assessing your firm

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now that we have completed an assessment of your leadership team and your leadership, the third leg is assessing the overall performance of the firm. this assessment, coupled with the assessment of the leadership team and your leadership, provides a strong foundation upon which to build the roadmap (strategies) for moving the firm from where it is today to a standout, high-performing firm. the underlying objective for this assessment of the firm is to have a factual basis for establishing a myth-free and accurate baseline of the firm by analyzing a number of key characteristics.

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what are the major areas of focus for the firm assessment? in center-led firms, the assessment of how well the firm is doing is generally focused around financial metrics. how much profit did we make? what was our growth? what was the change in average partner compensation? what profit percentage to revenue did we achieve?

these are all good metrics for firms to evaluate and understand the results. however, in edge-led firms, the edge leader expands beyond the financial assessment to include more impactful measures.

“the achievements of an organization are the result of the combined effort of each individual.” – vince lombardi

as stated before, edge leaders see financial performance as a result and not a cause. below are the seven key filters (characteristics) that should be used in the assessment of the firm’s performance.
each filter is explained below with various questions that should form the basis of the assessment. based on your firm, the questions might be different.

culture – vision, mission and core values – is the firm’s performance successfully reflecting the vision, mission and core values of the firm as well as the long-term objectives defined by leadership and shared by everyone in the firm?
strategic – are the strategies that are the backbone of the firm’s strategic plan delivering on the intended results, and are all layers of the firm supporting and driving the execution of each strategy?
talent – how talented and skilled are the individuals in the firm? does every team member work as a team member to advance the success of the team and the firm? does the entire team reflect the values and culture of the firm? does every member of the team, client-facing or internal, understand and focus on the client and delivering value every single day to their team, to the firm and to the client? how effective are the recruiting and retention processes?
client service delivery – is client service delivery optimized, value-based and focused on the needs of the client (current and future), resulting in strong client retention, high net promoter score (nps) and strong cross-selling of services? does the firm receive referrals from clients at a level it should?
business development/marketing – how effective are the business development and marketing models in terms of generating new client opportunities, and how good are the firm’s sales process and win percentage? is the firm’s brand recognition where it needs to be? is the firm seen as supportive of its broader community responsibilities? are all partners involved at an appropriate level?
financial – are the firm’s financial results across all key metrics at or above projections and within the range of the top-performing firms? what were the drivers of success or shortcomings?
organization – how effectively are the systems, processes, and policies operating? are the firm’s financial, practice management, it, operational and hr reporting comprehensive, timely, accurate and reflective of what all layers of the firm need to make effective decisions?

although the above seven filters are what i recommend, there are a few things to consider. first, the point values assigned to each (see scoring model below) should reflect the relative importance of each filter to the overall performance of the firm. in the above example, culture is the most critical followed by strategy execution, talent, etc. the specific filters and the target point value should be established by the leadership team at the beginning of the year. secondly, although i did not compute a weighted average score in the graphic below, a weighted average score might be more beneficial again depending on the firm’s specific facts and circumstances.

the leadership team needs to drive this assessment with objectivity and with a process that is unbiased and myth-free. to create this objectivity, i highly recommend that the firm retain an experienced consultant to perform the assessment and report findings to the leadership team. it is difficult to perform this assessment internally, because there are too many myths, perceptions and assumptions that would creep in, making the assessment more subjective than it should be, and therefore creating a false baseline. with a false baseline, the future roadmap will be flawed, and the long-term strategic objectives never fully realized.

i suggest that a scoring model similar to the one below be utilized to provide an assessment score that you can then evaluate against a maximum target score to see how the firm is operating against its target. the model i recommend is based on a target score of 85, broken down as follows:

culture – 25
strategy execution – 20
talent management – 15
client service – 9
business development and marketing – 8
client service – 15
financial performance – 5
organizational effectiveness – 3

the scores assigned should be based on the firm’s facts and circumstances weighing each based on its relative importance.

firm leadership should evaluate each recommendation provided through the assessment, approve where appropriate and ensure that each agreed-upon change is supported by a project plan to drive implementation.

how does the firm assessment become actionable? the assessments (leadership team, your leadership, the firm) should drive an annual update to the firm’s long-term strategic plan. to ensure that the changes are understood and supported throughout the firm, the edge leader should communicate the results of the assessments (through a town hall meeting or series of meetings), what changes are going to be made and the purpose, so that everyone understands why the change is being implemented, which will inspire everyone’s cooperation.

