BESTPRACTICES 2013
DISCARDING PARITY AND TURF PROTECTION:
PARTNERS HAVE TO LEAD THE WAY
PRESENTED BY TIMOTHY J. BARTZ
DIRECTOR AT UPSTREAM ACADEMY, LLC
BESTPRACTICES CONFERENCE 2013
© 2013 UPSTREAM ACADEMY, LLC
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Parity \per-ə-tē\
“Parity is the quality or state of being equal or
equivalent.”
In our case, we’ll define parity as the act of
treating everyone as being equal or equivalent
regardless of performance.
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Background Thoughts
Firms are struggling to keep their best people,
especially those with 3 to 7 years of experience.
To keep its best people, a firm must be prepared
to treat the best people differently than the
average performers.
This sounds good until you start applying it in
practice.
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Reasons People Leave
According to the AICPA, the principal reasons
people leave public accounting are:
1. Feeling their job interferes
with family life
2. Working more hours than
they prefer
3. Not having the chance to
use skills and abilities
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Reasons People Leave
4. Lack of people who understand and are
sympathetic to the challenges of their positions
and upon whom they can rely for advice and
assistance
5. Having too little say in the way work is
performed
6. Feeling their progress isn’t what it should be
in advancement and opportunity
7. Feeling their compensation is inadequate
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Life Changes
Simply stated – LIFE HAPPENS. We meet
someone, we fall in love, we get married, we
move, we have children – YOU NAME IT.
Our priorities change and our work in public
accounting seems like it might get in the way
because of busy season(s), travel, demanding
clients and the like.
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Work-Life Balance
Staff members feel like public
accounting demands too much
of their time for too much of the
year. There are certain times
when it might be very difficult
to get time off. During such
periods, work gets in the way of
the other parts of life.
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Billable Time Pressures
Public accounting firms make their
money largely from billable hours
worked on client issues times a
certain hourly rate. For firms to
achieve the revenue necessary to
keep up with rising costs and
technology, they expect individuals
to be 75% - 85% billable. Time
must be charted and entered into
practice management immediately.
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Travel
Often staff members are asked to travel to work
with firm clients. Sometimes as much as 25% to
50% of time can be spent out of the office. Travel
takes its toll.
When you travel, the work may be the same
during normal business hours, but you don’t get
the down time with family and friends in the
evenings (and possibly on weekends).
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Money
Often private industry (and
sometimes government jobs)
will offer higher salaries and
benefits at the 3 to 7 years of
experience level.
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Poorly-Defined Career Path
Individuals may have difficulty
identifying how they will move
forward in their careers. Often
people perceive there are only
more mysteries the higher they
move in the firm.
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Discussion Outline
1. What Constitutes Discrimination?
2. Where Must Parity Exist?
3. Where Can Firms Eliminate Parity?
4. Why Parity Exists
5. Treating People Differently Based on Their
Contribution
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 WHAT CONSTITUTES DISCRIMINATION?
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What Constitutes Discrimination?
From a legal perspective, where are we
prohibited from drawing distinctions in
people?
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What Constitutes Discrimination?
Anti-discrimination laws help protect employees
from employers who treat them unfairly. Some
of the most common prohibited areas of
discrimination are:
• Age (over 40)
• Gender
• Religion
• Race
• Sexual orientation
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What Constitutes Discrimination?
Unfortunately, many HR professionals and firm
leaders expand discrimination warnings and
decide everyone must be treated the same in all
situations for fear someone will cry out the D
word and we’ll spend the rest of time battling an
issue in court.
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What Constitutes Discrimination?
Clearly there are some
challenges if we don’t have
a solid performance and
evaluation tracking system,
but falling victim to the
fear of discrimination will
create mediocrity in your
firm.
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 WHERE MUST PARITY EXIST?
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Where Must Parity Exist?
Parity is required largely in the area of employee
benefits packages:
• Qualified retirement plans
• Health insurance coverage
• Vacation and other PTO
• Reward systems such as clothing allowances,
CPA exam assistance and fulfillment
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Qualified Retirement Plans
Qualified retirement plans have their own set of
rules as determined by the Internal Revenue
Code and the Department of Labor.
Participation and reward is based solely on:
• Longevity
• Minimum hours of service annually
• Individual compensation
• Individual contribution and matching
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Health Insurance Coverage
Generally health insurance must be provided to
all individuals in the same class of employment
with the only distinguishing factors being:
• Minimal waiting period before coverage
begins
• Employee contribution of some portion of the
premium
• Hours of service annually
• Participation in wellness program
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Vacation and PTO
Generally vacation and PTO are provided to
everyone, with the distinguishing factors being:
• Years of service
• Position in the organization
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Reward Systems
Some firms provide benefits like clothing
allowances to entry level employees, assistance
with the costs of preparing for the CPA exam, and
bonuses for successful completion of the exam.
Generally, everyone is eligible for these benefits,
although the benefits for professional
designations and clothing allowances may be
reserved for the consulting staff (with admin staff
excluded).
