Using Competency Models for Higher Levels of Performance Using Competency Models for Higher Levels of Performance

Using Competency Models for Higher Levels of Performance - PowerPoint Presentation

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Uploaded On 2016-06-16

Using Competency Models for Higher Levels of Performance - PPT Presentation

Accountants Advisory Group wwwAccountantsAdvisorycom Accountants Advisory Group wwwAccountantsAdvisorycom Strategic consulting to CPA firms Leadership management and strategic direction Advisory services pertaining to partnerships agreements partner compensation amp retirement agreeme ID: 364383

client firm performance goals firm client goals performance staff partners partner clients management amp work objectives business knowledge accounting




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Using Competency Models for Higher Levels of Performance

Accountants Advisory Groupwww.AccountantsAdvisory.comSlide2

Accountants Advisory Groupwww.AccountantsAdvisory.com

Strategic consulting to CPA firmsLeadership, management and strategic directionAdvisory services pertaining to partnerships agreements, partner compensation & retirement agreements, etc.Marketing, new business development and public relations strategiesMerger and acquisition consultingHuman capital and recruiting programsPartner retreat facilitationRecruiting partners and managersObjective and independent advicePractical experience from industry specialistsSlide3

The “Perfect Storm”

Gender Unfunded Retirement Increased Competition Leadership

Consolidation/Franchises Retiring CPAs Quality CPAs


CPA Firm Life Cycle

Initial Stages of Development

Running the practice in a more formal fashion

Mergers with smaller practices

New partners

Attracting experienced staff

Establishing niches and specialties

Economy and market conditions cause decline in revenues and profits

More competition for clients and talent

Founding and “rainmaker” partners retiring

Succession planning problems

Establishing a client and referral base

New partners

Start up

Growth - Established




Seek exit options




2012 PCPS Succession Planning Survey

79% of firm owners say succession planning will be a significant issue for them in the next 10 years.44% of multi-owner firms either are discussing a merger, acquisition, or sale, or are planning to do so in the next 2 yearsSlide6

Future Classification of Firms

Consolidation / mergers will take place at a rapid pace and as a result, the future classification of firms will change and will look like:Slide7

Top 10 Attraction Factors:2011 vs. 2006





Career growth





103Paid personal / vacation time86%79%7


Open-door / accessible






Comfortable office atmosphere





Interesting, challenging client projects*





Medical benefits




8Firm’s reputation or prestige73%


Retirement savings plan72%67%

510CPE credit reimbursement





PCPS 2011 Top Talent Survey. * The 2011 survey asked separately about client and internal projects. The 2006 survey asked about client and internal projects combined.Slide8

Driving Value

LeadershipState of the Art TechnologyMarketing, Public Relations and Practice DevelopmentRecruiting the best talent possible at all levels either directly or through M&A

Training, Career Development, Succession Planning, Partner & Staff Performance Management

Leading edge services, industry specialization



Efficient &

timely delivery

of serviceHuman Resource Management

Practice & Engagement ManagementValuesProfitsSlide9

STOP making Excuses—The Time to Change is NOW

“It is not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.” —Charles DarwinSlide10

Top 10 Accountant's Excuses For Not

Implementing A Performance Management PlanDeadlines

Too many client demands

Going on vacation



Unqualified staffSlide11

Top 10 Accountant's Excuses For Not

Implementing A Performance Management PlanReturning from vacation


new client

Writing newsletter article

Staff person quit



Build a Quality Staff Pyramid …the Clients Will ComeSlide13



Managing Partners / Senior Partners

Junior Partners







Inverted Pyramid StructureSlide14


Is the firm over-partnered for the current state of the “new economy”?Is the firm “carrying too many underachieving partners and mangers? Is the firm too “top heavy”?Does the leadership of the practice need to make some tough business decisions regarding the “Over-Partnered Syndrome” for the benefit of the firm?Are high billing rate partners doing too much low level work?Is the current partner compensation program demotivating partners to delegate to junior partners or managers?Slide15





Historical Pyramid Structure







Partner & Staff StructureDo we have enough “quality” staff in the appropriate positions to have a successful delegation process?

