© 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
BE
ST
PR
AC
TIC
ES
2
01
3
© 2013 UPSTREAM ACADEMY, LLC 2 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 3 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 4 BESTPRACTICES CONFERENCE 2013
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:
© 2013 UPSTREAM ACADEMY, LLC 5 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 6 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 7 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 8 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 9 BESTPRACTICES CONFERENCE 2013
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).
© 2013 UPSTREAM ACADEMY, LLC 10 BESTPRACTICES CONFERENCE 2013
Money
Often private industry (and sometimes government jobs) will offer higher salaries and benefits at the 3 to 7 years of experience level.
© 2013 UPSTREAM ACADEMY, LLC 11 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 12 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 13 BESTPRACTICES CONFERENCE 2013
WHAT CONSTITUTES DISCRIMINATION?
© 2013 UPSTREAM ACADEMY, LLC 14 BESTPRACTICES CONFERENCE 2013
What Constitutes Discrimination?
From a legal perspective, where are we prohibited from drawing distinctions in people?
© 2013 UPSTREAM ACADEMY, LLC 15 BESTPRACTICES CONFERENCE 2013
What Constitutes Discrimination?
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
© 2013 UPSTREAM ACADEMY, LLC 16 BESTPRACTICES CONFERENCE 2013
What Constitutes Discrimination?
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.
© 2013 UPSTREAM ACADEMY, LLC 17 BESTPRACTICES CONFERENCE 2013
What Constitutes Discrimination?
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.
© 2013 UPSTREAM ACADEMY, LLC 18 BESTPRACTICES CONFERENCE 2013
WHERE MUST PARITY EXIST?
© 2013 UPSTREAM ACADEMY, LLC 19 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 20 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 21 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 22 BESTPRACTICES CONFERENCE 2013
Vacation and PTO
Generally vacation and PTO are provided to everyone, with the distinguishing factors being:•Years of service•Position in the organization
© 2013 UPSTREAM ACADEMY, LLC 23 BESTPRACTICES CONFERENCE 2013
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).
© 2013 UPSTREAM ACADEMY, LLC 24 BESTPRACTICES CONFERENCE 2013
WHERE CAN FIRMS ELIMINATE PARITY?
© 2013 UPSTREAM ACADEMY, LLC 25 BESTPRACTICES CONFERENCE 2013
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?
© 2013 UPSTREAM ACADEMY, LLC 26 BESTPRACTICES CONFERENCE 2013
Where Can Firms Eliminate Parity?
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
© 2013 UPSTREAM ACADEMY, LLC 27 BESTPRACTICES CONFERENCE 2013
Where Can Firms Eliminate Parity?
Which of these areas of specialized treatment do you find to be of most interest to staff members?
© 2013 UPSTREAM ACADEMY, LLC 28 BESTPRACTICES CONFERENCE 2013
WHY PARITY EXISTS
© 2013 UPSTREAM ACADEMY, LLC 29 BESTPRACTICES CONFERENCE 2013
Why Parity Exists
What reasons can you think of that cause firms to resort to parity even in areas where it isn’t required?
© 2013 UPSTREAM ACADEMY, LLC 30 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 31 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 32 BESTPRACTICES CONFERENCE 2013
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?
© 2013 UPSTREAM ACADEMY, LLC 33 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 34 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 35 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 36 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 37 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 38 BESTPRACTICES CONFERENCE 2013
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?
© 2013 UPSTREAM ACADEMY, LLC 39 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 40 BESTPRACTICES CONFERENCE 2013
TREATING PEOPLE DIFFERENTLY BASED ON THEIR CONTRIBUTION
© 2013 UPSTREAM ACADEMY, LLC 41 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 42 BESTPRACTICES CONFERENCE 2013
Treating People Differently
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.
© 2013 UPSTREAM ACADEMY, LLC 43 BESTPRACTICES CONFERENCE 2013
Treating People Differently
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
© 2013 UPSTREAM ACADEMY, LLC 44 BESTPRACTICES CONFERENCE 2013
Treating People Differently
Avoid formalized programs to reward exceptional performance. Instead, identify what is important to the individual and make a difference in these areas of importance.
© 2013 UPSTREAM ACADEMY, LLC 45 BESTPRACTICES CONFERENCE 2013
Treating People Differently
“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.
© 2013 UPSTREAM ACADEMY, LLC 46 BESTPRACTICES CONFERENCE 2013
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.
© 2013 UPSTREAM ACADEMY, LLC 47 BESTPRACTICES CONFERENCE 2013
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
© 2013 UPSTREAM ACADEMY, LLC 48 BESTPRACTICES CONFERENCE 2013
Contact Information
Tim Bartz
Phone: 406.447.3090
E-mail: [email protected]