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W HAT H IGH P ERFORMANCE F IRMS D O T O A CHIEVE A MAZING R ESULTS

W HAT H IGH P ERFORMANCE F IRMS D O T O A CHIEVE A MAZING R ESULTS P RESENTED BY S AM M. A LLRED, CPA F OUNDER & D IRECTOR O F U PSTREAM A CADEMY. It ’s relatively easy to become a good public accounting firm. Many firms across North America have already demonstrated that.

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W HAT H IGH P ERFORMANCE F IRMS D O T O A CHIEVE A MAZING R ESULTS

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  1. WHAT HIGH PERFORMANCE FIRMS DO TO ACHIEVE AMAZING RESULTS PRESENTED BY SAM M. ALLRED, CPA FOUNDER & DIRECTOR OF UPSTREAM ACADEMY

  2. It’s relatively easy to become a good public accounting firm. Many firms across North America have already demonstrated that. Becoming a high performance firm, however, is another matter. 2

  3. So what stands in the way? One of the biggest obstacles is that good is good, and those who are leaders of such firms enjoy a great life. They’re well-compensated, typically have great clients, are respected in their communities, and reap many other benefits. 3

  4. So what else keeps firms from becoming high performance? It’s work. Thomas Edison probably said it best: “Opportunity is missed by most people because it is dressed in overalls and looks like work.” 4

  5. It’s been my privilege to work with hundreds of firms across North America, and I’ve seen elements of high performance in many of them. Relatively few have become truly high performance. This morning we’ll talk about what high performance looks like and what you need to do to get there. 5

  6. Observations regarding firm performance How do we define high performance? What do HPF do to achieve amazing results? Examples of HPF processes Questions and answers PRESENTATION ROADMAP

  7.  OBSERVATIONS REGARDINGFIRM PERFORMANCE

  8. OBSERVATION #1 The firms in our profession fit a perfect bell curve. There are a few weak firms, a lot of good firms, and a few high performing firms. 8

  9. OBSERVATION #2 The difference between a weak firm and a good firm is as great as the difference between a good firm and a great one (HPF). 9

  10. OBSERVATION #3 Too many firm leaders are living the Groundhog Day experience. Many feel their greatest challenges remain largely unchanged year after year. Excuses are common and serve as a barrier to making significant improvements in weak areas. 10

  11. OBSERVATION #4 Many firms struggle to achieve the discipline required to develop and execute a written strategic plan. Too many subscribe to a “flavor of the quarter” approach and live the strategy of hope. 11

  12. OBSERVATION #5 Firms often convince themselves they are doing just fine by making comparisons to weak competitors. This creates a false sense of security. Measuring against a mediocre standard seldom helps firms become high performance. 12

  13. OBSERVATION #6 Although there is ample benchmarking data available to compare and contrast firm performance, this data does not address the important areas of culture, trust, accountability, unity, vision, discipline, etc. 13

  14. The differences between high performance firms and other firms transcend benchmarking numbers. 14

  15. OBSERVATION #7 It’s impossible to become a high performance firm by accident. No one “lucks” into it. 15

  16. OBSERVATION #8 High performance firms have a low tolerance for poor results in any area. They understand the connection between great processes and great results. 16

  17. They also understand and believe that with focus, discipline and endurance, they can improve any area of the firm. Their track record of doing this has produced a culture of high performance throughout the firm. 17

  18. OBSERVATION #9 What Jim Collins said about the flywheel is true. High performance firms are never the result of any one specific action or event. 18

  19. “No matter how dramatic the end result, the good-to-great transformations never hap-pened in one fell swoop. There was no single defining action, no grand program. Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough, and beyond.” Jim Collins 19

  20. OBSERVATION #10 Virtually any firm on the planet can become a high performance firm if this is its primary goal and objective. In large measure, we all get what we deserve in terms of firm performance. 20

  21.  HOW DO WE DEFINEHIGH PERFORMANCE?

  22. So what does high performance look like? We think of high performance in terms of attributes and areas of discipline. Here are the attributes we’ve observed in high performance firms.

  23. HIGH PERFORMANCE FIRM ATTRIBUTES Passionate about continuous improvement Shared belief that problems can be solved Absence of artificial harmony A compelling, shared vision that excites every firm member Ability to think and act strategically Proven ability to set and reach stretch goals that align with vision and strategy

  24. HIGH PERFORMANCE FIRM ATTRIBUTES Passionate about exceptional service and ability to deliver it consistently A strong culture of self-accountability Ability to work together as team members in an atmosphere of mutual respect A “leave nothing to chance” approach to achieving anything of significance A strong business development culture

  25. HPF AREAS OF DISCIPLINE High performance firms are excellent in each of these six areas of discipline.

  26. KEY COMPONENTS • LEADERSHIP • Vision/Strategy • Non-negotiable Performance/Behavior Standards • Partner Unity/Teamwork • No Tolerance for Known Weaknesses • Effective Firm Governance • Productive Partner Meetings • Succession Planning Process • Strong Culture • Partner Compensation Process