Are we properly developing our staff?Is the firm’s scheduling process taking into account the proper matching of work and talent and career development?There is a direct connection between the “partner-to-staff ratio” and the ability of firms to be successful in the long-term and develop succession planning.Need at least a 1:5 partner to staff ratio.Slide17

Winners, Comfort Zoners, Journeymen

Winners—20%Passionate about their careers.Have a personal strategic planContinuously upgrading their skills and knowledge.Upgrade their client baseContinuous career development and self-improvementAble to increase billing rates and collectSlide18

Winners, Comfort Zoners, Journeymen

Comfort Zoners—60%Shy away from challenges that will truly test them and require them to learn new skills.Fairly competent accountants who work hard, and provide good client service.Not progressive—status quoThey have a jobTake no risksNo future game planSatisfiedVolume/factory generatorsSlide19

Comfort Zone


Winners, Comfort Zoners, Journeymen

Journeymen—20%Don’t careShort-term playersJourneymen-move to different firm every few yearsSlide21

Performance ManagementSlide22

Performance Management

Provide clear objectivesRating and ranking against competency standardsMeasuring achievementsProviding honest and unbiased feedbackLinking compensation and rewards to performanceSlide23

Expectation GapSlide24

Performance Expectations

Performance expectations serve as a foundation for communicating about performance throughout the year. They also serve as the basis for assessing performance. When you set clear expectations about the results that must be achieved and the methods or approaches needed to achieve them, you establish a path for success.Slide25

Performance Expectations—A 2 W

ay StreetPerformance objectives express mutually understood agreements for results that an employee is expected to produce during the performance assessment period. Performance objectives are not separate from an employee’s job, but part of the job. Performance objectives are “ends” towards which you and your employee direct effort and focus resources. Slide26

Characteristics of Professionals inSuccessful Firms


Performance Management

Implementation Using Competency Models





Reward &




Work Product and Work Quality Technical and Accounting Knowledge

ProfessionalismAnalytical Skills Team Building and Team WorkClient Focus/Client Service CommunicationSlide29

Business AcumenProject Management

Relationship Building Risk Management Supervisory SkillsManaging a Profitable Business Business Development Slide30

Performance Management

Accountability for Implementing the Firm’s Short-Term and Long-Term PlansAnnual goals and competency standards that are linked to the Firm’s strategic plansCompensation program that rewards each partner fairly based upon the firm’s profitability and achieving goalsCounseling and guidanceSlide31

Work Product and Quality—Manager & Above

Develops and manages project milestones; ensures they are achievedInvolves Partners at appropriate time throughout the projectDetermines deliverable content and format to meet project objectives/client expectationsPartners with the client to align work product with client’s business strategyDesigns and produces solutions aligned with project objectives and client expectations (business strategy)Assigns responsibilities for tasks and decisions; coordinates the team’s activitiesSets clear goals, objectives and measures for the projectReviews work of others—ensures quality of deliverable(s)Utilizes project results to continuously improve work/future projectsSlide32

Analytical Skills—Senior

Effectively gathers, organizes and summarizes dataUnderstands rationale behind tasks and ultimate objectivesInterprets data and arrives at conclusionsQuestions procedures in achieving objectivesQuestions data integrityIdentifies obstacles to collecting and analyzing dataApplies information, logic and experiences to suggest solutions and alternate processesConducts research to formulate and support recommendationsSlide33

Analytical Skills—Supervisor

Identifies opportunities for creative problem solvingResolves obstacles to collecting and analyzing dataEvaluates the quality of information considering its source, relevancy and timelinessPerforms complex data analysis Recognizes when additional expertise is needed to address client issues and communicates with client service teamSlide34

Analytical Skills—Supervisor

Recognizes the broader impact of proposed solutionsChallenges logic used to assess problemsIdentifies related problems and issues when solving problemsMakes timely and sound decisionsAccurately defines a problem based on an understanding of technical requirements and/or client needsApplies learning from prior experiences to interpret current situationsSlide35

Analytical Skills—Manager & Above

Identifies the most critical issues of a client's situationDevelops solutions to resolve technical or business issuesIdentifies Firm and external resources to solve client problemsDevelops innovative approaches for similar client situationsSolicits creative ideas from the teamChallenges ideas and conclusions of the team and the clientProbes beneath the surface of problems to determine root causesRecognizes risks associated with innovative ideas and problem-solving approachesAnalyzes data based on reasonable assumptions, factual information and vision Slide36

Technical Skills—Auditing & Accounting Staff

Is learning to read and interpret financial statementsPerforms specific accounting tasks as delegatedIs learning and progressing in the knowledge and application of accounting principlesIs learning and progressing in the knowledge of auditing and accounting standardsIs gaining a general knowledge and awareness regarding tax issuesIs learning to prepare financial statementsIs learning and progressing in the area of computer applications in facilitating the auditing proceduresSlide37

Work Product and Quality—Senior

Completes deliverables in a timely mannerProduces deliverables that are clear, concise, thorough and of professional qualityEnsures job execution, documentation, consultation and completion in accordance with required policies and proceduresExecutes self-review of all workGenerates solutions aligned with project objectives and client expectationsDemonstrates an understanding of how work product links to client’s business strategySlide38

