Platt’s Perspective: Will The Definition Of Success Change For Firms In The Future?

Mike Platt

Mike Platt

Ever since key performance indicators were created for accounting firms, measurements of success have been dominated by traditional metrics like growth percentages, leverage, revenue per charge hour, revenue per FTE, utilization, realization, profit margin and the ultimate target – net income per equity partner.

In recent years however, conversations have turned to targets of a different nature – staff satisfaction, investment in the future, re-imagining the business model, bench strength, succession planning, staying relevant and transformational change, to name a few.

As we enter a new year, it’s the appropriate time to look at the old and the new, and question how the profession’s definition of success may change over time.

How are firms marrying the traditional metrics with the top-of-mind issues listed above? Who will “win” the new game, and how will that be measured? What are the new goalposts that will define future performance and overall success?

Some suggest that traditional metrics no longer meet the needs of the profession, and point to benchmarks such as net income per equity partner as no longer relevant. Others vehemently oppose this notion, arguing that no targets are achievable without a solid business foundation that generates acceptable / suitable / achievable profits for partners.

A middle ground is needed – one that accounts for not only traditional performance metrics but also perceptions of staff, partners and customers and the firm’s impact on the lives of those it touches. At the 2017 PRIME Symposium, firms began this exploration of new measurements to assess the well-being of the firm as well as partners, staff, clients and communities they serve. IPA is committed to building on this holistic approach going forward to help firms achieve the balance between the objective and subjective indicators of success.

In the meantime, I challenge everyone to consider how the definition of success might change for your firm in the coming years. What do the current partners think? What do the next generation of partners think? How big is the perception gap between the two groups? Our goal is to understand that gap and bridge it to build a shared vision of success in the future.