© 2013 U PSTREAM A CADEMY, LLC1 B EST P RACTICES C ONFERENCE 2013 D ISCARDING P ARITY AND T URF P ROTECTION : P ARTNERS H AVE TO L EAD THE W AY P RESENTED

© 2013 UPSTREAM ACADEMY, LLC 1 BESTPRACTICES CONFERENCE 2013

DISCARDING PARITY AND TURF PROTECTION: PARTNERS HAVE TO

LEAD THE WAYPRESENTED BY TIMOTHY J. BARTZ

DIRECTOR AT UPSTREAM ACADEMY, LLC

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Parity \per-ə-tē\

“Parity is the quality or state of being equal or equivalent.”

In our case, we’ll define parity as the act of treating everyone as being equal or equivalent regardless of performance.


Background Thoughts

Firms are struggling to keep their best people, especially those with 3 to 7 years of experience.

To keep its best people, a firm must be prepared to treat the best people differently than the average performers.

This sounds good until you start applying it in practice.


Reasons People Leave

1. Feeling their job interferes with family life

2. Working more hours than they prefer

3. Not having the chance to use skills and abilities

According to the AICPA, the principal reasons people leave public accounting are:


Reasons People Leave

4. Lack of people who understand and are sympathetic to the challenges of their positions and upon whom they can rely for advice and assistance

5. Having too little say in the way work is performed

6. Feeling their progress isn’t what it should be in advancement and opportunity

7. Feeling their compensation is inadequate


Life Changes

Simply stated – LIFE HAPPENS. We meet someone, we fall in love, we get married, we move, we have children – YOU NAME IT.

Our priorities change and our work in public accounting seems like it might get in the way because of busy season(s), travel, demanding clients and the like.


Work-Life Balance

Staff members feel like public accounting demands too much of their time for too much of the year. There are certain times when it might be very difficult to get time off. During such periods, work gets in the way of the other parts of life.


Billable Time Pressures

Public accounting firms make their money largely from billable hours worked on client issues times a certain hourly rate. For firms to achieve the revenue necessary to keep up with rising costs and technology, they expect individuals to be 75% - 85% billable. Time must be charted and entered into practice management immediately.


Travel

Often staff members are asked to travel to work with firm clients. Sometimes as much as 25% to 50% of time can be spent out of the office. Travel takes its toll.

When you travel, the work may be the same during normal business hours, but you don’t get the down time with family and friends in the evenings (and possibly on weekends).


Money

Often private industry (and sometimes government jobs) will offer higher salaries and benefits at the 3 to 7 years of experience level.


Poorly-Defined Career Path

Individuals may have difficulty identifying how they will move forward in their careers. Often people perceive there are only more mysteries the higher they move in the firm.


Discussion Outline

1. What Constitutes Discrimination?

2. Where Must Parity Exist?

3. Where Can Firms Eliminate Parity?

4. Why Parity Exists

5. Treating People Differently Based on Their Contribution


WHAT CONSTITUTES DISCRIMINATION?


What Constitutes Discrimination?

From a legal perspective, where are we prohibited from drawing distinctions in people?



Anti-discrimination laws help protect employees from employers who treat them unfairly. Some of the most common prohibited areas of discrimination are: •Age (over 40)•Gender•Religion•Race•Sexual orientation



Unfortunately, many HR professionals and firm leaders expand discrimination warnings and decide everyone must be treated the same in all situations for fear someone will cry out the D word and we’ll spend the rest of time battling an issue in court.



Clearly there are some challenges if we don’t have a solid performance and evaluation tracking system, but falling victim to the fear of discrimination will create mediocrity in your firm.


WHERE MUST PARITY EXIST?


Where Must Parity Exist?

Parity is required largely in the area of employee benefits packages:•Qualified retirement plans•Health insurance coverage•Vacation and other PTO•Reward systems such as clothing allowances, CPA exam assistance and fulfillment


Qualified Retirement Plans

Qualified retirement plans have their own set of rules as determined by the Internal Revenue Code and the Department of Labor.Participation and reward is based solely on: •Longevity•Minimum hours of service annually•Individual compensation•Individual contribution and matching


Health Insurance Coverage

Generally health insurance must be provided to all individuals in the same class of employment with the only distinguishing factors being:•Minimal waiting period before coverage begins•Employee contribution of some portion of the premium•Hours of service annually•Participation in wellness program


Vacation and PTO

Generally vacation and PTO are provided to everyone, with the distinguishing factors being:•Years of service•Position in the organization


Reward Systems

Some firms provide benefits like clothing allowances to entry level employees, assistance with the costs of preparing for the CPA exam, and bonuses for successful completion of the exam.

Generally, everyone is eligible for these benefits, although the benefits for professional designations and clothing allowances may be reserved for the consulting staff (with admin staff excluded).


