Archive for the ‘performance evaluations’ Category

Tuesday, October 12th, 2021

The Bonus Dilemma

“Whenever there is a hard job to be done I assign it to a lazy man; he is sure to find an easy way of doing It.” – – Walter Chrysler

You have heard me say it often: I’ve been around a while.

One thing that I have lived through during my 30+ years in CPA firm management is the bonus plan saga. It is like a nightmare that keeps repeating itself (like in the movie Groundhog Day):

  • As a firm grows, it begins to hire more people.
  • At first, there is no bonus plan. People get paid for their over-all performance.
  • Then, a partner has a great idea, “Let’s put in a bonus plan! It will inspire our people to do better.”
  • And then, the ones who don’t get a bonus become jealous.
  • And then, CPA firm leaders feel guilty because they are not being fair to everyone.
  • The ones who do get the bonus usually are the top performers, however, some others may get a bonus because they are creative, intelligent people who can figure out how to “work” any bonus system ever designed for a CPA firm.
  • Eventually, (and it doesn’t take too long) the plan begins to demotivate people.
  • Then, the bright idea becomes: “Let’s do away with our bonus plan and build it back into their salaries.  We’ll reward top performers with larger compensation increases.” Thus, everyone gets an unexpected raise.
  • Several years later, “Let’s put in a bonus plan!” – – – same thing all over again, eventually it is dropped again because it really doesn’t work very well and it creates a huge amount of administrative work in tracking, measuring and analyzing.

I’ve actually been through this saga about 4 times during my career.

I have very mixed emotions about bonus/incentive plans relating to basic job performance.  However, I am very much in favor of incentives for special efforts like bringing in a great new client or recruiting a top-notch, experienced CPA to the firm.

Many partners and managers resort to incentives because they think they’re smart enough to create the perfect carrot. Doesn’t usually work that way in CPA firms.

Here’s what often happens inside the firm.  If you provide incentives for billable time you will get lots of billable time. Also, every client engagement will be over budget. You want them to get billable hours, yet you want them to perform the engagement more efficiently in less time than last year. It sends mixed messages.  We don’t live in a single-variable world – especially inside a CPA firm.

Much of the challenge with developing a highly productive team does not depend on incentives.  It relates back to having skilled, effective managers.  Winning firms have managers (and partners) who continually communicate, coach, and train the younger people in the firm so that everyone understands their role and the importance of quality, timely client service.  That is what will earn them a bigger paycheck.

While some bonus plans can demotivate your people, good managers do not. Good managers motivate.  Embrace the challenging activity of continually interacting and communicating with your team members.

  • You know what Gordie Howe got for a signing bonus? A team jacket!
  • Ed Lauter

Friday, July 16th, 2021

Words Are Powerful

“Be mindful when it comes to your words. A string of some that don’t mean much to you, may stick with someone else for a lifetime.” -Rachel Wolchin

Early in my career, I remember my firm’s partners providing feedback to me in the form of words. Yes, simple words. I have always remembered those words and I still think that keeping feedback simple is the best policy.

Right now, many of you are involved in providing feedback to your employees about their performance during busy season. Read this Flashback Friday post about evaluating people using words.

  • The secret of being boring is to say everything.
  • Voltaire

Monday, June 7th, 2021

Fixing People

“Spend more time encouraging high performers. Most leaders spend too much time trying to fix low performers.” – Dan Rockwell (@Leadershipfreak)

The above comment certainly made me think about all the time many CPA firms spend trying to fix people, meaning poor performers.

How many poor performers do you have inside your firm? I bet you can name more than one!

The comment I always hear from firm administrators, HR managers, etc. is “the partners won’t let her/him go. He/She has been here for 15 years.”

If you have a poor performer, they are taking up space that could be allotted to a bright, ambitious, up-and-comer. They are a faulty cog in the wheel of efficiency.

It is not being mean or hurtful to a person. It is about clearly defining expectations and monitoring a person’s progress toward meeting those expectations. This has become even more important with the enhanced need to be technologically savvy when working in the accounting world.

I hear the story over and over again. We need a development plan for Sally. Do you have a sample? I ask, “How long has she been with the firm?” The answer, “Ten years.”

The bright spot I am hearing is that, because of working remotely, many firms have increased the responsibility of their managers. Managers must provide feedback AT LEAST twice a month or even weekly. A person who is not meeting expectations should know that fact before they have been with the firm for years.

  • Leaders set high standards. Refuse to tolerate mediocrity or poor performance
  • Brian Tracy

Thursday, February 18th, 2021

Strengths

“It’s good to strengthen weakness but better to strengthen your strengths. You hired them for their strengths. Why focus on their weaknesses?” – Dan Rockwell @LeadershipFreak

You hire them because they have an accounting degree, they received good grades and they interviewed well.

