Archives for September 2010

Platt’s Perspective: 25 Years And Counting

I never thought I would be old enough to say this, but this month marks my 25-year anniversary of working with the accounting profession. In 1985, I started with Associated Accounting Firms International (AAFI), which later merged with Moore Stephens N.A

Twice a year, the MPs of the member firms met to discuss the most challenging issues of the day. The discussions focused on the critical issues that kept the leaders of the firms up at night: partner compensation, succession planning, partner selection and training, A/R, implementing technology, niche development and the role of the MP.

Sound familiar? After 25 years, the list hasn’t changed all that much. Sure, the details may have changed, but the fundamental issues remain the same.

The “glass-half-full” side of me wants to believe that the profession has solved many issues over the past quarter century, and that new and more challenging ones have taken their place. The “glass-half-empty” side of me cries out that we haven’t really evolved much, and that each generation of leaders is destined to re-encounter and re-learn the lessons that should have been solved by their predecessors.

Those who practice the discipline known as “knowledge management” create systems to capture the “Aha!” moments learned during the life of a business and develop the processes to successfully transfer that knowledge to the next generation of leaders. As a profession, I think we have done a good job of capturing some of that wisdom, but if you look at the concerns of many individual MPs today, you can’t help but think that a lot of the institutional knowledge gleaned over the years hasn’t been appropriately transferred. It appears that many leaders were short-changed by those they replaced.

My hope for the future is that while we are training and mentoring those coming up in the ranks, we make a concerted effort to share the lessons learned, which will shorten the learning curve of the future leaders and give them a leg up.

Generational wisdom is only valuable when shared with and embraced by the next generation – otherwise it simply becomes a personal experience that does nothing to help those who follow in our footsteps.

So as I mark my silver anniversary – that’s still hard to say! – I encourage all of you to continue finding ways to share your knowledge, to mentor the next generation and to “package” your wisdom so that your firm can evolve faster and better while remaining strong long after you are gone. After all, if the list of issues that keep MPs up at night doesn’t change over the next 25 years, what will we have learned?

Partner Accountability Begins With Firm Strategy

Partner accountability is a concept that most firms grasp, yet few accomplish properly. Accountability should start with the following hierarchy:

  1.  Identify the firm’s strategy.
  2. Develop a clear understanding of what is expected of each partner (individual goals), both subjective and objective, that are drafted by the line partners but modified as needed and approved by the MP.
  3. Provide a significant compensation stick the MP can use to affect the desired behaviors, and;
  4. A willingness on the part of the MP to financially reward partners who do what is expected and punish those who don’t, up to and including termination, if they act as an anchor to almost every initiative.

As soon as we mention the above process, the response is usually, “Okay … this makes sense, but tell me how to implement this strategy.” The answer? “It is hard to do when the most significant information in the process – identifying the firm’s strategy – is missing.” For example, take the common scenario that your partners are spending too much time working in the office and not spending enough time in front of their clients.

Based on experience, firms could be much more successful addressing an issue like this by shifting their strategy to incorporate several approaches.

  •  Stop partners from spending so much time doing lower-level technical work.
  • Require partners to spend more time with clients to be more visible and thereby creating more opportunities for the firm to assist those clients (business generation).
  • Require partners to spend time training, coaching and mentoring staff to improve the technical competence of the group so that more difficult technical work can be delegated to them.

Now that these approaches are outlined, let’s look at how they might be reflected in an accountability process. The MP should solicit input from each partner before finalizing the partners’ individual goals. For the above example, you might see the effort below from the MP to drive the individual partner goals:

  •  Create a matrix of key clients and require visits by each partner to the clients they manage. The partner(s) are required to make these visits, gather specific information based on a predefined process, report back to the MP (this also could be monitored by the marketing committee, or the marketing director), update the client relationship management (CRM) system, and strategize regarding likely future opportunities or resources required to adequately service these clients.
  • Work with each partner to determine clients to be moved to other partners or staff.
  • Work with each partner to identify clients that need to be removed or reconditioned in order to continue to be serviced by the firm (this could be rate/realization, collection, one-off engagement or one of many other issues).

The Compensation Stick

The partner compensation system is an essential way to drive accountability. It is here that you want to set up rewards to motivate the partners to do what they decided as a group to pursue for the firm’s strategy.