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 WHERE CAN FIRMS
ELIMINATE PARITY?
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Where Can Firms Eliminate Parity?
If we are truly seeking to treat individuals as
they deserve to be treated and to provide benefits
to our best people, what options exist for doing
more for some than for others?
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Where Can Firms Eliminate Parity?
1. Compensation
2. Advancement
3. Continuing education
4. Specialized training (e.g., leadership)
5. Work schedule
6. Work location
7. Client assignments
8. Coaching
9. Invitations to special meetings
10. Participation on firm committees
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Where Can Firms Eliminate Parity?
Which of these areas of specialized treatment do
you find to be of most interest to staff members?
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 WHY PARITY EXISTS
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Why Parity Exists
What reasons can you think of that cause firms to
resort to parity even in areas where it isn’t
required?
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Why Parity Exists
Possible reasons:
1) Protectionism by stakeholders and managers
2) Weak management
3) Poor evaluation system and an inability to
quantify distinguishing performance
4) Fear of offending people who aren’t included
5) Fear of discrimination claims against the firm
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Protectionism
Partners and managers have a lot on their plates.
In the short term, their job is made easier when
there is little conflict and when they have the
same people available to do the work year in and
year out.
When we create differences, partners and
managers are often left dealing with
disappointed and disgruntled team members
who might actually leave.
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Protectionism
Firm leadership needs to be a resource to
partners and managers who might be affected
negatively as a result of treating people
differently based on their performance.
How can firms provide support in these
situations?
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Protectionism
In the end, partners and
managers must stand behind
the firm’s decisions. They
must be accountable for
resolving the issue in the
firm’s favor and not throw
firm leadership under the bus
for distinguishing based on
performance.
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Protectionism
Some ideas for support might include:
• Ensuring partners and managers are aware of
special treatment offered to top performers in
the firm
• Providing information regarding why
someone’s performance is considered to be top
tier and worthy of special recognition
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Protectionism
• Coaching the partners on how to respond to
inquiries from others who aren’t getting
special treatment
• Assisting with staffing support in times when
someone leaves the firm, especially as the
result of eliminating parity
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Weak Management
Weak management is evidenced by failure to
make decisions and do what is in the best
interests of the organization for the long term.
Like the line partners and managers, weak
management doesn’t want to upset the apple cart.
The result is that the organization operates in an
atmosphere of mediocrity because leadership
does not push people outside their comfort
zones.
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Poor Evaluation System
Too many firms are plagued by evaluations full of
safe scores that fail to give employees a realistic
assessment of their performance. This is
compounded by compensation systems that give
raises to everyone regardless of performance (or
with only minor differences for poor or exemplary
performers). These systems (coupled with poor
documentation) handcuff firms when they try to
distinguish based on performance. They also
subject the firm to discrimination claims.
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Fear of Offending
Firms often ask, “Is it really worth the effort to
distinguish performance?” In other words, do
we get enough benefit from rewarding the top
performers at the risk of frustrating the average
performers?
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Fear of Discrimination Claims
No one likes dealing with
combative attorneys or
even having someone
threaten a claim of
discrimination. The result
is that firms often take a
more than conservative
stance. which means little
is done to distinguish
performance.
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 TREATING PEOPLE DIFFERENTLY
BASED ON THEIR CONTRIBUTION
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Treating People Differently
Firms that want to operate on the right side of the
bell curve – High Performance – have to learn to
treat exceptional performers differently than
others.
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Treating People Differently
A danger in identifying top performers is that
once identified, we label individuals as top,
average or poor performers (and forget to change
this based on performance).
Hopefully, we have the ability to identify poor
performers and release them quickly.
Average and top performers can move around.
Therefore, ensure people earn their designation
on an ongoing basis.
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Treating People Differently
Identify individual strengths and work to build on
these strengths. When we look at partner material,
we are looking for people who can excel in a
number of areas.
Team Development
Client Management
Business Development
Financial Management
Leadership
Personal Effectiveness
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Treating People Differently
Avoid formalized programs
to reward exceptional
performance. Instead,
identify what is important to
the individual and make a
difference in these areas of
importance.
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Treating People Differently
“These are the two assumptions that guide the
world’s best managers:
1. Each person’s talents are enduring and
unique.
2. Each person’s greatest room for growth is in
the areas of her or her greatest strength.”
Marcus Buckingham & Donald O. Clifton, Ph. D.
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Conclusions
Firms will never be able to keep everyone who
joins an organization. In fact, it would probably
be unhealthy to do so.
The critical point to remember is that you must
do everything in your power to keep your best
people. This must begin by the third year of
employment.
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Conclusions
“Good leadership involves responsibility to the
welfare of the group . . . . Ironically, by
procrastinating on the difficult choices, by trying
not to get anyone mad, and by treating everyone
equally ‘nicely’ regardless of their contributions,
you'll simply ensure that the only people you'll
wind up angering are the most creative and
productive people in the organization.”
Colin Powell
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Contact Information
Tim Bartz
Phone: 406.447.3090
E-mail: [email protected]
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