You teach and train them to perform the basic duties of an accountant working in public accounting. You provide lots of feedback on what they did wrong along the way.

Of course, they still have some areas where they need to improve. Now, it is time to downplay their weaknesses (no one is perfect) and devote time, energy, and dollars to building on their strengths.

Communication – Maybe they are a poor communicator but they can investigate and solve the most challenging tax issues. Maybe they are a great communicator but they dread having their nose to the grindstone for eight hours.

Problem-solving – Maybe they love the challenge to think outside the box and discover answers to specific challenges. Maybe, when they encounter a problem, they prefer to immediately seek the advice of their manager or other experienced person.

Some no-brainers in an accounting firm – Someone just has a knack for preparing corporate tax returns and another can quickly and accurately work their way throw a long list of individual tax returns. Someone seems simply loves working in the tax area and dreads being drafted to be on an audit team.

Discover each individual’s strengths by enlisting their help and then put people with different strengths on the same engagement team. Most engagement teams need a planner and a doer, etc.

Here’s a good article via Forbes that will help you begin focusing on each of your team members’ strengths.

  • Strength and growth come only through continuous effort and struggle.
  • Napoleon Hill

Thursday, February 11th, 2021

The Annual Performance Evaluation

“Be spectacularly great at what you do. Wear your passion on your sleeve and hold your heart in the palm of your hand. And work hard. Really hard.” – Robin Sharma

If you have been keeping up with current trends in firm management, you probably know all too well that the annual performance review is on the verge of death.

Many firms have already abandoned this old-school method of providing team members with information that could help advance their careers. Today’s workforce wants feedback continually – every day – or more often. If your firm does away with the annual performance review, it means that managers and partners need to step up their game. They need to learn how to actually manage people and manage performance. It’s worth the effort.

You might think of it as conversation-based performance feedback. You will probably find that this method will help advance the skill level of your team much more rapidly. These performance conversations can focus on serving the clients, embracing the firm’s core values, and more.

Eliminating those old-fashioned performance rating sheets will create a sigh of relief from everyone involved!

If you can’t eliminate the more structured performance feedback process, at least simplify the one you have. Try the Keep, Stop, Start method and perhaps give this feedback monthly.

  • Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.
  • Steve Jobs

Tuesday, December 1st, 2020

The Source of Truth

“How to give people feedback is one of the hottest topics in business today.” – Marcus Buckingham 

This is a follow-up to yesterday’s post about giving and receiving feedback. It is an excerpt from the article, The Feedback Fallacy, via HBR, written by Marcus Buckingham and Ashley Goodall.

Just in case you didn’t read the entire article, here is a segment that speaks volumes.

The Source of Truth

The first problem with feedback is that humans are unreliable raters of other humans. Over the past 40 years psychometricians have shown in study after study that people don’t have the objectivity to hold in their heads a stable definition of an abstract quality, such as business acumen or assertiveness, and then accurately evaluate someone else on it. Our evaluations are deeply colored by our own understanding of what we’re rating others on, our own sense of what good looks like for a particular competency, our harshness or leniency as raters, and our own inherent and unconscious biases. This phenomenon is called the idiosyncratic rater effect, and it’s large (more than half of your rating of someone else reflects your characteristics, not hers) and resilient (no training can lessen it). In other words, the research shows that feedback is more distortion than truth.

This is why, despite all the training available on how to receive feedback, it’s such hard work: Recipients have to struggle through this forest of distortion in search of something that they recognize as themselves.

Next summer, when all the unique and unusual circumstances surrounding work has calmed down. Your firm should be ready to give feedback in a new and refreshing way. Do the homework and begin now. Maybe even some new behaviors surrounding feedback should begin happening much sooner than next summer. How about starting January 1st?

  • Just as your doctor doesn’t know the truth of your pain, we don’t know the truth about our colleagues, at least not in any objective way.
  • Marcus Buckingham

Monday, November 30th, 2020

Thrive & Excel


“The key to learning is feedback. It is nearly impossible to learn anything without it.” – Steven Levitt

What kind of feedback are you offering at your firm? Is it an annual performance feedback session, a semi-annual review, or maybe quarterly “touch-base” type feedback meetings? Some firms have eliminated formal performance reviews completely.

Hopefully, firms are offering frequent feedback and keeping the entire process very simple and direct.

No matter what process you are using, be sure you are always searching for better ways to give feedback. Rather than giving people feedback on how they can do better, why not ask “How can we help each person thrive and excel?” This question comes from Marcus Buckingham. If we ask that question, we might just find that the answers take us in a different direction.