So, if doing a better job at training and mentoring is part of the individual partner’s strategy, then you have a clear behavior for that partner to get paid. When you say you want one behavior, but pay for a different behavior in your compensation system, you will get the latter behavior. Put your money where your mouth is.

If you assume that a partner’s total compensation is $300,000, then we suggest that the goals for this individual partner make up about 15 to 20% of his/her total compensation. Conservatively, this would amount to around $45,000, which you could break up into $15,000 increments for accomplishing the goal assigned related to each of the bullet points above.

In the end, partner accountability is simple. You must:

  • Be in a position to review, monitor and hold each partner accountable.
  • Be willing to identify, define and share expectations with each partner.
  • Have metrics to provide the appropriate rewards or punishments for the actual behavior demonstrated by the partner group.
  • Monitor and coach the partner group to help maximize earnings.
  • Have the authority and responsibility to do this.
  • Be willing to do the job – the good, the bad and the ugly.

Lessons Learned

The most important lesson learned: When a partner will not work within the system, when he/she cannot put the firm first, and when he/she is a boat anchor to every suggested change, the partner group must have the guts to let these people go.

If you find yourself in this place, you will find that accountability is not that hard, but rather is simply good management, adopted by all. Good luck!  

Copyright ©2010 Succession Institute. Bill Reeb, CPA, CITP, is a nationally recognized management consultant with almost three decades of experience specializing in assisting firms work through practice management, succession and leadership development issues. Bill frequently keynotes at national conferences and has been recognized by many organizations as one of the top consultants to the profession, with IPA listing Bill as one of the Top 10 Most Recommended Consultants. You may contact Bill at; (512) 338-1006, ext 102, or at 

Take Decision Support To The Next Level

Edi Osborne, president of Mentor Plus, shares invaluable insight regarding how to grow your business. The Mentor Plus whitepaper, Level 5 Service, provides a roadmap to client retention and growth. In May, IPA hosted an online webinar with Mentor Plus for MPs of IPA Best of the Best firms. IPA subscribers can download the full copy of the webinar, at no cost, online this month.

The concept of decision-support information systems is not new. Since the introduction of the IBM 650 in 1954, companies have been diligently working to capture and harvest mission-critical information to better manage performance. 

Although those behemoth machines were slow and cumbersome to use, they held great promise for real-time performance measurement and reporting. After 50 years, we’re finally able to realize that promise. Advancements in information technology make it easier for even the smallest companies to level the playing field between themselves and their larger competitors. Unfortunately, many firms are not taking full advantage of the information resources available; they are not alone.

In recent years the lines have blurred between accounting and IT. Many CFOs and controllers now wear two hats: CFO and CIO. Whereas accounting used to be considered a “back office” function, today’s CPAs are at the forefront capturing, managing and reporting on a company’s performance.

CPAs have an expanded role that includes helping clients make the connection between day-to-day activities and financial outcomes. CPAs build the bridge between leading and lagging information. It makes sense that the same skills that make for a great accountant can be applied toward “accounting for” and measuring all aspects of performance, especially given the increasingly fuzzy boundaries between financial and other information sources.

The traditional role of the CPA plus their objectivity and independence puts them in the unique position of seeing the company from a very balanced, big picture and detailed perspective. So what is “Level 5 Service”?

Level 5 Service is a defined service continuum that addresses the desired Vision competencies. CPAs that deliver Level 5 Service help clients leverage information resources, develop new performance measures tied to the goals and strategy of the organization and organize those measures into a cohesive reporting system. The ideal performance reporting system has the flexibility to provide valuable decision support for owners and managers while also providing real-time line of sight feedback for all levels of employees.

Level 5 Service encompasses what we think of when we hear the term “trusted advisor” for firms who are able to live up to that moniker. It provides a tangible definition of what it means to really add value to a client’s business. It goes beyond our current perception of a traditional CPA to include the mind set, skill set, and tool set required for the next generation of CPAs to be successful. Level 5 Service outlines a step-by-step linear progression of service offerings and corresponding value for firms to adopt. It is a service approach that is helping firms attract and retain quality staff and clients.

