By August Aquila
Sometimes partners find themselves on the proverbial partner wheel (similar to a hamster wheel), where they are doing a lot of spinning but not moving anywhere. They work and work but can't seem to get certain important things done. They find themselves working “in” the business instead of “on” the business, and can't seem to break the cycle.
We know that a strong focus on both overseeing and completing client work is important. It is the foundation for any successful firm. Unfortunately, being focused just on clients is not sufficient today. A lack of focus on leading the firm (personnel, strategy, technology, succession and business development), developing a strategic plan, and effectively marketing firm services can have devastating short- and long-term effects. The smaller the firm, the more difficult it is for partners to balance working “in” versus working “on” the firm.
Let's look at some of the symptoms:
1. The wheel is turning but you are not breaking out of the issues. For example, your leadership team has been talking about launching new initiatives around succession planning. They form a committee to look into the issue. A year passes and the committee has not accomplished much. This also goes for other initiatives. You even start to wonder if you should stop trying, since nothing is getting accomplished anyway.
2. Partners doing more work than managers. We found this occurring more often during the last year than ever before. One reason could be the economy, with partners, especially in smaller firms, digging in to keep control of their clients and holding on to what they perceive as a security blanket. Unfortunately, when partners exhibit such behaviors it takes them out of the real game of building the practice and providing outstanding client service.
Remember that an hour of billable time is only worth what your billing rate is, provided that you are able to collect 100 percent. If your billing rate is $300 per hour and you work on a project for 10 hours and bill the client for the time, you would obviously end up billing $3,000 for your time. On the other hand, you could delegate the 10 hours and focus 10 hours of your time on something involving building the firm – say, business development. If you were to have 10 meetings and eventually close two of them with billings of a modest $5,000 per year and you keep your clients an average of 10 years, then your 10 hours of time devoted to practice development could end up benefiting you $100,000 over a 10-year period. This is a small example of how investing your time wisely can produce great profits.
3. Partners doing more lower-level work than they should. This is very similar to the above barrier. We have found that partners do lower-level work in order to accumulate billable time. The excuse here is: “I'm busy, so leave me alone.” Being busy and being productive are completely different. Partners doing more lower-level work than they should be are not operating at their highest value contribution. This, in turn, creates a situation where higher-level activities like staff training and mentoring are left undone. When these needs go unmet, the growth of the staff is minimal and the cycle repeats itself because partners are still forced to do lower-level work.
4. Several partners and team members are frustrated with the lack of accountability and the overall complacency in the firm. People are noticing the lack of follow-through and compliance with firm rules. This typically occurs because partners' activities are not aligned with the firm's strategic initiatives, and hence the partners are involved with so many projects that they don't know which ones to focus on. It also happens when partners have not bought into the strategic initiatives and work that should be done to get everyone on the same page.
5. There is a lack of partner goals. A recent survey conducted by August Aquila and Coral Rice showed that 85 percent of the 400 firms responding did not have written goals for their partners. This lack of knowing what is expected of each partner is the No. 1 cause for poor performance. Hence, it is important that each partner not only be involved in setting the goals, but also that they agree to the final goals. The same should hold for managers in the firm. Goal-setting needs to become a part of the firm's established culture – it's a way of doing things.
6. There is a lack of an effective performance management system. Partners often tell us about their year-end evaluation process, and many think that it is ineffective. Ask most employees and they will tell you that year-end feedback is not enough for them. People thrive when clear goals are set and then monitored throughout the year. This enables behavior to change as needed along the way.
Regular feedback is a critical component in an effective performance management system. The installation of a performance management system for a firm can reverse the trend of a declining firm in a matter of months and further enhance a thriving practice as well. But it takes will power and a real commitment to do things differently.
WHAT YOU CAN DO ABOUT IT
1. Create a vision for the future with the involvement of the partners and next-tier leaders. When organizations involve the leadership in creating the vision for the future, the leadership will be intrinsically motivated to help the organization achieve the goals. They will be passionate about achieving the vision and more likely to change behaviors along the way. They will also be more amenable to being held accountable and supporting the firm goals.
2. Set partner goals. This should be one of the first things you want to implement. Don't ask the staff to do it until you get the partners setting the example. No one should have more than three or four goals to complete. These are all goals that are aligned with the firm's strategic plan.
3. Create expectations for every level as it relates to technical level of work, leadership and supervision, and results. Have clearly articulated targets. For example, if Partner A is responsible for training, how will you know if they are successful in their training efforts? Measure it. One way would be to give a test after the training and expect 85 percent of the participants to pass with a score of 80 or higher.
4. Tie compensation to performance. If your partner compensation is not tied to performance, one of the best ways to remove this barrier is to simply tie a larger and larger portion of partner compensation to specific performance goals. According to research that we have done, the majority of firms do not have written goals for their partners. It is true that many of the Top 100 Firms have such goals, but once you get below them, it becomes less and less common.
5. Implement a true performance management system. A good performance management system gets partners and staff engaged in the practice and generates increased profits. Look at the current performance management tools you have. Do you have clear job descriptions with expectations? What training are you providing to the individuals who are conducting the performance reviews? This is a critical element in the success of the program. They will need communication training, coaching skills, and the ability to assess performance.
6. Make accountability a non-negotiable behavior. Allow no one to “opt out.” Firms can accomplish this by assessing individual progress and reporting results. It's like a sports game – you have a scoreboard (or dashboard) on which others can see how the firm is progressing. Allow no one to “opt out” of the expected behaviors. The firms that allow this undermine their progress.
Now is the time to take a look at your situation, whether you perceive it as a lack of accountability or Complacency Syndrome. Continue to build a firm that the team will be proud of every year. Help steer your firm's efforts so that progress is occurring at the rate you desire.
August Aquila is a consultant, speaker and author who specializes in compensation design work, succession planning, M&A, and partnership issues. Reach him at [email protected]. Angie Grissom is executive vice president and chief operating officer of Five Star 3 LLC, and specializes in business development, marketing and strategic planning for accounting firms. Reach her at [email protected]