“i need all partners and staff to understand where the firm stands.” – steve feron, leader of johnson o’connor

let’s take a little deeper look into each of the seven filters and how they drive standout performance. as stated above, the firm should retain a consultant to lead the assessment process working with internal leaders as defined below.

1. culture – vision, mission and core values – this is an assessment of the most critical filter in terms of achieving the objective of becoming a standout, high-performing firm.

“what really drives culture is values and it is about ensuring that everyone in the firm understands what we care about, our mission, vision and values.” – kevin o’connell, leader of mgo

a major component of this assessment filter is how well culture is understood and reflected in what the firm does at every level. another component relates to the trio of vision, mission and core values – are these just words on a piece of paper or are they the sun to our earth, giving life and energy to every action that every person takes every day? the culture assessment should be performed by the leadership team utilizing a combination of surveys, interviews of staff/partners and interviews outside the firm with some key constituents.

“creating and living our culture starts with hiring the right people.” – robert minkler jr, leader of anders cpas

“culture starts at the top, what is the tone that the senior leaders of the firm push down to partners who then push down to staff. culture affects firm performance through the performance of our people.” – bill davidson, leader of davidson & co.

2. strategic – this filter is one that the edge leader needs to assess. is the firm delivering on its strategic plan and is the execution successful and timely? are the strategies contributing to the ultimate objective of becoming a standout, high-performing firm? if not, the edge leader needs to communicate the assessment and its impact as well as what changes will be implemented to address any identified challenges. the strategic plan is not meant to be a static document but one that evolves with time and experience and is always focused on the ultimate vision of becoming that standout, high-performing firm.

3. talent – the assessment surrounding talent evaluates all aspect of talent throughout the firm, both client-facing and internal. this assessment is to evaluate the technical skills, attitude, team skills, client-facing skills (internal clients as well as firm clients) and how well the talent pool aligns with what is needed to drive the firm’s strategic plan. this assessment should also cover recruiting and retention to determine how effective hr is at ensuring that the talent the firm needs is available. this assessment should be done by the head of hr working with practice leaders.

4. client service – this filter includes everything related to how the firm services its clients. this assessment should be done using a few different steps. first, each practice leader should submit a report regarding how the practice area performed, addressing key areas of client service. second, and very critical, is to get feedback from clients through a survey based on net promoter score, which assesses how likely the firm’s clients are to refer the firm to another business. an nps of less than 8 out of 10 points to some issues. third, the firm leader or members of the leadership team should have one-on-one discussions with the firm’s top x clients to talk about how well the firm did against what the client expected; where the firm added value and could have added value; where the firm could have performed better; and where the firm fell short in the eyes of the client. finally, client churn rate should be examined to determine if the firm is losing too many clients and if so, why. this assessment should be completed by the firm’s leadership team.

5. business development and marketing – this filter addresses how well the firm’s business development and marketing processes are doing, and should be measured against simple kpis: (1) new clients won and their revenue potential; (2) the revenue value of cross-selling; (3) health of the firm’s pipeline; (4) overall partner effectiveness as it relates to business development and marketing; (5) the firm’s overall name recognition; (6) the number of quality new client opportunities that were generated; and (7) how many referrals were client-generated. this assessment should be completed by the firm’s cmo or whoever is responsible for marketing and business development.

6. financial – financial includes the overall financial performance of the firm when measured against all key kpis, budget to actual results, cash management, business development, ar/wip management, etc. this is a fairly objective assessment that the cfo should prepare, coupled with detailed analysis where the firm’s actual financial performance differed from targeted performance, why and steps that need to be taken to improve.

