Many CPA firms don't have a living, breathing strategic plan that enables them to successfully navigate through their next two or three years.

That in and of itself is not very surprising since most CPA firms are basically small and midsize businesses with the same generational challenges faced by most small and midsize family and privately owned operating companies. After all, the 100th largest CPA firm in the United States is only about $35 million in annual volume. In our view, the lack of a well-executed strategic plan is a potential death blow to a small and midsize CPA firm. It eventually will be difficult for these firms to be competitive because of undistinguishable client service, insufficient growth that helps retain talent, and an inability to attract and retain young superstars who will perpetuate the firm into the next generation.

It’s unfortunate as these shortfalls could be circumvented, or at least minimized, with a strategic plan that is properly executed (with emphasis placed on the word “executed”). Many small and midsize CPA firms do undertake an exhaustive strategic planning exercise but don’t use it as a living, breathing tool that holds partners accountable through a performance management and compensation system. Instead these firms go through an “exercise” (which can be an expensive undertaking if an outside consultant or facilitator is used) that eventually sits on a shelf (perhaps in gift wrap and a bow) gathering dust in partner offices. That’s a missed opportunity because a well thought out strategic plan, if executed properly, is a great leadership and management tool that can help perpetuate a firm. It provides direction and gets partners on the same page. It instills discipline that requires delivery of reliable commitments as opposed to broken promises or lip service. It is also a vehicle for individual partner setting, periodic monitoring, counseling and an annual evaluation which is usually used as the basis for annual compensation adjustments.

Why have many firms found it difficult to convert strategy into action? Why have many firms failed to achieve successful implementation of their strategic plan?

Failure to effectively execute on a strategy most often occurs because it is very easy for partners, including the firm’s CEO and senior management, to get distracted and make excuses for their inability to deliver. The biggest partner excuse usually cited is the demand of client service and, no doubt, some of that is real. It’s not unusual, however, for partners to “hide” behind the notion of client service while the real reason for execution failure is the perception that the CEO doesn’t take the implementation process seriously. We often hear “the plan is nothing more than a theoretical exercise that will never come to fruition.” When the “boss” isn’t paying attention to follow through and individual accountability, why should the line partners? Implementation of actionable goals that are part of a strategic plan is oftentimes uncomfortable for partners as it takes them out of their comfort zone.

Strategy execution failure comes down to an organization’s inability to muster up the necessary fortitude to translate strategy into results. It usually starts with the discipline (or lack thereof) exhibited by the CEO and senior management. We believe that successful execution of strategy, usually assigned to the chief operating officer as project manager, requires the following components:

1. A clearly defined strategy with objectives that are reasonably actionable within the firm’s stretch capabilities.

2. Appropriate key performance metrics to monitor and measure results.

3. A clearly communicated strategy and objectives throughout the firm—making sure everyone understands the strategy, the rationale, the objective and how day-to-day actions impact success.

4. Champions, leadership and effective project management and tools.

5. A compelling business case that has the potential to inspire all partners and staff and creates enthusiasm.

6. Incentives that reward results that are celebrated throughout the firm through emails, state of the firm meetings, etc.

7. Patience and persistence—remember that a firm’s strategy is merely a hypothesis in the beginning that is only proven with appropriate actions and results. Don’t give up too quickly and don’t let client service distractions, lip service and other excuses derail the progress the firm is making.

8. A blend of short-term and long-term objectives.

9. The ability to manage the pressures of today that all too often get in the way of creating opportunities of tomorrow.

10. Complete alignment throughout the firm in terms of decision making that supports the long term strategy.

11. Align individual partner performance goals with the firm strategic goals. Actionable results need to be periodically measured against goals and, if appropriate, modified if certain goals are subsequently deemed unrealistic.

12. Tie progress against goals into annual compensation adjustments. Partners know you are serious about strategy execution if they can measure the impact their participation has in their wallets.

13. Ensure appropriate training and coaching of line partners and senior management.

14. Remember that the firm has the ability to manage change.

Does your firm have a strategic plan sitting on a shelf in your office? Dust it off and re-energize the efforts required to move into actionable tasks.

Dom Esposito

Dom Esposito

Dom Esposito, CPA, is the CEO of Esposito CEO2CEO, LLC, a boutique advisory firm consulting with small and midsized CPA firms on strategy, practice management, mergers and acquisitions.