Level 5 Service is not new. It is a philosophy that starts with the realization that CPAs can provide an accurate set of financial statements and still not help their clients gain the insight clients are seeking. From a compliance standpoint, even though the financial statements are accurate, many firms are not serving the managerial needs of the client. When clients are asked about what they look for in a CPA, the subject of GAAP or accuracy seldom comes up; these are assumed competencies.

The majority of clients say they want their CPA to help them be successful. We are not suggesting that the current model for financial statements be abandoned; however, their usefulness as a management tool is limited. The Level 5 Service approach is about augmenting financial statements with reports that provide feedback on performance at all levels of the company. 


Eight Roadblocks To Harvesting Best Practices

Have you ever noticed certain leaders in your firm are exceptionally good at doing one specific thing? Maybe they consistently get great client satisfaction scores, or their staff have very low levels of absenteeism.

It’s clear that these high performers are doing something different… something that sets them apart. You’d love to bottle the potion that creates their “magic touch” and distribute it to other areas of your firm, but when you’ve tried to get others to follow their lead, there’s a good chance you’ve fallen short of the goal.

Harvesting “best practices” and encouraging other leaders to adopt them is a wonderful way to achieve organizational consistency, yet many firms just can’t seem to get them to take root. Below are eight common “roadblocks” that keep firms from identifying and moving best practices forward.

1.  High performers can be modest. They minimize what they do. “Oh, it’s no big deal,” they’ll say. To figure out what they’re doing that’s different, you need to dig deep.

2.  A leader may fear losing his or her edge. They fear that if they tell everyone about their best practice, they will be unable to keep up their success. This does not happen frequently, but it does occur.

3.  Sometimes high-performing leaders balk at taking on a “teaching role.” Maybe they don’t want others in the organization to think they are showing off or they are favorites in the firm. When they do a presentation, they may cite reasons why they were able to successfully implement the best practice. For others, it may not be so easy.

4.  Success is attributed to the leader and not the best practice. People think it’s the leadership and not the practice itself that gets the great results – so the actual best practice is missed or underestimated.

5.  Leaders want to keep their autonomy. Implementing someone else’s way of doing things makes them feel they are giving up control… it moves them out of their comfort zone.

6.  “Terminal uniqueness” can hamper the adoption of best practices. Leaders are quick to point out how they are just a little bit different, which is why a certain best practice won’t work for them.

7.  Egos get in the way. By the time some people get to leadership roles, they are better leaders than followers. Or at least they think they are!

8.  There is too much change and not enough time. There simply isn’t enough time for a best practice to be mastered – and it’s dropped before it’s given a fair chance.

The good news, of course, is that

Quint Studer, author, presenter and founder of the Studer Group. Contact the Studer Group at or (850) 934-1099.

IPA And Steve Erickson Join Forces To Assist The Profession In Helping Staff Be More Successful

The 2010 Career Development Survey, sponsored by IPA and Steve Erickson, national consultant to CPA firms, closed in May with more than 1,650 responses. The survey is being compiled and complete results will be shared with IPA readers in the coming months. We share a few highlights from the survey:

Top Staff Motivators

Feeling successful at work

Flex time and Alternative Work Schedules


Learning and Training Opportunities

– At a time when salaries and benefits are historically high as a percentage of revenues, 50% of the respondents reported that they felt underpaid, most by 6% to 10%.

– While utilization continues to decline, a significant percentage of the respondents reported spending one or more hours per day responding to e-mails, and in many instances, over two hours per day.

– File and process consistency and standardization continue to be a concern to employees as firms move from paper to digital storage. The majority of employees overwhelmingly stated that files are not consistent, as shown in the following graph.

1 = no agreement and 9 = total agreement with the statement:

All files are consistent regardless of the partner or manager on the engagement

Only 1/3 of the 1,650+ respondents rated their response a 7, 8 or 9. Clearly there is still much work to do to standardize files.

Employees also overwhelmingly stated that everyone in their firm did not follow standardized processes and procedures.

1 = no agreement and 9 = total agreement with the statement:

Everyone in our firm uses standardized processes and procedures

Again approximately 2/3 of the employees rated this statement a 6 or below. Results of the full survey will be shared as they come available.

