cpa leadership institute december, 2011. august is the ceo of aquila global advisors, llc which...
TRANSCRIPT
CPA LEADERSHIP INSTITUTEDECEMBER , 2011
•August is the CEO of AQUILA Global Advisors, LLC which specializes in succession planning, mergers and acquisitions, compensation plans and transformational strategic planning
•Selected as one of the “Top 100 Most Influential People” in the Accounting Profession by Accounting Today in 2004, 2007, 2009 - 2011
•AAM Hall of Fame member, founding AAM Board Member
•First marketing director to become a partner in Top 100 Firm (1985)
•Former partner in top 100 firm – Friedman, Eisenstein, Raemer & Schwartz (FERS)
•Former executive with American Express Tax & Business Services, Inc
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How many partners are in your firm?( ) 2 to 5( ) 6 to 10( ) 11to 20( ) 21 or more
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Introduction – What is accountability and why is accountability important
Seven organizational building blocks
What does trust have to do with it?
Do your firm leaders have what it takes?
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Part I
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Culture is a system of beliefs about the behavior that is appropriate to attain goals
Culture is the “way we do things around here”
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Accountability, according to the Merriam-Webster dictionary, is “the obligation or responsibility to accept responsibility or to account for one’s actions
An obligation is a promise to do something
It’s personal
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Changing Environment
◦ No growth economy
◦ Fee pressure on audits
◦ Pressure to produce results for clients
◦ Clients demanding more
◦ Profit squeeze
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Common Errors
◦ Make it into a checklist
◦ Create a list of obligations
◦ Capture more production information
◦ Tinker with isolated compensation elements
◦ Lack a clear framework
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Must permeate the culture of the organization
Becomes a way of life It affects the way the firm:
◦ Governs and manages itself◦ Creates its policies and systems◦ Allocates and accounts for resources ◦ Engages owners and employees
Must come from firm leaders!
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How would you define the level of accountability in your firm today?( ) We have no accountability( ) We have some accountability( ) We have accountability( ) We have a strong culture of accountability
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What is not working?
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Do itSolve it
Own itSee it
Versus
Ignore itNot my job
Finger pointingTell me what to do
Cover your tailWait &
seeSource: The Oz Principle
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Part 2
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Seven Building Blocks
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Think of a person you trust?◦ Why do you trust them?
Think of a person that trusts you◦ Why do they trust you?
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According to Steven M. R. Covey “trust means confidence”*
◦ Confidence in the individual’s: Character - Integrity and Intent
Competence - Capabilities and Results
Trust is a function of character and competence
◦ Both are observable
*The Speed of Trust (Free Press, 2008),
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Personal Trust – our own confidence in our ability to set and achieve goals, to inspire trust in others
Four Trust Elements:
◦ Integrity
◦ Intent
◦ Capabilities
◦ Results
Source: Speed of Trust Steven M. R. Covey
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Trust consists of : Character
◦ Integrity◦ Motives and Intent
* Source: The Speed of Trust, Stephen M.R. Covey
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Integrity –◦ I am honest with my interactions with others◦ What I say and do is what I think and feel
Intent – ◦ I am aware of my motives◦ I make sure I do the right things for the right
reasons
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Trust consists of :
Competence◦Capabilities and Skills◦Results and Track Record
* Source: The Speed of Trust, Stephen M.R. Covey
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Capabilities – ◦ I upgrade and increase my knowledge and skills◦ There is a high match between my talents and the
work I’m doing
Results – ◦ I have a good track record◦ I often finish what I start
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Low Character High
Competence
High
Micromanagement Unhappy employees “Cover your a@#” behavior Wasting time defending decisions Hidden agendas Little collaboration A lot of bureaucratic rules Systems and structures not aligned
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Low trust organization◦ More meetings◦ More time to get things
done◦ More hallway
conversations◦ More closed door
meetings Higher cost to the
firm
High trust organization◦ Fewer meetings◦ Shorter meetings◦ Less time to accomplish
projects◦ Fewer or no hallway
conversations or closed door meetings
Higher profits for firm
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What is the level of trust among your partners?
