reward effort, not just closing.
by marc rosenberg
the rosenberg practice management library
most firms over $5 million have incentives in place for staff to bring in business. oddly, there is a tremendous disparity from firm to firm in how their incentive plans work. more on this later.
more: is it time to hire a marketing consultant? | how and why to hire a marketing director | how to brand and differentiate your firm | why consultative selling works | does your firm recognize all its skills? | 15 powerful niche marketing practices | are you ready for the great disruption?
exclusively for pro members. log in here or 2022世界杯足球排名 today.
only 20 percent of cpa firm partners are effective at bringing in business. this means that 80 percent are not effective at selling. that’s a pretty low batting average. if partners are this bad at it, think what staff’s experience must be like!
most people, whether they are partners or staff, will tell you that there is a cpa personality, and one trait is not enjoying selling or being “pushy.” most of the professional staff at cpa firms are young and can’t imagine themselves selling. most young professional staff had zero training in selling in college and most likely have had little or no business development training at their firms. so it’s up to the partners to educate and mentor the staff on business development skills.
yet everyone, including young professional staff, knows:
- the lifeblood of a cpa firm is bringing in business. if you don’t grow, you become stagnant.
- bringing in business boosts your career. you’ll get promoted quicker and have a better shot at making partner.
- you’ll make more money if you bring in business.
this brings us to the central point. as we said above, sales training and mentoring is a great way to develop the staff’s business development skills. another important tactic is providing incentives, mostly financial, for bringing in business. while this doesn’t work for everyone, it certainly works for some. if staffers earning $75,000 a year can add $5,000 or so from sales commissions, that’s a lot of money to them and worth the effort.
here are several programs that cpa firms commonly use to incentivize their staff to bring in business.
commission plans for bringing in business. most firms have these plans in place.
debates have raged for decades on whether commission plans are successful.
- some firms swear by them and take great joy at writing checks to the staff. they cite as evidence of success the facts that (a) the money motivates staff to go outside their comfort zone to sell and (b) their firm has a track record of growth and a marketing culture that excites people to bring in business, commission or not.
- most firms complain that these plans don’t work; they pay out hardly any money. our view is that money may not motivate the staff because (a) they don’t know how to sell and (b) the firm doesn’t have a healthy marketing culture. when staffers see stagnant growth and partners who don’t do business development, no amount of money will incentivize them to do something they are uncomfortable with and unable to do.
let’s look at common provisions of staff sales commission plans that we see. the disparity in plan features from firm to firm is huge.
- half of firms pay 10-15 percent of sales. half pay 20 percent or so. we believe the higher the rate, the more likely it is that the incentive will excite the staff.
- the vast majority pay the commissions on collected sales, not billings.
- the payout period is all over the board, ranging from one year to as long as the staff person is employed. usually the commissions stop when a person makes partner, but we know one firm that continues the commissions for partners.
- what qualifies? some firms limit eligibility to
- new clients
- 1040s over a certain dollar amount
- projects that experience a minimum realization
- remember, regardless of the size of the commission offered, don’t introduce staff commission plans unless you provide sales training. a sales commission plan won’t excite staff who don’t know how to sell.
- reward sales leads. it’s very hard for young staffers to close sales. but they may be able to generate leads for partners to close. so make sure there are incentives for generating leads whether or not the leads are converted to sales. if the lead is closed by other firm members, the staff person should be rewarded for a sale, not just for the lead.
increases in base compensation. many factors come into play in determining salary increases for staff. generally, the better performers receive higher raises. certainly, one trait of a better performer is bringing in business. a base salary can be increased as a standalone gesture or in addition to a commission plan.
selection to attend leadership development programs. there are three or four national, excellent, highly reputable, curriculum-based leadership development programs. the partner institute is one: www.thepartnerinstitute.com firms send people to these programs only if they are at an advanced level in the firm and have the potential for further advancement, including to partner. it’s very prestigious for a staff person to be sent to one of these programs and therefore a nice reward to receive.
participation in a goal-setting program linked to an incentive bonus. you remember the very strong link between writing down smart goals and achieving those goals. it makes sense for firms to create goal-setting programs for staff. they are usually, though not always, reserved for higher-level staff with upward promotional potential. goal setting can be very motivational.
a goal-setting program is a way for the firm to reward effort as well as success. at many things in life, effort precedes success. firms need to incentivize their staff to make the effort to sell.
assignment of small clients to staff. yet another internal firm practice that is greatly appreciated by experienced staff giving them clients. it tells chosen staffers that they are successful, highly thought of by the partners and on track to make partner.
promotion to senior positions and eventual promotion to partner. firms have wildly varying views on whether bringing in business should be a criterion for promotion to manager and partner. certainly, there can be promotional opportunities for staffers who aren’t business-getters, but most experienced staff know that bringing in business is better for advancement than not bringing in business.
pat on the back. mark twain once said, “i could live for an entire month on just one compliment.” regardless of which incentive tactics you use, always make sure staffers get a nice pat on the back when they bring in business or even make the effort to try.