  27. KEY COMPONENTS • FINANCIAL PERFORMANCE • Incentive Compensation Plans • Leveraged Staffing Mix • Commitment to Billable Hour Budgets • Bottom 50 Process • Payment Expectation Process • Business Value Agreements

  28. KEY COMPONENTS • PARTNER EFFECTIVENESS • Partner Evaluations • Partner Goal Setting • Partner Accountability • Optimizing Partner Horsepower • Knowledge Transfer Process • New Partner Training • Partners as Experts

  29. KEY COMPONENTS • TEAM DEVELOPMENT • Bench Strength Process • Meaningful Evaluations and Career Planning • Rapid Skill Development • Staff Mix • New Partner Selection Process • Connection and Commitment to Vision and Strategy • Recruiting HPF Candidates • Getting the Wrong People off the Firm Bus • Performance-based Comp

  30. KEY COMPONENTS • CLIENT MANAGEMENT • Client Classification • Proactive Client Plans for A/B Clients • Continuous Improvement of Service Offerings • Raving Fans Strategy • Client Upgrading • Payment Expectation Process

  31. KEY COMPONENTS • BUSINESS DEVELOPMENT • Business Development Results Tracking • Business Development Culture • Rainmaker in Training Process • Optimizing Rainmakers • Client Screening and Acceptance • Niche Development Process • Cross Servicing Plan • RFP Process

  32. WHAT IS A HIGH PERFORMANCE FIRM? There’s a tendency to see high performance firms only through a numbers lens. There certainly are key measurements and metrics, including income per partner, net fees per partner, net fees per person, realization, utilization, etc. 32

  33. WHAT IS A HIGH PERFORMANCE FIRM? There are likely as many non-tangibles as tangibles that factor into the qualifications of a high performance firm. A high performance firm consistently functions at its highest level and possesses most (if not all) of the characteristics of a high performance firm. 33

  34. WHY AREN’T MORE FIRMS HPF? If it’s true that most (perhaps all) firms want to get better, and if most firm leaders know what their firm needs to do to get better, why aren’t there more high performance firms in our profession?

  35. THE JOURNEY TO HPF ISN’T EASY “The primary reason we do not work at areas in which we know we need to improve is that the rewards (and pleasures) are in the future; the disruption, discomfort and discipline needed to get there are immediate.” David H. Maister

  36. THE JOURNEY TO HPF ISN’T EASY “The essential questions of strategy are these: Which of our habits are we really prepared to change, permanently and forever? What issues are we really ready to tackle?” David H. Maister

  37. THE JOURNEY TO HPF ISN’T EASY “Discussing goals is stimulating, inspiring, and energizing. Discussing what disciplines you are prepared to accept to get to a goal feels tough, awkward, annoying, frightening and completely unpleasant.” David H. Maister

  38.  WHAT DO HPF DO TOACHIEVE AMAZING RESULTS?

  39. 1. ABANDON THE STRATEGY OF HOPE While hope is a wonderful virtue, it has to be among the worst strategies. High performance firms recognize they must take a leave nothing to chance approach to all major endeavors. 39

  40. 2. SEE IT AS A JOURNEY These firms realize the most important thing is to stay on the path to continuous improvement. They don’t treat the journey like a 100 meter dash. They fully expect the journey to take four to five years. 40

  41. 3. ACHIEVE LEVEL 8 PROCESSES One of the great killers of progress is a checklist mentality. The best firms understand it’s about learning to do the right processes the right way. 41

  42. 4. FOLLOW THE ADVICE OF JIM COLLINS • Every firm that has successfully made the journey has followed the advice of Jim Collins: • Get the wrong people off the bus • Get the right people on the bus • Get the right people in the right seat on the bus 42

  43.  EXAMPLES OF HPF PROCESSES

  44. PARTNER EVALUATIONS • PARTNER EFFECTIVENESS • Partner Evaluations • Partner Goal Setting • Partner Accountability • Optimizing Partner Horsepower • Knowledge Transfer Process • New Partner Training • Partners as Experts

  45. PARTNER EVALUATIONS A significant focus of the partner evaluation process is to help partners see what they could do to become continually more valuable in and out of the firm. 45

  46. The evaluation process needs to be a catalyst for positive change. The primary purpose of the evaluation process is to help partners and managers become high performing leaders. KEY PRINCIPLES 46

  47. The process should provide honest feedback regarding needed improvement. To encourage consistency, guidelines on the rating system need to be set and followed. Evaluators need to openly interact with each other rather than being allowed to complete the evaluation process while sitting at their desks. KEY PRINCIPLES 47

  48. HIGH PERFORMANCE DEFINED To be a high performing leader, an individual must excel in four of the following six areas and be good in the remaining two. A high performing leader is never a “one or two trick pony.” 48

  49. PERFORMANCE AREAS AND SCALE 49

  50. PARTNER/MANAGER EVALUATION 50

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