7. organization – organization includes every process, policy, system, it platform, finance, financial and operational reporting, marketing (i.e., website, social media, branding), hr (including recruiting and retention) – all things internal to the firm other than client service delivery. the assessment of the organization is to evaluate how well each aspect of the organization is operating to support the firm’s strategic and operational plans. the input to this assessment should be the completion of an evaluation by each department manager reflecting their view of how their department operated against its annual objectives, along with recommendations as to steps they will take in the new year to improve their department’s effectiveness. if there is a concern that the department manager will be less than objective, the outside consultant can perform the assessment. the key is to make sure the assessment is comprehensive, objective and truthful

putting it all together, a hypothetical assessment might look like this.

with an overall assessment score of 58 percent, the firm has work to do to get to the level of a standout, top-performing firm. one last point is that as this assessment is completed as part of the annual year end performance evaluation of the firm, as mentioned above, the weighting may change to reflect a different focus based on a firm’s specific results. for example, if the firm scored poorly on the financial assessment but well on the talent assessment, the weight assigned to financial assessment for the new year might be higher than the weight assigned to talent. finally, you may want to use a weighted average instead of a simple average although for the purposes of evaluating how the firm performed, i think a simple average suffices.

posted on may 2, 2021

anthony zecca

about the author

anthony zecca is a veteran cpa and management consultant who focuses on growth strategies and leadership.

he is the author of
leading from the edge – the strategic growth handbook with bonus toolkit
published by 卡塔尔世界杯常规比赛时间.

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zecca’s understanding of leadership was honed both by his career as a partner in a cpa firm as well as his work as a consultant with hundreds of leaders across numerous industries.

“leading from the edge” reflects zecca’s belief in what makes a successful leader and challenges every leader, in any capacity, to have the courage to step out of what he calls “center leadership” to become an impactful edge leader who can move their organization to the level of a standout, high-performance firm.

zecca’s career began at j. h. cohn & company – a small $5 million dollar firm in new jersey where his first exposure to leadership was gained. zecca earned his cpa credentials early in his career and was promoted to partner in 12 years.

his successful career as an audit partner provided him with the opportunity to work with a number of large clients of the firm.

zecca’s interest in how businesses worked, what made good ones good and bad ones bad, resulted in a career move from audit to management consulting. as a partner in the small consulting team at j. h. cohn, he led a number of consulting projects for small to middle-market companies.

he used his work with ceos of these companies as a “leadership laboratory” where he took the time to probe and observe so many different leaders and began to develop a deep understanding of what made great leaders great and their impact on how their companies performed. zecca served on the management committee of the firm and was part of the leadership team at j. h. cohn as the firm grew from a small firm to a $250-milion dollar firm and one of the top 20 firms among the top 100 firms.

he became the managing partner of the consulting division of the firm in 2001 when consulting revenue was less than $2 million with a team of five.

when he retired from the firm at the end of 2015, the consulting division had revenue of about $70 million with 24 partners and close to 300 staff. half of that growth was from the firm merger with reznick in 2013.

over his career, he consulted for hundreds of organizations, interacting with leaders in family companies as well as publicly traded and large not-for-profit organizations.

it’s through his long career working with leaders and being active in the leadership of his firm that his concepts regarding leadership were developed and shared in this second book. zecca was co-author of “the performance power grid,” first published, by wiley, in 2000, focusing on “business intelligence,” making it one of the first on the topic.

anthony has presented at conferences and client company retreats numerous times on strategy, growth, and leadership. he has written numerous articles on these subjects and is recognized for his excellent presentation and facilitation skill.

he has been involved in various charitable organizations including being one of the founding members of the medhen orphan relief effort which is an organization that supplies financial support to an orphanage in ethiopia.

in addition, he has been on various boards including his hometown board of education where he was elected president for 8 of the 12 years he served. most recently his consulting work has been with a number of accounting firms as well as other professional service firms providing high-value advice on strategy, leadership, and growth.

click here for more by anthony zecca