Becoming the firm of the future: 5 reasons firms aren't holding on to the best talent
Ask yourself these essential questions to determine whether you're driving top talent away.
December 1, 2014
Editor’s note: This article is the last in a series adapted from a white paper by Joey Havens, Becoming the Firm of the Future, which is available in the AICPA Private Companies Practice Section Human Capital Center. The white paper includes an extensive checklist of steps that firms can take to better position themselves to become the firm of the future, as well as discussion questions they can use in firm meetings or partner retreats.
CPA firms are poised at a crossroads: We are faced with hard trends changing our profession, and our ability to adapt will determine our future relevance. To address the challenges we face—and position ourselves to seize new opportunities—we must attract, develop, and retain capable young team members who will become our future leaders. We have struggled to do this so far. Why? Here are five hidden challenges that prevent firms from developing robust talent pipelines, followed by discussion questions that can help leaders identify steps to turn this problem into an opportunity to increase their relevance.
Challenge No. 1: The leadership void
Firms face a serious leadership drought as the roughly 77 million Baby Boomers retire, leaving only an estimated 50 million Gen Xers to replace them. Compounding the problem is the fact that our current leadership development practices are primarily based on a “sink-or-swim” mentality. Partners and managers brag that they just “got it” when it came to learning how to lead, but this mindset only leaves members of younger generations uncertain how to get ahead and disenchanted with the profession as a long-term option.
Here are some things to consider as firms attempt to address the looming leadership void: What is the age and retirement timeline for key leadership positions in your firm? How many early retirements do you anticipate? (Some Baby Boomers are going to surprise us by leaving earlier than we thought.) Has your firm adopted a formal succession plan for key positions that identifies potential new leaders? Do you have sufficient mentors to nurture your most promising professionals? What recent training have your partners and managers participated in that was focused on the skills needed to grow other leaders? Is there a need for additional coaching to fill voids or address timing concerns?
Challenge No. 2: Recruiting and retention rationalizations
Too often, we pay insufficient attention to recruiting and wait too long to think about retention. We wrongly assume that, because the accounting profession offers careers with desirable incomes, talented people will always flock to it. Over and over again, we rationalize high turnover by telling ourselves it’s simply a fixed trend in the profession. When firms fail to challenge this poor logic, the effectiveness and timeliness of their recruiting and retention initiatives suffer.
We are in the beginning stages of a talent war, so your firm needs to ask certain questions about recruiting and retention. For instance, is your turnover rate increasing? How do you monitor employee satisfaction? Are your top people satisfied, or do they have an eye on the door?
Challenge No. 3: Seeing is believing
A recent ConvergenceCoaching LLC survey on CPA firms showed that more than 90% of firms boast career/life integration policies offering lots of flexibility. Though firms have good intentions when putting these policies in place, team members remain skeptical about them if their firms’ leaders fail to change their expectations or their own work styles. As a result, team members feel guilty about participating in flexible work arrangements and often worry that requesting greater flexibility will harm their careers. Firms also undermine the effectiveness of flexibility policies by overscheduling employees and making frequent requests for exceptions to the flexibility arrangement when crises occur. All of this leads to overworked and disengaged team members.
To address these problems, ask yourself these questions: What steps has your firm taken to understand how team members might want to work differently? How many of your partners and managers are modeling the kind of satisfying career/life integration that would appeal to promising younger professionals?
Challenge No. 4: Time stinks
The economic engines of almost all CPA firms are built on the chargeable hour. But creating a vibrant firm culture requires that we appreciate employees for the value of their contributions, not just the time they report or spend completing a project. A firm can suffer enormous untracked costs when bright, entrepreneurial young professionals see the disconnect between time recorded and quality of work performed, and seek work elsewhere. The speed of technology, artificial intelligence, the preferences of Millennials, and clients’ demands are changing the ways we determine the value of work. It would be a serious mistake—and not in our clients’ best interest—to ignore new ways of monitoring and assessing performance.
Questions to ask in your firm include: Have you had an open debate on the best way to establish your value to your clients? Are your team members’ goals and expectations based on the time they spend at their desks or on the results they achieve? How often do team members receive feedback related to chargeable hours or hours worked? How does that compare to the quantity and quality of feedback they receive on their own roles and responsibilities and the results you expect?
Challenge No. 5: Heart matters
It’s easy to drift into busyness and lose our connection with our mission—our why—without realizing it. What seems to be missing, all too often, is the requisite energy and passion—the heart behind our actions. A firm’s culture ends up being based on the artifacts of policies established long ago.
We focus a lot of our time and energy on the business side of firm management—finance, marketing, and technology—and not enough on our people and culture. Our future leaders want to understand and connect to our mission and purpose. How can we provide our team members a better sense of connection? It starts by clarifying who we are and who we are not. That will enable us to maintain a better sense of purpose and communicate it with passion and transparency.
You can begin by asking questions like these: What percentage of your firm members can state your mission or vision? How often is the “why” of your organization—its purpose and reason for being—communicated to everyone? On a scale of one to 10 with 10 being over-the-top, how would your team members rate the partners’ passion and connection to your mission?
Positive change leads to growth and prosperityIf we work intentionally to create strong cultures in our firms, together we can meet these new challenges for our profession. If we ignore the challenges we face, we run the risk of being overtaken by competition or watching our clients—and most promising younger leaders—drift away. What got us here will not take us forward. It’s time to change how we work and communicate. Together we can make a difference for our profession and grow in relevance along with our clients and people.