Does Your Firm Reward Poor Performance?

Source: Solutions for CPA Firm Leaders

The following includes excerpts, reproduced with permission, from an article by Rita Keller.

Do you give pay increases to poor performers? I bet you do.

When shouldn't raises be a given? There is an interesting article from HR Capitalist that might give you something to think about.

Here's a story the article featured. An NFL football team has a history of not overpaying, even for a potential Hall-of-Famer nearing the end of his contract. If players' skills are even slightly declining, the team trades them.

It has no desire to commit to a multi-year contract with a player whose skills will do nothing but decline from this point forward. They have a history of not upping, overvaluing and overextending compensation to players who won't continue to improve or whose skills may decline quickly. It is an organizational philosophy and they live it.

As the article says, the team won't overpay. Won't do it. Would rather be brutal.

By now, I hope you are thinking about your CPA firm. Are you willing to have the tough (even brutal) conversation with good people who are not performing? Or, do you avoid the drama and give them three percent to four percent.

The issue goes back to how you build the community inside your firm. CPA firms hire several college grads each year. Do they know they are competing to keep their jobs? Do they understand they must pass the exam quickly and continue to improve for the rest of their careers? Or, do you have partners doing manager work and managers doing senior work and the young people scrambling to keep their schedules full?

If you fill up your firm with mediocre people, you end up being a mediocre firm.

For the complete article, read “Everybody Gets a Raise.”

From Solutions for CPA Firm Leaders, Rita Keller's CPA MAP Newsletter, www.ritakeller.com, November 10, 2010.