Do You Have the Guts to Beat the Covid Crisis?

Male-Lion-at-rest-portrait-Serengeti-2017-Telberg-Photo cropFive tough questions to ask about your firm's leadership in these tough times.

By Bill Penczak

In times like these, firms should be challenging themselves with the tough question, “What do we want to be, today and into the future?”

MORE: How to Inoculate Your Firm against Covid Competition | ‘Found Money’ Delights Clients | Don’t Buy a Rolodex, Buy a Process | The Three R’s for Beating the Corona Crisis | 6 Reasons Why Your Marketing Sucks
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

If maintaining the status quo and “serving clients,” whatever that really means, are the only responses your partner and leadership teams can muster, then perhaps it's time to evolve from being a lifestyle firm to being one with a vision and the guts to achieve it.


Years ago, the senior management team of my firm had a discussion about whether ours was a “lifestyle firm,” one that preserves and protects a certain enviable lifestyle for the partner group, replete with the culture absent of accountability.

And that if a partner’s book of business dipped for whatever reason, someone else would replace the slack, and juicy bonuses would still flow like summer wine.

We reasoned that our firm did not fit the description, but there were others in the market that did. Maybe working for a lifestyle firm is ideal for some. For those who truly want to make a long-term difference for clients, their people and their community on the whole, OK is not OK.

“Sure, busy season sucks. And if I have to attend one more online CPE class to satisfy my hours' requirements days before the deadline, I’m going to scream. But summer Fridays are pretty sweet because I can leave for the beach house early. And earning more than 90 percent of the rest of the country is a great place to be as a partner in a CPA firm.” – The imaginary partner at a typical lifestyle CPA firm

Here are five questions to ask your partner group to determine if yours is a lifestyle firm:

  1. Does your firm measure and enforce its top-line revenue or margin contribution parameters for its partners? I’ve always found it strange that some of the most disciplined professionals, CPAs, follow prescribed disciplines on how they perform client work, but are antithetical when it comes to disciplines for running their own firm. At the end of the day, hours, utilization, and even revenue are only leading indicators for what really matters: margin contribution. Firms that don’t hold partners to a modicum of true productivity metrics are likely to fall into the “lifestyle firm” category because as the old saying goes, you don’t manage what you don’t measure.
  2. Is the path to partner clearly defined with KPIs or is it still a popularity (or unpopularity) contest? There are perhaps 15 to 20 percent of today’s seniors in your firm who are or could be on the partner track. How is your firm communicating with them about the firm’s expectations of a partner, and the definable, measurable path to grow from senior manager to partner? Does the storyline vary, depending on which partner has last bent their ear? If that is the case, then yours is likely a lifestyle firm. Clear direction, defined metrics and consistent messaging are the hallmarks of highly functioning CPA firms. Firms working on the fly, with random sets of success metrics and performance parameters are demonstrating to their people and even potential employees that rules apply to everyone but them.
  3. Do the bad behaviors of bad partners trickle down to senior managers and principals? The Sicilian saying, “the fish rots from the head down” is appropriate here. Your middle management team is learning from the partners with whom they work and they will develop habits, good and bad, from their partners. A partner should be setting the tone for the quality of the work, certainly, but they also set the tone on the softer, and often more evident behaviors such as business hygiene (returning phone calls or emails in a timely fashion, showing up on time, being prepared for meetings, etc.), how they treat their subordinates, the propensity for gossip, and the general behaviors that demonstrate you really don’t care about anyone but yourself and your own compensation. If there are still dark corners of your firm where these behaviors are promulgating, then you are working in a lifestyle firm.
  4. What are the consequences if partners don’t attend retreats, department meetings, and discussions about the firm’s future? “I’m too busy” is a passive-aggressive tool of the uninterested. Time is one of the few commodities with equal and universal distribution, and we as professional adults are responsible for managing and prioritizing our time. Along with the privilege of serving as a CPA firm partner, are the responsibilities to the rest of the partner group, and to the rest of the firm. Those who vote with their feet and choose not to be part of running the firm are outliers at best, and morally lazy at the worst. Firms with more fully engaged partners demonstrate a team approach, shared futures, and common goals. Firms that tolerate outliers can be characterized as lifestyle firms.
  5. Are your managing partner or department heads older than dirt and/or been in the role since either of the Bush administrations? Generally speaking, the closer to retirement, the more cautious will the managing partner be. After all, deferred comp may be at risk! Failure to look forward, keep up with industry trends, experiment with process improvement, or constantly improve the culture of your firm is a sign of someone already “retired in place.”

How does a leadership team challenge itself and the rest of the firm to remain relevant in a constantly evolving world?

If you don’t know, spend some time with the partners from a firm that tries to look around corners.

 

Leave a Reply