Being Accountable for Accountability
. . . Continued
Source: Public Practice
In his previous column, Bill Reeb discussed the goal-setting process. In this column, he addresses how the managing partner (MP) should approach the goal-setting process with partners or shareholders.
Reeb believes that for an MP to hold partners accountable for accomplishing their goals, a reasonable amount of performance pay should be set aside for discretionary allocation by the MP. Most firms are opposed to doing this, however, because (1) they're concerned about giving the MP too much control over compensation, or (2) partners feel they've earned a certain amount of autonomy over the way they do things.
The first concern is legitimate if the MP controls all compensation, but the MP needs to control some compensation to effectively hold partners accountable. The second concern, Reeb says, is “riddled with flaws.” For one thing, people who become partners “prove themselves” in a managed environment, so it makes little sense to switch to an unmanaged environment once someone is named partner. Also, if partners aren't managed, firms' compensation systems don't necessarily motivate them to do what's best for the firm.
The remainder of the column describes how an MP goal-setting process might work. First, the partner group identifies a strategy and sets budgetary and other parameters within which the MP must operate to achieve that strategy. Next, the MP meets with each partner to create customized goals designed to achieve the firm's strategy. Reeb suggests a four-phase process:
- Guidance, in which the MP points the partner in the right direction;
- Suggestion, in which the partner develops a detailed approach for getting there;
- Discussion, in which the partner defends his or her suggested approach; and
- Direction, in which the MP establishes and prioritizes the partner's goals and allocates performance compensation among them.
For the complete article, read “Accountability for Performance Management (Column 4).”
From Public Practice, Texas Society of CPAs, May-June 2012, www.tscpa.org.