Why Performance Reviews in CPA Firms Don't Work
Is there any ritual in public accounting more despised and pointless than the annual performance evaluation?
Years before I heard Ron Baker and Ed Kless rail against them, I had already decided they were pointless and a complete waste of my time. So I started breaking the rules.
For my first few years in public accounting, I took the exercise seriously. About two weeks before my scheduled evaluation meeting, I received a questionnaire to fill out and rate myself.
The partner supervising me and my co-workers received the same questionnaire to judge me, but I struggled to answer the questions and figure out whether my performance over the last year met or exceeded the poorly defined standards for my job title.
The criteria were too subjective, and it was never clear what I had to do to improve my ranking.
This was a small firm, and there wasn’t anyone else in the tax department at my level, so I had no way to compare myself to what my peers in the office were doing.
Here are a few of the areas that puzzled me:
1. “Continues to develop working relationships with appropriate client personnel.”
If I could email or call the client’s bookkeeper and get answers to my questions quickly, and if I, in turn, responded to their emails and phone calls promptly, did that mean I was “meeting expectations” or “exceeding expectations?”
What about the clients that I had no contact with — the ones where I had to run all my questions through a designated partner or manager? Did those count against me? What did I have to do to “Exceed expectations?”
2. “Monitors chargeability, profitability and/or realization goals for each engagement and assigned personnel.”
I had very little input into the firm’s billing practices, and I generally had no idea if my work was written up or written down for the final bill. And, on the rare occasions when a partner promised the client a specific price for a project, that price was almost never shared with me.
One of the partners almost always put down a time budget of six hours for a corporate tax return, no matter the complexity. This standard six-hour time budget had no relation to either any agreed-upon price to the client or the number of hours the work would actually take.
So a six-hour return might actually take just four hours, or maybe as many as 12. Plus, our time and billing system didn’t have an easy way to monitor running costs or time spent for projects.
How was I supposed to monitor “chargeability, profitability and/or realization goals” when I had little control over them and almost no visibility into the process?
Of course, I wanted to get the work out as quickly as possible, but in the grand scheme of billable hour goals, was I penalized or rewarded when I found more efficient ways to get the work done?
3. “Demonstrates high-level analytical and problem-solving skills.”
I knew I had those skills, and I worked with some really smart people. But did I meet or exceed expectations for my position? As I said above, this was a small firm, and I didn’t have a big frame of reference for what that meant.
Accountants all have those skills, but was I better or worse than I was supposed to be? Because these evaluations were so subjective, it wasn’t a terribly useful exercise to help me do my job better. I rarely got any useful feedback.
What about throwing in some concrete metrics, like turnaround time, or accuracy of my work? How about asking the clients I worked directly with what they thought of me? What about tracking the money my efforts brought into the firm?
So, I started breaking the rules for those self-evaluations. In the absence of any concrete criteria for how I should rank myself, I looked to the only authority I could find for guidance: the tax partner who was evaluating me.
I pulled out his evaluation from the year before and simply copied his grading from last year onto my form for the current year, which saved me a good chunk of time. At the same time, I was starting to look for an exit out of public accounting, so this exercise became even more pointless.
Finally, at my last performance evaluation, about a year before I left that firm, I broke all the rules. Sure, I put the appropriate pen marks on the forms and handed them in to the right people. But then when I sat down at lunch in the usual crowded and noisy restaurant with the tax partner and my manager, all my frustrations from the last year boiled over.
The tax partner, who I still regard as one of my best bosses ever and a good friend, asked me some innocuous question about the last year and I said the one thing that everyone says is the fastest way to get fired: “I hate my job. The only good thing about it is working with the two of you and the rest of the tax department.”
Amazingly, my boss didn’t fire me on the spot. He took a deep breath and said, “Well, in that case, I don’t suppose going over your evaluation makes any sense,” as he set the forms aside.
The three of us ended up having a great conversation, lunch and a lot of pent-up frustrations off my chest. Unfortunately, that didn’t lead to any changes back at the office, so about 10 months later I gave my notice when a perfect opportunity dropped in my lap.
I don’t recommend that anyone follow my example, I knew that I was a valuable team member, and that replacing me would be tough. I also had a close relationship with the tax partner and knew that he was more concerned with my development as a professional than in keeping me in place.
But for those in charge at your firms, it’s time to ditch the annual performance review and replace it with something that actually helps people do their jobs better.
Liz Farr, CPA, spent 15 years in tax and accounting at small firms in Albuquerque, NM. Besides tax returns of all flavors, she worked on audits of governmental entities and not-for-profits, business valuations, and litigation support. Now she's a full-time freelance writer specializing in content marketing for accountants and bookkeepers around...