Technical Skills—Auditing & Accounting Senior

Reads and interprets financial statementsPerforms specific accounting tasks as delegatedProgressing in the knowledge and application of accounting principlesProgressing in the knowledge of auditing and accounting standardsGeneral knowledge and awareness regarding tax issuesPreparation of financial statementsProgressing in the area of computer applications in facilitating the auditing proceduresSlide39

Technical Skills—Auditing & Accounting Supervisor

Demonstrates solid judgment when interpreting dataHelps staff to develop Accounting knowledgeAcquired the knowledge and application of accounting principles and is sharing knowledge with othersAcquired knowledge of auditing and accounting standards and is sharing knowledge with othersGeneral knowledge and awareness regarding tax issuesPreparation and review of financial statements including disclosuresUses computer applications to facilitate the auditing process Slide40

Competency Models—Defined Roles & AccountabilitySlide41

Come Ready to Play Every DaySlide42

Technical SkillsA high level of comprehensive technical skills that is respected by clients, staff, and referral sources.

Continuously upgrades technical skills to become more valuable in the marketplace.Strong expertise in a niche or industry.Takes pride in their work and shows a personal commitment to quality.Slide43

Leadership & Team PlayerRespects partners

and employees of the firm. Is a mentor and counselor, who is fair and objective. The firm comes first before personal gain. Is both client and staff centric.Is entrepreneurial and takes calculated risks to grow and improve the firm. Willing to invest personal capital into the firm.Recognized by partners and staff as a trusted professional and manager of the firm. Is a role model to younger staff. Is a team player. Prioritizes the needs of the firm and takes the initiative to complete tasks and projects on a timely basis.Is willing to be held accountable for performance. Makes no excuses for underachieving.Slide44

Not a Great Role Model


Leadership & Team Player

Has enthusiasm and a positive attitude for the profession, the firm, and clients.Communication skills are clear, concise, and confident whether dealing with clients, staff, or prospects.Is willing to assist in resolving conflict and by acting as a liaison between people in the firm.Contributes to firm management by committee involvement and taking on special projectsSlide46

Leadership and Team Player

Follows the One-Firm Firm concept and puts the firm first.Provides constructive feedback on a continuous basis and is a good coach.Is a team player and good role model. Works hard at relationship building.Concerned about long-term issues, not just short-term profits.Is a source of creative ideas about the firm.Slide47

Client Service & Relationships

Meets with clients throughout the year and provides solutions to their business and personal financial problems.Clients seek out advice and counsel and is truly considered a trusted advisor in all aspects of their major business and personal financial decisionsExcels at client retentionProvides a greater level of client service with each yearReceives referrals from clientsGenerates additional revenue from clientsSlide48

Client Service & Relationships

Generates additional revenue from clientsTransfers clients to others when appropriateCulls out C & D clients when appropriateHas strong client relations and is considered a “Trusted Advisor”.Clients are not just satisfied, they are “delighted clients”.Has a strong history of client retention.Clients refer friends and colleagues.Slide49

Practice Development

Has a strong network of relationships with professionals outside the firm, such as attorneys, bankers, high-net-worth individuals and corporate executivesCommitment to firm/niche marketingAbility to generate new revenueAbility to generate additional revenue from existing clientsAbility to cross-sell firm servicesAbility to increase personal billing rate and collect itSlide50

Practice Development

Continuously demonstrates the ability to engage new business.Markets for quality clients, not quantity and continuously upgrades his client base.Strong relationships with referral sources and the business community.Generates additional work from existing clients. Slide51

Engagement Profitability & Management

Manages engagement profitability and quality on a frequent basis.Clients generate high realization rates.Consistently upgrades client base with high profitability clients. Disengages “C” clients.Demonstrates timely and effective billing and collectionsSlide52

Combining Competency Modelsand SMART GoalsSlide53


Develop “SMART” GoalsSpecificMeasurableAttainableRealisticTime-FramedAlign individual goals with firm objectivesInclude a self-evaluation in the processUtilize weightings and ratings to evaluate actual performanceSlide54

The Elements that Make a Goal SMART

SpecificSpecifically define what you expect the employee/partner to do/deliver.Avoid generalitiesThe level of detail you need to provide depends on the employee’s personality and their experience level. For example, a highly autonomous or experienced employee will need less detail than a less confident or seasoned one.MeasurableIdentify how you will measure success—usually stated in terms of quantity, quality, timeliness or cost (e.g. increase by 25%).Slide55

The Elements that Make a Goal SMART

Actionable/AchievableMake sure that accomplishing the goal is within the employee/partner’s realm of authority and capabilities.Can the employee successfully complete this goal with the skills, resources and time available to them?Are there factors beyond their control that need to be considered?While considering whether a goal is actionable/achievable, you also need to consider the partner’s/employee’s total set of goals. While each individual goal may be achievable, overall, you may be assigning the employee more goals than they could reasonably be expected to successfully complete.Slide56

