Moving Partners Out of their Comfort Zone
One of the most significant reasons for succession planning problems in public accounting is the vast number of “comfort-zoners” in the partner ranks. Many comfort-zoner partners are very competent accountants, dedicated and hardworking, and good client service professionals. However, they have little tolerance for taking entrepreneurial business risks. They also avoid making the necessary changes and investments in the firm that are vital to attain higher levels of success in the current marketplace. The number of comfort-zoner partners in public accounting firms has reached epidemic proportions and is one of the root problems that forces firms to merge-up. If public accounting firms allow their comfort-zoners to permeate their culture and partner ranks, they risk becoming irrelevant, obsolete, and eventually less competitive.
There is an abundance of partners who feel entitled to compensation increases each year but are not consistently attaining higher levels of performance. In addition, they are not contributing additional value and profitability to the firm on a continuous basis. As comfort-zoners partners receive compensation increases as a matter of course, they become even more complacent. Thus, there is no incentive to work smart, be creative, and innovative, or set challenging goals for themselves. Why step-out of their comfort zone and take risks?
Managing Partners (MPs) need to lead their partners out of their comfort zones in the following ways:
Due to the shortage of qualified staff, many firms across the country have discontinued the policy of attaining higher levels of performance each year as a condition of continued employment. This policy can create a culture of entitlement that eventually can enter the partner ranks. MPs need to move away from the culture of partner compensation “entitlement” for partners whose careers have plateaued.
Partner “pay for performance” compensation systems need to be carefully structured and managed with the goal of achieving the firm’s strategic goals and objectives. Partner compensation should only be increased if there have been recognizable increases in contributions to the firm’s value and profitability.
Comfort-zoners should be put in positions to be technically challenged and deliver higher levels of client advisory services each year resulting in higher billing rates and profitability. Firms need to stop rewarding partners who work harder and increase the volume of low profitable clients which eventually takes a toll on the staff. Firms need to encourage and reward partners to be creative, entrepreneurial, and innovative, even if they do not initially succeed.
Partners’ performance goals should be measured very specifically and without ambiguity in terms of contribution and expectations regarding results. At a minimum, partner goals should focus on attaining higher levels of technical and technology competencies and client service, new business development results, financial management of their client engagements, and staff development.
Clarifying performance expectations of comfort-zoner partners is challenging, but necessary. They need to know how to specifically improve performance and results. It is easier to avoid dealing with partner expectation gaps and hope things will change on their own, but that’s rarely the case. Change needs to be driven through a series of action items that MPs motivate their partners to achieve and coach them throughout the process. “Management is about persuading people to do things they don’t want to do, where leadership is about inspiring people to do things they never thought they could” – Steve Jobs
Most of the time, the difference between overachieving partners and comfort-zoners is a reluctance to change, not ability. Transforming comfort-zoner partners through accountability for higher levels of performance and moving them out of their comfort zone translates into a successful firm of the future.
Remember, “It is not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.” —Charles Darwin