Don’t get this feedback confused with actual training type feedback actually called instruction. Per Buckingham, “To be clear, instruction – telling people what steps to follow or what factual knowledge they’re lacking – can be truly useful. That’s why we have checklists in airplane cockpits.”

Also, per Buckingham, there are three theories that we in the business world commonly accept as truths. 

  • Theory of the source of truth
  • Theory of learning
  • Theory of excellence

Read Buckingham’s informative article, The Feedback Fallacy, here.

  • Make feedback normal. Not a performance review.
  • Ed Batista

Tuesday, October 20th, 2020

Be Honest With Yourself

“This above all: to thine ownself be true.” – William Shakespeare

I hope, at your firm, you are asking your team members to do a self-evaluation periodically. I also hope that those evaluating the performance of others read the self-evaluations.

So many times I hear the stories about an accounting firm team member who is asked to do a self-evaluation. They take the task very seriously. They reflect back on the period of time being evaluated and expertly list their accomplishments and often also note some deficiencies.

It seems that the above Shakespeare quotation truly applies to them.

It has been my observation that people really do know themselves. They realize their strengths and their weaknesses.

When you compare their self-critique with the evaluations supplied by others, they usually align quite well.

The problem is, many people with power over the person’s career progress often do not study the self-evaluations or even read them at all.

  • A company could put a top man at every position and be swallowed by a competitor with people only half as good, but who are working together.
  • W. Edwards Deming

Monday, October 5th, 2020

After the Retreat

“Unless commitment is made, there are only promises and hopes; but no plans.” – Peter Drucker

Think about how you felt immediately after your last strategic planning retreat. I have observed it first-hand many times. During the wrap-up conversations partners and other attendees feel relieved, enthused, optimistic even happy.

Next, think about how you felt one month after your retreat. Do you even remember that you felt relieved, enthused, optimistic and even happy?

You return to the office and there are voice messages and emails that need attention. There are team members awaiting your return so they can ask questions or obtain your opinion and there are family and other personal commitments you must meet. That is why I strongly urge you to develop specific action steps that will help you accomplish the FEW important initiatives identified at your planning retreat.

Everything is changing so rapidly that it is difficult to really comprehend what your firm will need to do two years from now. To keep your firm moving forward, identify two or three initiatives, document the steps it takes to accomplish each one and commit to getting them accomplished in 12 to 18 months.

It is each participant’s duty to actively participate. See the quotation above. If you don’t commit, there are only promises and hopes, but no plans.

  • Duty is what one expects from others; it is not what one does one’s self.
  • Oscar Wilde

Thursday, October 1st, 2020

Performance Management is Evolving

“My motto was always to keep swinging. Whether I was in a slump or feeling badly or having trouble off the field, the only thing to do was keep swinging.”  – Hank Aaron

A great resource for firm administrators/practice managers, managing partners, and HR directors working in public accounting is Sharlyn Lauby, an HR pro turned consultant. She created HR Bartender so people would have a friendly place to discuss workplace issues. I follow her on Twitter so that I can keep abreast of all the current issues facing HR professionals.

I constantly remind you to focus on the importance of performance feedback and make it a process that is simple, easy, and effective. In light of COVID and the fact that so many team members are working remotely, you have new challenges with providing helpful feedback to a remote workforce. Even before the pandemic, a PWC survey found that about 60% of employees were able to work at least one day a week remotely.

Performance feedback is evolving and the old days of judging a person’s performance based upon chargeable hours is a thing of the past. Firms utilizing value pricing have realized that moving away from a chargeable hour culture is not an easy task. It actually requires managers (and partners) to manage people and processes.

Lauby gives us five performance management activities to consider. The following are my comments on each of the five but please read her article to gain the full impact.

Take performance management online – Many firms have already done this and it is a must when people are not physically working from one location.

Create measurable goals, including stretch goals – I always remind you to ask less experienced staff to stretch and take on more responsibility. Instead of looking to hire a Manager, ask a Senior to step up.

Build a feedback mechanism – Managers and employees should have regular feedback sessions, not just once per year.

Allow multi-rater feedback – I believe most CPA firms are doing this now and obtaining a self-evaluation. However, read Lauby’s comments on this one.

Offer training programs for managers (and employees) – I have observed that accounting firms do not train their managers on how to truly manage people. Firms make a person a manger because they are a highly-skilled technician. Don’t forget the softer skills!

  • If the employee doesn’t understand the goal or the process, it’s difficult to achieve successful performance.
  • Sharlyn Lauby