Summer flew by. Fall was so busy with extended returns. Now it is November.
Fall is prime time for your competitors to approach your valuable clients about switching accounting firms. Hopefully, you are also doing the same. Year-end is approaching and it is the time of year when clients are most likely to make the move to another firm.
How many times have you touched base with your best clients throughout summer and fall? Have you sent them articles relating to their industry? Have you helped educate them about the new tax bill? Have you scheduled their year-end tax planning appointment?
Now is the time to give them a call. Even better, drop by their place of business just to see how they are doing. Every conversation with a current client usually leads to opportunities to provide additional services.
“Steady as she goes” is something you might have heard growing up. We don’t hear the term used much any longer. Steady as she goes is an order for a helmsman to keep a ship’s current course.
I think it also applies to CPA firm leadership. During my many years inside a CPA firm and consulting with many other CPA firms, I have seen many interesting styles of leadership from managing partners.
Some managing partners are dictators, benevolent dictators, collaborators, delegators, know-it-alls, consensus builders, and even radicals. Some are very strong and some are wimps.
When it is time to appoint a new managing partner, beware of inconsistency and go with steady and dependable. I remember one firm that had a choice of two partners to take the role of managing partner as the current managing partner moved into retirement.
One was a great rainmaker, very involved in the community and great at client service. He was always quick to take action; however, he could be described as hot and cold. You never knew which personality you would be dealing with on any given day.
The other candidate had similar positive characteristics but he was steady, consistent and dependable. He was always easy to talk to and sought out feedback from everyone in the firm. He was confident but careful. He demonstrated the same demeanor day in and day out.
I guess you know which one was selected to be the firm’s next managing partner.
I don’t know how to put this in a softer way but, way too many CPA partners think they know it all.
I don’t mean to be harsh or disrespectful. Experienced CPA partners do know a lot. They have spent years developing their technical skills. Many have become true experts in a specific niche or discipline. Often, they discount their vast knowledge by not charging fees that are appropriate for their exceptional expertise.
However, when you mention Emotional Intelligence (EQ), they are in the dark. In working with many partner groups over the years, I have found that usually, but not always, the managing partner demonstrates more traits of EQ than the other partners. That is probably why the managing partner was elected managing partner.
Emotional Intelligence is a term created by two researchers – Peter Salavoy and John Mayer – and popularized by Daniel Goleman in his 1996 book of the same name.
Some define it as the ability to:
- Recognize, understand and manage our own emotions
- Recognize, understand and influence the emotions of others
This means being aware that emotions can drive our behavior and impact people (positively and negatively), and learning how to manage those emotions – both our own and others – especially when we are under pressure.
According to TalentSmart, 90% of top performers have high EQ. EQ is responsible for 58% of your job performance and people with high EQ make $29,000 more annually than their low EQ counterparts. Maybe it is time to provide some EQ education and training to all your staff.
I work with many CPA firms on strategic planning. Often, there is confusion about the dedication and focus it takes to carry out a strategy.
Here is a brief passage from David Maister’s book, Strategy and the Fat Smoker that helps clarify strategy.
To be different in the eyes of the marketplace, you have to be known for something in particular. It’s not enough just to be known. (That’s name awareness, which is not the same thing as being seen as differentiated). And you can’t have a reputation for being something specific if you only to it occasionally.
The very essence of having a strategy is being selective about choosing the criteria on which a firm wishes to compete, and them being creative and disciplined in designing an operation that is finely tuned to deliver those particular virtues.
If you are charged with leadership of a CPA firm or want to be in the future, read Maister’s book on strategy.
Elon Musk and Steve Jobs, via an article on Inc., both have an important message for leaders and it certainly applies to all of us working, as leaders, in the CPA profession.
“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better. I think that’s the single best piece of advice — constantly think about how you could be doing things better and questioning yourself.”
Musk believes good leaders seek feedback even if it is not what they want to hear. Negative and constructive feedback will stretch you to learn new things and consider better options.
“It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”
Some CPA partners seem to actually fear feedback from their team. Some have even shared that they really don’t care what the team thinks of them. Continually asking your team and your clients for feedback should be a habit. Just ask, “How am I doing? Is there something you need from me that you are not getting?”
As you manage your accounting practice, sometimes your attention gets diverted to things that might not be as important as others.
Of course, you worry about hiring and retention, partner performance, marketing/sales, facilities and the general reputation of the firm. Lots of time and energy are expended on short-term activities. Maybe it is time to escape the day-to-day and think about what might be good for the firm long-term. When have you really contemplated profitability and the long-term future of your firm?
Profitability is not just about partner salaries. If you are profitable, it enables you to fund future growth of the firm, attract and retain the most talented professionals, explore new services, offer the best technology to your staff and clients, and so on.
If you are not as profitable as you would like, you could simply give up and sell or merge your firm into another firm. Or, you could get larger by growing organically or by being on the acquisition side of a merger.
