounting firms. However, the profession is moving from an efforts-based to a results-based economy, and charge hours are only one of many gauges that a firm pilot must watch.
In order to maximize staff performance, many accounting firms have implemented performance evaluation systems; however, many partners complain that there is too much paperwork, and it takes too much time to administer. Most partners prefer serving clients to managing people.
Many firms complicate the performance management system by attempting to measure everything, rather than priorities.
The following define a successful performance evaluation system:
1. Simple and easy to understand.
2. Quarterly interaction between manager and employee.
3. Focus on the future, rather than the past.
4. The employee is responsible for administering the system.
Too often, performance evaluations are tied to annual salary increases and conducted on an annual basis during which employees are rated by multiple managers and partners. Any comments lack specificity and are not relative to improvement and personal growth.
Another missing link is how the employee's performance plan integrates with the firm's strategic plan. If the firm doesn't have a strategic plan or if it is not communicated and understood outside the partner group, keeping quality people around at all levels will be a problem.
SIMPLICITY IS BEAUTIFUL
Good managers do not like bureaucratic forms and irrelevant terms. Instead, they are more concerned with how to say what needs to be said to an employee. Many older systems focus on compliance, rather than coaching and development.
Annual evaluation meetings miss the details. Quarterly meetings are manageable in most firms if people know and trust the system. Frequent interaction is positive and reduces risk of misunderstanding or misinterpreting expectations.
We recommend that employees complete an accountability review form that focuses on their progress over the previous 90 days. This offers them the confidence to take on bigger goals in the future, while also demonstrating any shortcomings with individual and firm expectations.
Offer practical, rather than general, advice. Our firm uses a one-page form that relates successes over the past 90 days, further progress that is required, and specific steps for the future. Direct each employee's attention toward the future, rather than focusing on the past. Frankly, you cannot do anything about the past other than a self-assessment of what worked and what did not work.
FOCUS ON THE FUTURE
Good managers use an accountability review to evaluate employees' modes of operation and requirements. A good manager ensures that people have the resources (i.e., training and equipment) to succeed. People are motivated differently. While conventional wisdom says that you must treat everyone the same, great managers do not. They know what motivates each person and make sure that employees design individual, 90-day game plans that integrate with the firm's strategic plan.
Significance is important to employees, and they want to know how they are contributing to the firm's overall success. Self-assessment is a powerful tool. Management need only review and ensure that the self-assessment is accurate and that the employee is focused on priority goals that integrate with the firm's strategic plan.
Each employee should be responsible for maintaining their own performance evaluation system. They should also schedule their quarterly meetings with their supervisors. The supervisor's responsibility is to understand the firm's overall strategic plan and conduct the meeting with honest and consistent feedback.
Utilizing such a system allows the firm to focus on the right outcomes and on their employees' strengths, rather than on their weaknesses, and to build motivated teams. Quarterly sessions help the manager learn about the individual employee's strengths, goals and requirements - from the employee's perspective. Kolbe Index testing is vital to helping firm managers understand an employee's work instincts and preferred way of solving problems.
If not chargeable time, what are outcomes upon which a firm should focus? Chargeable time is just one, and not all employees have chargeable time as a primary outcome.
Outcomes can be neatly arranged into four categories:
Financial;
Processes;
Client satisfaction; and,
Development (training and learning).
Do employees follow firm standards and procedures with respect to billing, tax preparation and financial reporting? Are clients satisfied and willing to buy additional services? Does the employee develop themselves, as well as others?
Some refer to these measurements as the Balanced Scorecard, but the term "integration" works just as well. There are many pieces to the firm management puzzle, and they must fit together in order to be adequately leveraged. A firm performance system should support the firm's strategic plan and individual 90-day game plans (including partners). The net result is accountability, and it starts at the top.
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
Grade A
A successful performance evaluation system should:
1. Be simple and easy to understand.
2. Involve quarterly interaction between manager and employee.
3. Focus on the future, rather than the past.
4. Have the employee responsible for administering the system.
