Leadership, stability, and innovation at any business depend on management, and in an accountancy firm on the partners. A young CPA works hard for many years, and by showing his talents as an accountant becomes a partner, managing others and showing other young CPAs what to do.
However, being a good accountant and being a good manager are entirely different things. By just promoting the best accountants, a CPA firm risks running headlong into the Peter Principle and promoting accountants outside of their competency. And a Gallup poll conducted in 2015 found that only “about one in 10 people possess high talent to manage,” meaning that your partners may likely be unsuited for their leadership positions.
Even if a CPA firm has a good partner currently, there is no guarantee that the partner will stay effective for the next 20 to 30 years. Perhaps the partner refuses to adapt to new technologies such as automation which will change the accounting industry. Perhaps his personal life worsens, which in turn impacts his job performance. Perhaps his energy levels drop off drastically as he ages.
Whatever the reason, a once effective accountant becomes an ineffective partner. Such problems can be highly difficult to address, especially because that partner can be a good friend or long-working colleague with senior leadership. And just as we ignore our friends’ foibles at times, senior leadership may ignore the partner’s failings and hope that it will get better.
But few problems get better by hoping they go away, and that decision to ignore this problem will result in negative consequences for the firm. Younger workers will look at how the leadership is ignoring this one problem worker and conclude that the leadership is incompetent, lowering the entire firm’s morale and productivity.
Management must figure out how to handle ineffective partners as soon as possible, and do it in a way which shows their respect for their past accomplishments.
Detecting an Ineffective Partner
The first step for management is to confirm that a partner has become truly ineffective in a way which goes beyond an occasional mistake. As Sandra Wiley in an AccountingWEB article details, bad partners and managers are often rude, dictatorial, try to run everything themselves instead of delegating as a manager should, and fail to understand that their workers have a life outside of accounting.
Sometimes you can detect such behavior yourself, but the people who can truly tell you whether a partner is ineffective are their subordinates and fellow workers. In particular, using employee monitoring software, departing employees can provide great insight about your partner’s weaknesses. CPA firms must communicate with leaving employees, figure out why they are leaving, and address their complaints to prevent other talent from slipping away. That includes taking care of an ineffective partner.
Also take care to observe if there is a trend among the kind of workers who are leaving. For example, if more women than men are leaving your firm, that could be a sign of an unfriendly, unopen atmosphere fostered partly by management.
Handling Things Gently
Even if your firm has determined that a partner is a problem, figuring out how to handle it can seem to be a tricky affair. But the reality is that it generally is not much different from handling a problem employee in any other business.
Just as your firm should listen to exiting employees to determine whether a partner is a problem, so too should the firm talk to your partner about how they can improve. Talk to them face to face so that you can have a proper conversation of how things should change or how the firm can help the partner. Consistently set down proper rules, as it may sometimes requiring reminding the partner of his faults more than once. Always stay calm, rational, and never overly negative. Inc. has some rules for giving negative feedback which can help discussing performance adjustments with a firm’s partner.
But in the worst case scenario, understand that a CPA firm may have to ask an ineffective partner to leave. That departure should be done as gently as possible. A partner should be allowed to take some clients, and make clear that the firm would prefer a mutual parting of the ways rather than an acrimonious divorce.
Dealing with an ineffective partner can be a highly unpleasant task and management may prefer to just let thing slide. But such problems cannot be allowed to fester. For the good of the firm, management should attempt to work with a partner as much as possible, listen to their complaints, and do what is possible to bring them back to their former glory. But in the worst case scenario, the firm must be willing to minimize the partner’s role in the company and eventually outplace him.
Gary Eastwood is a CPA licensed senior accountant from Seattle, Washington. He received his CPA license from the Washington State Board of Accountancy in 2001 before relocating to Onawa, Iowa in 2008. Over more than 15 years of accounting experience, Gary has worked with multinational health service providers and independent CPA firms. He has a proven ability in dealing with business clients from a variety of backgrounds as well as leading companies to greater efficiency and profitability. He is familiar with both US GAAP and China GAAP.