The Elements that Make a Goal SMART

Agreed upon:Sufficient space to provide a detailed descriptionA field to list the higher level organizational goal that this goal is linked toAn area to list any important milestonesA separate field to capture the way success will be measuredA separate field for the due dateA limited number of fields to enter goals, to limit the overall number of goals assigned to each employeeSlide57

Using Weightings to Prioritize Competencies & Goals

Communicates the relative importanceAssists in prioritizing work on a day to day basisDecisions when faced with competing demandsOften used when compensation in tied to performance ratingsReflects the firm’s values and prioritiesSlide58

3-year Goals

1-year Goals

Long-Term Vision and Goals

Setting and Achieving Goals

90 Days




1-Year Goals

Long-Term Vision and Goals

3-year Goals

6-Month GoalsSlide59

Partner Accountability, Goals, and WeightingsSlide60

Partner Compensation Criteria

Criteria WeightFinancial Goals 50%Collections: $1,600,000Realization Rate: 90%Average Days A/R: 45Average Days W/P: 45Billable Hours: 1,200Marketing Goals 15%Net New Business: $200,000New Website by 9/30/13Branding Program by 10/31/13Establish Wealth Management Niche by 12/31/13Slide61

Partner Compensation Criteria

Criteria WeightMiscellaneous 15%Assigning clients to other partners: $400,000Adhering to firm policiesAssisting younger partners and staff to advanceContribution to staff CPE trainingManagement of the Firm 20%Leadership and daily managementAchieving action items assigned from the last retreatRecruiting of high-level talentImplement an amended partnership agreementManage the implementation of a new Career Development ProgramSlide62

Partner Self-Evaluation

Each partner should prepare a self-evaluation of total performance, including accomplishment of goals and objectives.Optional criteria to be considered for incorporation into the evaluation:Number of years as a partnerBillable hours workedNon-billable hours worked, including hours spent on:Practice development Staff recruiting and training New niche developmentGeneral firm marketingTraining in firm CPE sessionsSpecial management and administration projects and responsibilitiesSlide63

Partner Self-Evaluation (continued)

Optional criteria to be considered for incorporation into the evaluation:Client relationshipsClient fees managedRealization rate for client fees managedBilling rate compared to other partnersContribution to developing, mentoring and retaining staffNew business engaged this yearAdditional fees earned from current clientsClients lost this yearQuality of technical workCooperation with other partners and staffContribution to firm managementSlide64

Partner Self-Evaluation

The advantages of having each partner submit a self-evaluation form prior to the annual counseling and compensation meetings are:It opens up the lines of communication between you and your partners. Your partners will be forced to think about their performance, both objectively and subjectively prior to the meeting.It will allow you to attain knowledge about your partners’ accomplishments, some of which you may not be aware.Both parties will be better prepared for the discussions.It will assist you in evaluating how well each partner achieved their goals and objectives.Slide65

Sample Partner Self-Evaluation

Form QuestionsSome sample points to be included in a partner self-evaluation:Review the partner statistical and other information that was forwarded to you. Evaluate the information and provide me with your opinion of your performance in these areas.Provide any pertinent information that was not included in the statistical and other information that would assist me in evaluating your performance.Slide66

Sample Partner Self-Evaluation Form Questions

(continued)Review results of your past year’s goals and objectives. For those goals and objectives that were not achieved, explain why and what you will do differently in the future to accomplish them. Indicate your goals and objectives for the new year taking into account the firm’s stated goals and objectives.Indicate any other discussion items you would like to address in your upcoming annual performance review.Slide67

Aligning Performance Management with the Firm’s Objective and VisionSlide68

Alignment Process

A firm strategy and vision is developedGoals and objectives are agreed upon to achieve the strategy and visionAn action plan is developedPartner and Manager goals and objectives within a competency model framework are developed in conjunction with the action plan.Slide69

Performance ManagementSlide70

The One-Firm Culture

Not individual practices under one roofEstablishing and communicating the Firm’s organizational goals that all partners can contribute to.Each partner focuses on how their work contributes to higher levels of Firm success.Partners (including the managing partner) and staff are held accountable for performance and results.The practice is run more like a business with entrepreneurial ownersSlide71

Talent & Alignment—Factors That Make a CPA Firm Successful

Must create an environment where partners and staff are constantly motivated and can effectively balance their commitment to the firm, the clients, and themselves.Creating strong links between partners/managers and the kinds of things that motivate them, the firm’s strategy, and the way the firm is organized to deliver the strategy.The success of a CPA Firm is directly aligned to the partners and staff putting the interests of the firm ahead of their own needs.