Most of us would admit that sometimes we could benefit from a little outside motivation — someone to hold us accountable for hitting the goals we set, to crack the whip over us. Most of us would also admit, however, that we don't like having someone crack the whip over us, so we mostly avoid putting someone in that position.
This is a constant issue for many, many accounting firms, where the lack of hierarchy in the partner group and a preference for collegial relationships make it difficult to hold individual partners accountable. This, in turn, can make it hard to implement firmwide initiatives, as individual partners exempt themselves from any they don't like. It can also inhibit cross-selling, as partners try to isolate their own clients. And it can make it difficult to pursue a coordinated growth strategy, with different partners following their own agendas at their own speed, ignoring or only half-heartedly chasing firm goals.
Large and successful firms overcome all this with "One Firm" policies and more-corporate structures; many others simply continue on as they are, because the very partners who need to be held accountable are in a position to make sure their firms never implement the structures that would do it. With so many firms reluctant to have the difficult conversations needed to change this, the only way around it has been to wait for the recalcitrant partners to retire — but anxiety over the security of their retirement itself may actually help solve the problem.
Providing the capital necessary to fund the retirement plans of the profession's baby boomer and Gen X partners has been a major reason that accounting firms are turning to private equity — but that in itself will bring structural changes that make it easier to hold all members of the partner group accountable.
That's because PE doesn't just bring the capital that accounting firms lack; it also brings a seriousness about goals and bottom lines and key performance indicators that accounting firms have often let slip in the interest of maintaining a collegial atmosphere. PE firms also bring more of a willingness to have those difficult conversations: Collegiality is nowhere near as much of a priority for them as profit.
This isn't to suggest that PE firms are cold, bloodthirsty profit-mongers. Rather, it's to warn accountants that while PE deals may shore up shaky retirement plans, they will also bring unexpected levels of accountability, more rigid expectations, and a much higher level of comfort with having uncomfortable conversations.
You can hear more about this topic, and many others involving private equity, at Accounting Today's PE Summit in Chicago Nov. 20-21, but for now I have to go — our production team is cracking the whip over me, telling me it's long past my deadline … .