Many firms are merging as a way to achieve more rapid growth. It helps increase market share and, sometimes, eliminates competition. It also provides more resources to be able to produce products and services to meet the demands of a wider client base.
Keep in mind, a merger is a professional marriage and you need to know your future partner. Take time to look at a merger from all sides and be sure that both sides understand how a combined firm will operate. Involve an experienced outside facilitator. Give me a call if you want to simply discuss your specific situation.
The managing partner is faced with many challenges. It is a juggling act, trying to keep a group of partners happy and continually push them out of their comfort zone.
You are now facing major changes in the profession and it is your job to pull the wagon of change up a steep hill. You are the leader and it is your responsibility to lead. Sure, you want to be loved and respected but forcing change and being loved usually does not go hand-in-hand inside a growing firm.
Certainly, you need to listen to your partners and discuss major changes. What I often observe is that the listening to partners and discussing can go on for months and even years!
As a leader, you need to take action and force change. It might not make you the most popular partner but you were given the role of leader, so lead.
Once you have all the input from the partners and the staff, make the decision, a decision that is in the best long-term interest of the firm. Always make your decisions based on “the good of the firm.” Never let individual interests over-shadow what is best for the long-term prosperity of the firm, as a whole.
Some new ideas result in failure. Take the blame and move on to other challenges. If the new idea is a great success, give credit to all those who helped make it possible.
As managing partner, daily you are walking a tightrope. Work on your balance!
The traditional way a CPA firm finds and uses a management consultant is to ask around and find out the names of consultants that other firms are using or have used. Or, you might identify someone you have heard speak at a management conference then hire them to facilitate your partner retreat.
The firm has budgeted a certain amount for the retreat facilitation and after the retreat, the consultant moves on to other engagements and the firm often does not want to spend the money to have them do follow-up work or assist with implementation and accountability
Find a consultant that you think fits your firm, based on size, service lines, people needs, partner problems, etc. You find these people by hearing them speak but also by assessing them in relation to their writings, use of social media, and ability to keep pace with current trends in business.
Initially, they will facilitate your retreat or conduct a planning day or two with your partners or management leaders. Then they attend your monthly partner meetings or executive committee meetings (60 to 90 minutes per month via Skype or another virtual resource) to continually contribute and to hold you accountable. The firm budgets an amount for the 2-day planning session and another amount for the 12-month on-going involvement.
Result: You have a much better shot at actually getting things done, at moving your firm ahead, at recruiting and retaining top talent and developing a culture within your firm of continual change and improvement. That’s the culture the new workforce wants to experience.
Who does the hiring at your firm? In CPA firms, at least in those under fifty people, the recruiting and hiring activities are usually assigned to one particular partner.
Other partners and staff might be involved in various activities and interviews but usually one partner takes the lead. Sometimes, it is an experienced manager who leads these efforts.
I have observed that in many firms, this person has been playing a key role in recruiting for many years. They personally visit the college campus and conduct the formal interviews during the fall recruiting season. Sometimes they draft a manager or senior, who is an alumnus of that institution to accompany them and share the interviewing duties.
This leader also attends campus job fairs and “meet the firms” events. They may also be visible at accounting fraternity events and meetings. They work closely with the firm administrator in organizing many activities that are part of the recruiting efforts. Finally, they probably make the key decision in who receives an offer and who does not.
I want to suggest that you consider replacing this individual with another key person at the firm. I also think it is a good practice to only allow this recruiting leader to be in the role for no more than five years.
Why? Because people tend to hire people just like them. Of course, they do this without even realizing it. Studies have shown us that employers seek out candidates who are not only competent but also culturally similar to themselves.
You need a variety of skill-sets and personalities to build a successful firm. The most successful firms have programs in place to promote diversity within their firm. So, when it comes to a leader for your recruiting efforts – mix it up every so often.
Have you wondered how long the partnership, ownership model for public accounting firms will continue? I have. If you are at all in tune with the changing workforce, this topic must have crossed your mind.
Baby Boomer partners came of age in a different environment. If they worked long and hard they had a good chance of becoming a partner. Most did not even have to prove themselves as significant rainmakers. It was mostly about technical expertise and work ethic. You just had to prove that you were willing to work 60, 70 or more hours per week and that your work was accurate.
As business development became more and more important, many firms found that they had too many non-business getting partners and the sales aspect of the firm rested on the shoulders of a few, sometimes just one partner.
The current public accounting workforce desires a more balanced lifestyle. They question the process of becoming a partner and wonder if it is all too political. Is it all about who you know and not what you know?
All of this came to mind because of a very interesting post by Caleb Newquist on Going Concern titled, To Partner or Not to Partner, That is the Senior Manager’s Question.
Newquist explores the role of the CPA Senior Manager. Some senior managers share the fact they wonder if they really want to be a partner in a public accounting firm. They also see through the ploy of the non-equity partner, or Director, role as a mere parking lot for people who will never be a partner.
Read the article and see if any of it applies to your own firm.