Partner Evaluations: If Nothing Ever Changes, What’s The Point?

By Sam Allred

Let’s be honest: we’ve had it awfully good for a long, long time.

Fueled by a strong economy, most firms grew faster and were more profitable during the 1990s and most of this decade than ever before. Unfortunately, the robust economy also fueled a number of partner performance issues: poor accountability, the willingness to remain in comfort zones, and a tendency to be reactive rather than proactive – to name just a few.

And then 2008-2009 happened.

Partner performance problems, long waiting quietly in the wings, quickly captured the attention of firm leaders and have now taken center stage in many firms across the nation. Sadly, few firms have the mechanism – a meaningful partner evaluation system – in place to adequately address performance issues. Far too many are still evaluating partner performance in a perfunctory way that gives little or no honest, helpful feedback and sends the message that all is well when often it isn’t.

So what constitutes a meaningful partner evaluation system? At the most basic level, a solid program for evaluating partner performance must accomplish two things. First, it has to get the attention of the individual whose performance is being evaluated. And second, it must motivate and be a tool for change. A poor system does neither of these things. Worse yet, such a system may erroneously communicate to the partner that everything is just fine, or it may tell the individual that change is needed but provide no meaningful direction for that change. Little good will come from either of these outcomes.

Great things can result from partner evaluations if the process possesses these characteristics:

High performance firms are the direct result of high performing partners. The goal of the process, therefore, should be to ensure that each partner is a high performing leader. To be a high performing leader, an individual must excel in four of the following six key performance areas and be good in the other two: financial performance, client management, business development, team development, personal effectiveness, and leadership.

There should be multiple evaluators for each partner. To help ensure consistency and avoid inflated or deflated scoring, at least one of the evaluators should be the managing partner or another key firm leader. It’s vital that the evaluators meet together to complete the evaluation. This will ensure the necessary comments that will help each evaluated partner know what to do to improve his or her performance.

Clear standards must exist that define each rating. If, for example, your firm uses “World Class” as a potential rating, you need to be able to very clearly identify what being “World Class” means.

A number range should be attached to each descriptive rating. The numerical ratings of the evaluators should be averaged to produce a single score for each performance area, and a threshold total should be set for those who wish to remain equity partners.

In each area of performance, evaluators must clearly articulate the partner’s strengths and weaknesses. The evaluation should also describe how the partner can better play to his/her strengths and identify corrective actions that need to be taken to mitigate weaknesses.

The evaluation must be linked to each individual’s agreed-upon goals.

The past 18 months have been a bumpy ride for many people, and the toll in human suffering has been considerable. However, challenging economic times can serve as the catalyst firm leaders need to make important course corrections in many areas, including partner evaluations. In that light, improved economic conditions – such as many analysts are now predicting for 2010 – could be one of the worst things to happen to us as a profession. My advice to firm leaders is very simple: act now to do what, in most cases, should have been done long ago.

Copyright© Sam Allred, Founder & Director of Upstream Academy. Sam was selected as one of the Most Recommended Consultants by INSIDE Public Accounting annual survey and analysis of firms. You may contact Sam at: (406) 495-1850; sama@upstreamacademy.com; www.upstreamacademy.com; P. O. Box 1147 – 828 Great Northern Blvd., Helena, Montana 59624.