( ) There is no trust( ) We have some trust( ) We have trust( ) We have a high degree of trust
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No one else wanted the job
Thinks in terms of two separate roles
◦ Producer/client server
◦ Strategic leader
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Best Practices◦ Set direction
Provide a compelling direction Know where the firm is and what is possible Focus partners’ attention and actions around key
priorities◦ Gain commitment to direction
Take the partners with them Motivate, empower and trust their partners Balance being a business and a profession
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Best Practices◦ Execute
Initiate activities that drive and support the strategy Appoint people who get things done Help clients and firm’s people exceed their
expectations◦ Set personal example
Seek opinions but know when to act Take the tough people decisions Ask for help when they need it
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Firm members need to have shared vision, goals and values
The more tightly aligned your firm is, the
better your performance will be
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Partners and staff aren’t sure what it is
Does not motivate partners and staff
What do the partners want the firm to become?
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Do we have a clear, compelling and realistic mission and vision?
Are our decisions based on achieving our mission and vision?
Do we ensure that we have the right capacity (human, financial, infrastructure) to effectively implement new services and activities?
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Do we a shared vision for what we want the firm to become?
Have each of our partners bought into what they have clearly and specifically promised to achieve?
Are all owners and staff members recognized and held responsible for achieving what they said they would accomplish?
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How would you explain the way we do things around here?
What are our standards for behavior? Are we a group of Lone Rangers or a team? What shared goals do we have? What shared values do we have? How aligned are we as a group? What behaviors do we accept that are harmful to
the firm’s success? What behaviors do we exhibit that are important
to the firm’s success?
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Best Practices
◦ No involvement no commitment
◦ Commitment flows from trust
◦ Alignment between what leaders say and do
◦ Connecting with your professionals on a personal
and emotional basis
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The Core Values are much more than minimum standards. They remind us what it takes to get the mission done. They inspire us to do our very best at all times. They are the common bond among all comrades in arms, and they are the glue that unifies the force and ties us to the great warriors and public servants of the past.
Integrity first, Service before self, and Excellence in all we do. These are the Air Force Core Values. Study them . . . understand them . . . follow them . . . and encourage others to do the same.
Source: The Little Blue Book, US Air Force
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Are we driven by a set of core values?
Will we turn down work if we would have to break or bend a core value?
Do we annually evaluate owners and staff on living the core values?
Is compensation tied to living the core values?
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Best Practices – Do you◦ Identify your core values?◦ Define your core values?◦ Describe specific behaviors?◦ 360 degree evaluations?◦ Tie to compensation or bonus?◦ Reward those who live the values?◦ Remove those who do not?
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Do your partners have what it takes? Partner Key Competence
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Personal Production
Marketing Business
Development Business
Management
People Development
Firm Leadership Client Service Technical/Niche
Expertise
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Production◦ A/R collection◦ WIP management◦ Dollars collected
Business Development $$◦ From existing clients◦ From new clients◦ For self◦ For others
Productive Time◦ Firm/niche leader◦ Training◦ Building systems◦ Recruiting
Value Creation◦ Engagement
profitability◦ Reputation
enhancement◦ Marketing activities
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◦ Most partners must be working partners
◦ Partners need to generate business
◦ Non billable time needs to be productive time
◦ Partners look for ways to enhance firm’s
profitability
◦ Partners do things that enhance firm’s reputation
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Deliver Results vs. Deliver Activities
Get Better vs. Deteriorate
Confront Reality vs. Bury Head in Sand
Clarify Expectations vs. Create Vague Expectations
Practice Accountability vs. Don’t Take Responsibility
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Knowledge workers want to make contributions
Your people want to know how they contribute to the firm’s success
Leading causes of work complexity and inefficiencies:◦ Unclear goals and objectives◦ Lack of alignment of goal
Alignment provides a line of sight for all employees back to the lofty goals in the strategic plan
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Develop individual partner plans that ◦ maximizes their unique strengths ◦ identifies their weaknesses◦ articulates their role in their department or line
of service Plans should be explicit as to:
◦ what you expect the partner to do during the current year
◦ the career trajectory over the next 3 years◦ what they need to demonstrate to move on to the
next level
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All partners are not equal
Design a partner growth path
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LEVEL Production Expertise Client Service
Leadership Business Development
LEVEL 4
Book >$1.5M
Firm Guru Holds firm leadership position
>$150,000 annually
LEVEL 3
Book at least $1M
Has area of expertise
Cross Sells Team Leader
$100,000 to $150,000
LEVEL 2
Book$600k to $999k
Develops strong client relationships
Serves as mentor
$75,000 to $100,000
LEVEL 1
Minimum 1100 billable hours
Strong Technician
Attains gross profit margins
Trains & develops staff on the job
<$75,000
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Level Production Expertise Client Service Builds the Team
Business Development
Compensation
Level 4
Major Book
Industryexpert
Holds firm leadership position
ChiefRainmaker
$320,000 to$600,000
Level 3
Book at least $2M
Has area of expertise
Practice leader Rainmaker and Cross Sells
$275,000 to $340,000
Level 2
Book>$1.5
Developsexpertise
Develops strong client relationships
Trains & develops staff
Industry Team Leader
$200,000 to$290,000
Level 1
1200 billable hours
Strong technician
Attains gross profit margins
Community Involvement
$160,000 to $220,000
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Pay for Performance
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Entitlement vs. Performance Continuum
Weak performance management process
What is rewarded in your firm?
