PA firms are in the business of measuring business; in our world success is measured mainly by how much money the partners make. Pundits, consultants, journalists and partners usually define a firm’s “greatness” by purely economic metrics such as size, growth, employees and net income per partner. Those metrics seem logical but are, in our opinion, incomplete. Recent literature we’ve read and conversations with consultants and other practitioners have led us to a different view that challenges some conventions and broadens the metrics to include more meaningful measurements of firmwide achievement than economics.
Almost every magazine, newsletter and newspaper that covers the profession rates CPA firms by their numbers. Annual articles blare that such-and-such is the “biggest, best, most profitable firm and has the most revenue per partner.” Recently, when one CPA firm won an award as one of the best places to work in the United States a managing partner of another large national firm asked what the return on investment was for winning the award. Talk about not seeing the forest for the trees.
In Good to Great: Why Some Companies Make the Leap…and Others Don’t, a well-known 2001 HarperBusiness publication, author Jim Collins says truly great companies are all about great people—for which the basic metric “is having the right people in the right positions.” Organizations whose fundamental mission is to attract great people over the long run “live” longer, grow at more sustainable rates and exceed the goals set out in their mission statements, he says.
Indeed. Consider the fact that the top firm management issue for the past decade has been hiring and retaining staff. What have we learned? One thing is that our employees have a long list of attributes they look for from us when trying to find a great place to work. Only one of those is financial and, according to the experts, it’s not even no. 1.
A NEW VIEW OF SUCCESS
Success can be measured in as many ways as a CPA can imagine, but most of the traits we consider important metrics of great firms can’t. As with a good character or a compassionate nature, their contribution to the quality of “excellence” is subtle. Our definition of a truly special organization is a firm that excels in a few of these attributes, and a firm for the ages will excel in all. We hope you will consider these metrics carefully when deciding what you want your firm to be, how to get there and what your firm’s legacy will be.
Philanthropy. Being charitable can serve many purposes. Remember the old saying, “A great man is measured by what he gives rather than what he receives.” One of the most meaningful yardsticks of greatness is generosity.
CPA firms are visible, respected and admired, which puts them in a unique position to give back to the communities in which they practice. Many firms give back through charity golf events, participation in community runs and walks, employing the disabled and collecting food for the hungry, to name a few.
Sincere philanthropy will nurture your community and inspire your employees and clients. Ben & Jerry’s, the ice cream company, for example, puts 2% of all profits into philanthropic activities. People like being affiliated with such an organization. The one problem it does not have is staffing. In a small, winter-cold Vermont town, people line up to work for this company, and we believe its philanthropic culture is part of the reason.
Reputation. Nothing is more important than your firm’s reputation. In today’s climate, businesses want to associate with firms that have impeccable reputations for integrity and honesty. “Any press is good press” is wrong—positive press is good press.
At a retreat of a large New York City CPA firm, a managing partner implored all employees to protect “our” reputation. He went on to say that if anyone in the firm heard of or saw wrongdoing and could not rectify it to “please, please bring it immediately to my attention.” Your reputation is absolutely your most valuable asset.
Built to last. Most firms fail to focus on what it takes to carry on from generation to generation. In fact, none of the 25 largest firms in the country in 1980 is still intact. A firm may have to forgo extraordinary financial success to reinvest current profits into a long-term “built to last” strategy. That requires a plan that facilitates succession and recognizes the needs of retiring and succeeding generations as well as their cultural differences.
A good succession plan gives owners, employees, clients and—in the case of a sale or merger, all participants—a sense of accomplishment and satisfaction. Succession isn’t selling out to consolidators, either. The foresight and dexterity to implement a plan to survive time is truly an attribute of a great CPA firm.
Diversity. The days of white-male domination in our profession have gone the way of dress codes. Today, more than 50% of all accounting students are female, and recent immigrants from around the world are entering the profession. Firms that embrace diversity will develop and promote initiatives to meet the needs of their employee and client base, and programs to enhance the management and leadership skills of women and minorities. Indeed, in the not-too-distant future, the CPA profession may well be dominated by women in the partner ranks. Firms that recognize this shift will prosper and succeed. Firms that live in the past will die.
Employee-centered. Great firms are built around great people. Firms that take care of their employees are rewarded with superior and dedicated professionals. Employee-centric firms serve the wants and needs of their employees. Many have developed university-level continuing education and sophisticated retention programs. They recognize and embrace quality-of-life issues, create a pleasant and rewarding work environment and provide their employees with the newest and best technology and state-of-the-art offices. These firms are compassionate and have a conscience when it comes to the interests of their employees.
Work quality. Great firms do great work. Indeed, many truly outstanding firms choose to ensure superior work product over profitability. They worry more about doing the job right than about the realization percentage and related write-offs. Accept nothing less than great quality.
Creativity. Creativity is certainly not considered a common trait of CPA firms, but creative firms have paved the way for employee ownership, rolled out new service offerings and created nontraditional career paths.
We are just beginning to see firms hire more creative thinkers. Great firms think “out of the box.” They look at problems differently and become solution providers. Creativity is an important new-age metric of highly successful firms.
M EASURE W HAT C OUNTS
While we’re gratified to see a trend toward recognizing that our knowledge provides value, it would not bother us if we never read another financial ranking of successful CPA firms. Rather, we would prefer to read about the CPA firms that have made their mark on our culture, our society and their communities in ways that make us proud. It is our belief that, while economics are important, financial vitality is a by-product of the more-critical characteristics that so often get overlooked or underemployed—generosity, love of excellence, creativity and respect for others. Our purpose here is to ask readers to think more deeply about these metrics and ask themselves what truly is important. What really makes a difference?
Gary S. Shamis, CPA, MAcc, is managing partner of Saltz, Shamis & Goldfarb (SS&G) Financial Services in Cleveland. His e-mail address is email@example.com . Jay N. Nisberg, PhD, is president of Jay Nisberg & Associates, Ltd., consultant to the CPA community. His e-mail address is firstname.lastname@example.org . Both are members of the Advisory Board, a CPA think tank.