WHERE CAN FIRMS ELIMINATE PARITY?


Where Can Firms Eliminate Parity?

If we are truly seeking to treat individuals as they deserve to be treated and to provide benefits to our best people, what options exist for doing more for some than for others?



1. Compensation2. Advancement3. Continuing education4. Specialized training (e.g., leadership)5. Work schedule6. Work location7. Client assignments8. Coaching9. Invitations to special meetings10.Participation on firm committees



Which of these areas of specialized treatment do you find to be of most interest to staff members?


WHY PARITY EXISTS


Why Parity Exists

What reasons can you think of that cause firms to resort to parity even in areas where it isn’t required?


Why Parity Exists

Possible reasons:1)Protectionism by stakeholders and

managers2)Weak management3)Poor evaluation system and an inability

to quantify distinguishing performance4)Fear of offending people who aren’t

included5)Fear of discrimination claims against

the firm


Protectionism

Partners and managers have a lot on their plates. In the short term, their job is made easier when there is little conflict and when they have the same people available to do the work year in and year out.

When we create differences, partners and managers are often left dealing with disappointed and disgruntled team members who might actually leave.


Protectionism

Firm leadership needs to be a resource to partners and managers who might be affected negatively as a result of treating people differently based on their performance.

How can firms provide support in these situations?


Protectionism

In the end, partners and managers must stand behind the firm’s decisions. They must be accountable for resolving the issue in the firm’s favor and not throw firm leadership under the bus for distinguishing based on performance.


Protectionism

Some ideas for support might include:• Ensuring partners and managers are

aware of special treatment offered to top performers in the firm

• Providing information regarding why someone’s performance is considered to be top tier and worthy of special recognition


Protectionism

• Coaching the partners on how to respond to inquiries from others who aren’t getting special treatment

• Assisting with staffing support in times when someone leaves the firm, especially as the result of eliminating parity


Weak Management

Weak management is evidenced by failure to make decisions and do what is in the best interests of the organization for the long term. Like the line partners and managers, weak management doesn’t want to upset the apple cart. The result is that the organization operates in an atmosphere of mediocrity because leadership does not push people outside their comfort zones.


Poor Evaluation System

Too many firms are plagued by evaluations full of safe scores that fail to give employees a realistic assessment of their performance. This is compounded by compensation systems that give raises to everyone regardless of performance (or with only minor differences for poor or exemplary performers). These systems (coupled with poor documentation) handcuff firms when they try to distinguish based on performance. They also subject the firm to discrimination claims.


Fear of Offending

Firms often ask, “Is it really worth the effort to distinguish performance?” In other words, do we get enough benefit from rewarding the top performers at the risk of frustrating the average performers?


Fear of Discrimination Claims

No one likes dealing with combative attorneys or even having someone threaten a claim of discrimination. The result is that firms often take a more than conservative stance. which means little is done to distinguish performance.


TREATING PEOPLE DIFFERENTLY BASED ON THEIR CONTRIBUTION


Treating People Differently

Firms that want to operate on the right side of the bell curve – High Performance – have to learn to treat exceptional performers differently than others.



A danger in identifying top performers is that once identified, we label individuals as top, average or poor performers (and forget to change this based on performance).

Hopefully, we have the ability to identify poor performers and release them quickly.

Average and top performers can move around. Therefore, ensure people earn their designation on an ongoing basis.



Identify individual strengths and work to build on these strengths. When we look at partner material, we are looking for people who can excel in a number of areas.

Team Development Client Management

Business Development Financial Management

Leadership Personal Effectiveness



Avoid formalized programs to reward exceptional performance. Instead, identify what is important to the individual and make a difference in these areas of importance.



“These are the two assumptions that guide the world’s best managers:1.Each person’s talents are enduring and unique.2.Each person’s greatest room for growth is in the areas of her or her greatest strength.”

Marcus Buckingham & Donald O. Clifton, Ph. D.


Conclusions

Firms will never be able to keep everyone who joins an organization. In fact, it would probably be unhealthy to do so.

The critical point to remember is that you must do everything in your power to keep your best people. This must begin by the third year of employment.


Conclusions

“Good leadership involves responsibility to the welfare of the group . . . . Ironically, by procrastinating on the difficult choices, by trying not to get anyone mad, and by treating everyone equally ‘nicely’ regardless of their contributions, you'll simply ensure that the only people you'll wind up angering are the most creative and productive people in the organization.”

Colin Powell


Contact Information

Tim Bartz

Phone: 406.447.3090

E-mail: [email protected]

Documents

© 2013 U PSTREAM A CADEMY, LLC1 B EST P RACTICES C ONFERENCE 2013 D ISCARDING P ARITY AND T URF P ROTECTION : P ARTNERS H AVE TO L EAD THE W AY P RESENTED