Partner Unity is Essential for Success!

I’m sure that every practicing CPA has wondered why some firms are growing and profitable while other firms always seem to struggle. Winning firms typically have significantly higher income per partner and more partner satisfaction than their peers. We analyze their statistics, evaluate their clients, compare markets and even try to duplicate their processes in an effort to improve our practices. However these traditional practice improvement methods do not address how partner relationships impact the success of a CPA firm.  It is my premise that improved partner unity is essential for superior firm performance and profitability.

In November of 2002 the Nobel Prize in economics was awarded to a Princeton professor of psychology for his work in the areas of individual emotions, decision-making and the subsequent impact on the financial success of a company.  This research found that individuals that have positive emotions make better decisions which results in greater profitability.  The Gallup organization reported on these findings and asks the question: how to manage the “emotional economy”.  They also suggested that mismanagement of the “emotional economy” could have a significant negative financial impact on any business.

This timely research supports my premise that improved partner unity results in improved performance in a CPA firm. 

• Positive partners have better relationships with their peers and clients.

This promotes better communication, more interaction, more intense problem solving, better solutions and more profits.   

Surveys of CPAs concerning the connection between the unity of their partners and the profitability in their firms have shown there is in fact a correlation. Exceptional firms have a very high level of trust, shared values and a common vision of where they are headed in the future. Partners sense their success and work hard to achieve their common goals because each of them knows they will benefit from the effort.  Sounds so simple but the fact is just a very few firms have mastered this concept.

Unity is elusive because individual partners are at various stages of their lives and have different personal and professional goals.  One partner might be looking forward to retirement while another is dealing with a young family or trying to build a practice. Now add some differences of opinion about how the practice should be managed and relationships can be strained. Simple disagreements or misunderstandings between partners, which appear on the surface to be very subtle, can negatively impact trust and personal relationships when the motives for these differences of opinion are not fully understood.  This is especially true when the potential actions of certain partners threaten the security and success of others. Additionally, when partners have to compete internally for firm and staff resources it inhibits their ability to execute their business and personal plans.  This inability to execute to the best of their ability leads to organizational stress and ineffectiveness.   CPA's are bright individuals that know what it takes to be successful.  When they meet their individual and professional goals they become very motivated. When they are not succeeding they become stressed and start questioning the motives of other partners in the firm. This diverts attention away from the goals and objectives of the firm. 

Unity is gained by embracing common core values and a clear vision of the direction for the business.  It is not about catastrophic differences between partners, it’s simply a matter of trust.  The trust partners feel in knowing they will be treated fairly in the firm.  When there's a question in the mind of a partner that this isn't the case, they hold back and do not give their full effort for the benefit of the firm.  The resulting negative impact on a firm’s profitability can be significant.

Survey your partners to determine where they think improvements could be made that would allow them to attain the level of success they desire.  No doubt there will be some differences of opinion as to what needs to be done.  These discussions are never easy and can be uncomfortable when first initiated. This discomfort quickly passes as the partners communicate their needs respectfully. Keep the discussions civil and productive by using the services of a skilled facilitator.  Trust between your partners will be enhanced and future satisfaction and profitability are sure to follow.

A FEW WAYS TO IMPROVE PARTNER UNITY

1. Reconcile Firm Goals with Partner Professional and Personal Goals
Each partner should complete an annual firm impact plan that includes both their professional and personal goals and a commitment for both chargeable and non-chargeable activities Personal and professional goals should be clearly defined, compatible and attainable.
Survey your partners often to determine if they are making progress on their professional and personal goals as well as their feelings on the level of partner unity in the firm.  Identify any major problem areas and focus efforts to correct the major concerns first. Openly discuss core values, individual goals and firm goals at partner meetings and retreats.  Be sure to mitigate differences by finding ways for every partner in the firm to achieve the quality and level of success they desire.

2. Allow Every Partner to Experience Success
Every partner must feel that they have the ability to serve their clients to the best of their ability.  A partner with dissatisfied clients can create a major source of stress and dissention among partners. The worst time in public accounting is when a client is dissatisfied or the quality of the work is not acceptable or up to their standards.  Partner unity is undermined when partners have to compete internally for the staff resources they need to serve their clients.  Establish processes for the administration and management of the firm that provide for a level-playing field for all partners to have access to the resources they need to serve their clients and feel successful.  Partner unity and firm profitability will be greatly enhanced.

3. Adopt an Understandable Partner Compensation Plan
Develop a well-understood and supported partner compensation system.  Each partner must know how their compensation will be computed and tied to the results of the firm in advance. Prepare a firm budget to include each individual partner’s estimated net income for the year.  Subsequent adjustments to compensation will then need to be made for individual partners that do not meet their budgeted income goals for the year and also for those partners that have exceeded their budget goals. It is very important that partners understand why their compensation is being adjusted.  Partner unity can be seriously undermined when there is confusion over who gets the money and who doesn’t.
 

4. Go Public with Your Succession Plan
Succession planning has become more and more important as our profession ages as a whole. The security of individual partners can be threatened when there is excessive speculation about who will replace the current leaders of the firm or if in fact anyone is qualified to assume the leadership role. I have spoken to many firm owners that have expressed serious doubts about their ability to pass their practice on to the next generation of partners and as a result they have taken no action on their succession plans.  Waiting for some future event or for someone else to solve the problem will only prolong the stress and erode the confidence of the partners and unity in the firm. Get started on a succession plan now! Identify the next leaders of the firm, get them trained and start transitioning clients to them as soon as possible.  Financial arrangements can to be made to promote the early transfer of clients.