You may download the full survey response online. More detials will be forthcoming in up coming issues of INSIDE Public Accounting.

INSIDE Public Accounting Benchmarking Webinar Series 2010

IPA subscribers are cordially invited to attend – IPA Benchmarking Webinar Series 2010 – available at no charge as a benefit of a subscription to INSIDE Public Accounting.

Webinar No. 1

Date: Wednesday, September 22
IPA’s Top 100 Firms Overview and Analysis

If you missed the September 22 Webinar, The Top 100 Review and Analysis, you may download the presentation.  Click here.

Webinar No. 2

Date: Wednesday, October 13
IPA’s Best of the Best Firms Overview and Analysis

 If you missed the  October 13 Webinar, IPA’s Best of the Best Firms Overview and Analysis, you may download the presentation. Click here.

Webinar No. 3

Date: Wednesday, November 3
IPA’s Benchmarking 101 – In Depth Benchmarking Trends
Time: 12:00 – 1:00 p.m. EDT
Run Time: 60-minutes
Register Now For the Nov. 3 Webinar.

Join Mike and Kelly Platt, publishers of INSIDE Public Accounting and the IPA National Benchmarking Report, to dig deeper into the results of the 2010 Annual Survey and Analysis of Firms. In the first session, we will take an in-depth look at the analysis for IPA Top 100 firms; in the second we explore IPA Best of the Best firms; and in the final session we review the overall results of the 2010 IPA National Benchmarking Report.

Presented by INSIDE Public Accounting

Once you register you will receive dial-in information for both the conference call as well as the Web conference itself. We look forward to welcoming you to this added-value series and appreciate your feedback along the way.

Book Recommendation: Rethink, Reinvent, Reposition: 12 Strategies to Renew Your Business and Boost Your Bottom Line

Can you tell the difference between a compelling vision of your firm’s future and a neurotic nightmare waiting to happen?  Sometimes change for change sake isn’t such a good idea and sometime it is.  Bill Welter is a consulting educator and managing director of Adaptive Strategies, Inc. ( which helps professionals and executives know the difference between intentional, positive change and anxiety attack actions. 

His recent book, Rethink, Reinvent, Reposition: 12 Strategies to Move Over Your Business, describes the process, tools, and overall framework professional services leaders can use to renew their firms, practice groups and service offerings. Rethink, Reinvent, Reposition guides managing partners through a simple yet effective approach to successful renewal in today’s business environment…including ways to identify which parts of your firm or practice do and which do not need to be reinvented.

Rothstein Kass Admits Four Partners

Roseland, N.J.-based Rothstein Kass (FY09 net revenue of $169.5 million) admitted Camille Asaro, Frank Attalla, Jeff Kollin and Navin Sethi to principal.

Asaro and Attalla are members of the RK financial services group. Sethi, a tax principal is a member of both the financial services group and the firm’s commercial services group. Kollin has been named principal and head of the financial services advisory practice.

Two Orlando Firms Join Forces

Two Orlando, Fla. firms, Averett Warmus Durkee and Osburn, Henning & Co. merged their practices in August.

The merged entity, Averett Warmus Durkee Osburn Henning, has approximately 100 employees and provides assurance, tax and consulting services to clients engaged in timeshare, as well as in agribusiness, banking, real estate, construction, governmental activities, professional services and not-for-profit causes.

The firm’s executive committee will consist of Tom Durkee, Ed Hofma, Ron Person, Steve Petosa and Jim Warmus. Warmus will continue to serve as the firm’s CEO.

“Our decision to merge at this time is reflective of each firm’s desire to offer increased resources for clients, including membership with the PKF North American Network of independent CPA firms,” says Warmus. “We have become bigger and better as a result of the merger.”

Eide Bailly Merges In Colorado Firm

Fargo, N.D.-based Eide Bailly LLP (FY10 net revenue of $151.8 million) has merged with R T Higgins & Associates, a move that will expand EB’s presence in the oil and gas industry and with high-net-worth clients. The merger was effective on Aug. 1.

Richard Higgins will join EB as a partner, and brings six staff members with him, all of whom will be located in the Denver and Golden, Colo., offices.

 “We continue to look for opportunities to grow our practice,” James Lyons, PIC of EB’s Colorado practice, says.