Being Accountable for Accountability...Continued

Source: Public Practice

In his previous column, Bill Reeb discussed common examples of objective criteria (both financial and nonfinancial) used to define partner performance expectations. He also discussed the need for “objective support tools” to gauge success. In this column, Reeb addresses the goal-setting process.

Establishing an accountability and goal process is a challenge, but it's worth it, Reeb says, because “Anytime you can get all of your key people working as a team toward the same objectives, your chances of getting where you want to go and achieving the success you desire are infinitely better.”

But many CPAs are resistant to the goal-setting process, asking “If all of my key people are conscientious and hard-working, and we share a common vision, shouldn't we be able to get to the same place without all of this extra administrative hassle?” In Reeb's experience, the answer is “Generally speaking, no.”

Successful CPAs are reluctant to commit to an accountability and goal process because they are accustomed to being self-motivated and self-directed. But shared expectations and defined goals, Reeb explains, lead to a higher level of performance and greater clarity about what needs to be done. Consider, for example, a firm with three owners. They agree that growth is essential, but even though their strategies appear to be aligned, they have very different reasons for desiring growth: One owner wants to maximize his retirement pay, one wants to involve his kids in the business, and one wants to increase his compensation. As a result, the three owners make conflicting decisions about the best use of their time and resources.

Compensation committees are useful for developing a general compensation framework and establishing and monitoring objective performance criteria. But, Reeb says, when it comes to each partner's customized goals, accountability should be to the managing partner alone. And the MP “needs a compensation stick that he or she alone determines for each partner regarding the specific individualized goals set out for each partner.”

For the complete article, read “Accountability for Performance Management (Column 3).”

From Public Practice, Texas Society of CPAs, March-April 2012, www.tscpa.org.