do your firm’s core values mean anything?
by marc rosenberg
the role of the managing partner
we have addressed the techniques managing partners use to manage the partners. one of the most effective tactics to show leadership in working with partners – and managing the firm – is to create ways to establish accountability for their behavior and conduct. in this post, we drill down on this.
more: five ways to evaluate partners | compensation is no way to manage partners | clarify partner expectations | exceptional managing partners offer their advice
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i have had the privilege of working with dozens of highly effective managing partners during my career. these leaders are the cpa profession’s equivalent of rock stars. one question i always ask them: what makes your firm so successful? they almost never cite the obvious suspects: great at bringing in business. lots of billable hours. high rates. expertise. long work hours.
no. instead, without hesitation, they say that their success is due primarily to their partners living and breathing a uniform set of core values. and they are quick to follow that up with the partner accountability needed to embrace those core values.
how partners at most firms see accountability
i have interviewed hundreds of partners. when i ask them if they think there should be partner accountability in the firm, the response they are thinking but won’t say is: “yes, i’m all for partner accountability (long pause) as long as it doesn’t affect me!”
my favorite definition of accountability
i think i may have actually invented this one:
“if there are no consequences to failing to achieve a goal or expectation, even if such goals and expectations are crystal clear and the partner agrees 100% with them, then it is less likely that the goals will be accomplished and the expectations met.”
the legendary david maister said it slightly differently: “if people are not prepared to be held accountable for what they do, it is unlikely they will achieve much.”
ten main ways to achieve partner accountability
- managing partner meeting with partners as necessary. to some partners, being summoned to a meeting with the managing partner is a feared event to be avoided at all costs. but arguably, the most effective partner accountability measure is a session with the managing partner to adjust attitude and performance. it’s the best method of getting accountability in any walk of life ever invented!
- compensation. as discussed earlier, partner compensation is probably the most common way that firms try to achieve partner accountability, but it is not the most effective way. some ill-advised firms reason that:
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- if partners perform well, they will be rewarded with higher compensation. message sent. no discussion necessary.
- if partners don’t perform well, they can expect lower compensation. message sent. no discussion necessary.
we know that compensation does have a role to play in achieving partner accountability. the key is to make it clear what is expected and then link compensation to the degree to which those expectations are met.
- partners adhering to the firm’s vision and strategy at all times. with strategic planning, vision and strategy:
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- priorities are defined. first things are done first.
- the firm becomes proactive rather than reactive.
- everyone pulls in the same direction, united in their adherence to the firm’s game plan.
this method of partner accountability is an advanced technique. firms over $15-$20 million in annual revenue make the greatest use of it. why? because most smaller firms have no written, coherent strategic plan, or if they do have one, nothing gets accomplished because of a lack of leadership and partner accountability.
point #1: partners need to do what the firm needs them to do.
point #2: how can partners be expected to do what the firm needs from them if they don’t know what that is?
- living and breathing the firm’s core values. if creating a firm vision and strategy is advanced management for small and midsized cpa firms, creating core values is at the ph.d. level.
core values are:
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- attitudes and beliefs that define a firm’s culture
- words that truly influence a firm’s behavior
- the soul of a firm: what it stands for, what it holds dear
borrowing from the famous line by supreme court justice potter stewart in 1964 when defining pornography: core values are hard to define, but you know them when you see them.
many firms create a set of core values that mean nothing. why? because the partners regularly transgress these values without consequence. for example: if a core value is “be on time,” yet one partner consistently comes late to all firm meetings, without consequences, then other partners will reason, “if he comes late, so can i.” if firms are serious about creating and embracing core values, then they need to hold partners accountable for living and breathing them.
- peer pressure. it should be a sin for partners to be neutral on important firm issues. if partners see conduct by fellow partners that is harmful to the firm, they need to speak up.
- partner goal setting. very simple: all partners should have written smart goals. they should be held accountable for achieving those goals in these ways:
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- the managing partner or a pic monitors partner progress on smart goals occasionally throughout the year.
- the managing partner or a pic meets with partners who are struggling to achieve their goals and tries to help the partners get on track.
- partners’ compensation is affected by the extent to which they achieve their goals.
- partner evaluations. when a partner’s performance is disappointing, many firms sweep the problem under the carpet. but that only creates lumps. problems with partner behavior and performance need to be addressed in performance evaluations, loud and clear.
- client satisfaction and loyalty surveys and upward evaluations of the partners by the staff. is there anything more important than client and staff satisfaction? most firms consider these achievements non-negotiable. we’ve all heard the axiom: “you can’t manage what you don’t measure.” fortunately, these areas can be measured easily with surveys.
- clarifying the roles and expectations of each partner. as with goal setting, partners must be held accountable for fulfilling their role in the firm, whatever it may be. many firms make the mistake of assuming that every partner knows his or her role in the firm. the sad truth is that many partners do not.
- the door. years ago, i was called by one of the cpa industry’s leading publications. the theme of an upcoming issue was firms firing partners, and they wanted me to write the lead article. i immediately broke into uproarious laughter. the editor asked me what was so funny. i said, “cpa firms hardly ever fire partners. i’m not sure i can help you.”
firing a partner is clearly the most severe partner accountability measure of all. it’s generally resorted to only when:
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- a partner’s performance is so appalling and harmful to the firm’s clients, staff, profitability, quality, reputation and morale that the person’s continued presence in the firm is a cancer that needs to be excised.
- all attempts to address the issue(s) with the partner have failed.
- a final note on the door: make sure your partner agreement lists offenses that are enforceable grounds for termination.