Is compensation aligned to the strategic
plan?
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Do we regularly and rigorously evaluate the right measures?
Do we take prompt and corrective action in response to the performance information?
Do we reduce barriers to higher levels of performance?
Do we generate new and better ways of doing things and approach challenges creatively?
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Pay-for-performance is frequently referred to as merit or incentive pay
Pay-for-performance is compensating an individual beyond their base pay or salary for accomplishing specific, agreed-upon measures of performance rather only for time worked, seniority and/or ownership
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Is the compensation system fair? Is the compensation system fairly
applied? Have you involved those most
affected by the plan? Does everyone understand how it
works? Does it promote the most
profitable work for the firm? Does it create a one-firm concept,
rather than silos? Does it encourage the owners to
live the firm’s core values? Does it encourage everyone to do
what’s best for the clients?
Does it substantially reward performers over nonperformers?
Does it reward for current production as well as building future capacity?
Is the compensation system tied to the firm’s strategic goals?
Does the system usually provide for predictability in total compensation year over year?
Is the system modified from time to time based on the changing needs of the firm?
Will the system keep the firm alive after the retirement of the senior owners?
Does it drive the desired behaviors?
Is there some flexibility to reward exceptional performance?
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What factors are currently measured?
How are these factors weighted?
Which of these factors drive desired behavior(s)?
Do all owners complete a self-evaluation form at the end of the year? If so, is the self-evaluation form shared with each of the other owners?
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Do you provide owners with a base salary and then allocate profits based on specific criteria, other than equity/points
On average, what percentage of an owner’s compensation comes from his/her base salary? From a bonus pool? From other source(s)?
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Rewards for current production as well as capacity building activities
Rewards for individual and team goals
Rewards for value enhancement
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Too complex Creates wrong
behavior Employees focus
only on individual goals
Firm unwilling to commit to training
Firm gives only lip service to core values and competencies
Unable to track data
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Motivates owners (or staff) to peak performance
Rewards results first and efforts second Modifies behavior in support of firm values Separates top performers from average
performers Helps non-performers move to different
roles (or a different firm) Assists with recruitment, retention and
succession
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What percentage of your total partner compensation is paid as a bonus:
( ) None( ) 5 to 10%( ) 11 – 20%( ) 21 – 30%( ) More than 30%
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Lack of trust in the organization
Partners are afraid to embrace real change
Leaders are afraid to commit to change
Barriers to change◦ Lack of urgency◦ Financial◦ Resources
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Create a sense of urgency Pull together the guiding team Develop the change, vision and strategy Communicate vision to all to create a
supportive organization Produce short term wins Empower others to act Don’t let up or fall back to old ways
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An environment with more:
◦ Trust
◦ Communication
◦ Empowerment
◦ Buy-in
◦ Motivation
◦ Accountability
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To achieve accountability:◦ Create a motivating firm vision
◦ Align owner and staff goals with strategic plan
◦ Identify minimum partner competencies
◦ Develop clearly defined partner career paths
◦ Create a pay for performance system
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1. How do you make a difference to our firm?
2. What new ideas are you working on?
3. When did you last get coaching from your
mentor?
4. When did you last give coaching to your
mentee or a staff person?
5. How have you increased the firm’s value
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What did I forget to say?
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