Are You Attracting the New Breed of Equity Partners?

Businesswoman shaking hands with someone out of view7 tactics to address the "new normal."

By Domenick J. Esposito
8 Steps to Great

There’s no argument within the accounting profession that today’s economy is anemic, margins are squeezed and talent, particularly tax talent, is very scarce.

MORE ON STRATEGIC PLANNING: Stay Independent But Keep Looking Upward | 10 Ways to Link Compensation and Strategy | Develop Home-Grown Future Leaders | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent
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On top of that:

  • The philosophies of: (a) finders, minders, grinders and (b) an accounting firm model (principally low-margin compliance services) are no longer sufficient and probably are counterproductive to the perpetuation of a firm.
  • Clients have the upper hand in their accounting firm relationships.
  • Technology will continue to create a lesser demand on lower-level staff.
  • It is widely believed that Google and Microsoft will soon become fierce competitors for certain compliance services.

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Stay Independent But Keep Looking Upward

Businesswoman walking up stairs14 questions to ask.

By Domenick J. Esposito
8 Steps to Great

Your firm was knocking the cover off the ball pre-financial crisis (circa 2007 and 2008) with a strategy of getting bigger with quality growth, stronger with quality talent, and more profitable but it is increasingly obvious that it has become difficult competing in today’s mid-market space.

MORE ON STRATEGIC PLANNING: 10 Ways to Link Compensation and Strategy | Quality Work, Quality Service Not the Same Thing | Who Will Be the Next Category Killer? | Why Is Strategy Execution So Difficult? | Time Running Out for Succession Planning | The Benefits of a Client Situation Review | Capital Markets 101 | How to Implement Industry Practice Groups | What Is ‘Acceptable’ Performance? | 6 Measures of Partner Performance | Is HR Ready for Your Partner Pipeline?
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The business environment is anemic and organic growth is hard to come by. Your challenge is exacerbated when you see an insufficient number of young superstars and rainmakers and your senior partners, mostly baby boomers, don’t have an awful lot of “golf course” left to play.
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10 Ways to Link Compensation and Strategy

Consider disclosing the executive committee's compensation – but no one else's.

By Domenick J. Esposito
8 Steps to Great

If a CPA firm has a partner performance management and compensation plan (and many don’t), rarely is it used as a means of driving strategy and running the firm. Instead partner goal setting and evaluations are used merely as a means of rewarding partner compensation – one of the greatest challenges for senior management and executive committee.

MORE ON STRATEGIC PLANNING: Quality Work, Quality Service Not the Same Thing | Ineffective Partners and How to Address Them | The Dangers of Low-Hanging Fruit | 10 Common Leadership Traps | Expand Your National and Global Geographic Reach | Show Clients How to Improve Working Capital | Do You Belong In Cybersecurity?
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As important as the annual goal setting, evaluation and compensation adjustment are leadership’s direct and indirect messages communicated during the process as these messages affect firm culture, how partners choose to spend their time and the firm’s ability to implement its strategic plan.
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Quality Work, Quality Service Not the Same Thing

Quality Work, Quality Service Not the Same ThingCompetence isn't enough.

By Domenick J. Esposito
8 Steps to Great

Over the years, I have enjoyed reading and internalizing the insights of David Maister, highly regarded author, speaker and practice management consultant.

MORE ON STRATEGIC PLANNING: Ineffective Partners and How to Address Them | Develop Home-Grown Future Leaders | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent | Using a High-Performance Business Framework | What a Client Service Plan Can Add | 36 Consulting Services You Might Be Overlooking | How to Drive Consistent Partner Behavior
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Many years ago (circa 1993), Maister wrote a professional service firms article titled “Quality Work Doesn’t Mean Quality Service.”
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The Struggles of Hitting Market Compensation … Fairly

Four empty metal bucketsAvoid the temptation to "sprinkle" among "buckets."

By Domenick J. Esposito
8 Steps to Great

For the most part, managing partners at a large number of the best-run Top 100 firms below the Giant Four do an excellent job in splitting up their compensation pies.

MORE ON STRATEGIC PLANNING: Ineffective Partners and How to Address Them | Develop Home-Grown Future Leaders | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent | Using a High-Performance Business Framework | What a Client Service Plan Can Add | 36 Consulting Services You Might Be Overlooking | How to Drive Consistent Partner Behavior | CPA Firm Partner Performance: Different Activities, Different Metrics
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Their partner compensation system rewards performance and, at the same time, nurtures rising stars with lots of potential.
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Ineffective Partners and How to Address Them

Three office workers glaring at cameraConsider not just the current impact, but the future.

By Domenick J. Esposito
8 Steps to Great

Most accounting, tax and advisory CPA firm professionals who have demonstrated that they can help perpetuate an organization become partners between the ages of 35 and 42. In many cases, these same professionals retire from their firms as they approach the age of 60, 65 and 70.

MORE ON STRATEGIC PLANNING: Develop Home-Grown Future Leaders | Who Will Be the Next Category Killer? | Why Is Strategy Execution So Difficult? | Time Running Out for Succession Planning | The Benefits of a Client Situation Review | Capital Markets 101 | How to Implement Industry Practice Groups | What Is ‘Acceptable’ Performance?
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Many emotional and physical changes happen to us humans over the course of 25, 30 or 35 years. Sometimes for the good and sometimes for the bad, our personal lives, energy levels and productivity at the age of 35 usually are different than our personal lives, energy levels and productivity at the age of 65.
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How to Develop Home-Grown Future Leaders

A development academy might be your answer.

By Domenick J. Esposito
8 Steps to Great

When it’s time to make decisions about new partner admissions, here is what senior leadership at many small and mid-sized CPA firms often hear:

  • “If Mary doesn’t make audit partner this year, she will leave the firm. We can’t afford to lose her as she gets all the work done at ABC Manufacturing Corporation, who pays us over $300,000 a year. Without Mary, this client will leave the firm” and
  • “We need to make Joe a tax partner this year because he is the only one in the firm who understands 'C.' Without him, we will have a big hole in our tax department capabilities. It could put a big hurt on the firm.”

MORE ON STRATEGIC PLANNING: Who Will Be the Next Category Killer? | The Dangers of Low-Hanging Fruit | 10 Common Leadership Traps | Expand Your National and Global Geographic Reach | Show Clients How to Improve Working Capital
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In their guts, these leaders know that, while both Mary and Joe are solid professionals, there is little chance that either of them will develop beyond client service partners.
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