When the Inmates Are Running the Asylum

Crazy doesn't get better by adding more crazy.

THE CONUNDRUM

“We can’t really enforce this because we don’t want to risk having him (or her) quit.” I can’t tell you how many times we hear something to this effect when we talk with CPAs. We hear this at small firms and we hear it at large firms. We hear it from partners, from directors, and from managers. It doesn’t matter what size of firm they’re in, nor does it matter what level of position they hold. It’s always the same line. It reminds me of the old adage, “the inmates are running the asylum.” It raises the question of who actually is running the firm. Who’s in charge?

AN EXAMPLE

For example, a partner may be struggling with how to deal with the behavior of a manager we’ll call Joe. Both the clients and most of the people in the firm view Joe as being highly technically proficient. He generally gets the work done on time and within budget, and does a nice job of hand holding with the client. “Well,” you may be thinking, “what’s the problem with that?” That clearly is not a problem. It would be great if every manager of every firm fit that description. Where the problem lies is in how he treats the people with whom he works. Joe may be viewed, charitably, as a “bull in a china closet.” I say “charitably” because if he’s really aware of what he’s doing and the impact of his behaviors, then he is behaving inappropriately by design, which is far worse and requires much more swift action.

In the typical situation represented by this example, firm management at the level above Joe’s position has probably attempted to deal with it by using one or more different approaches. Management may have tried one alternative, and finding it to be ineffective, then tried another option. Thus, there could have been multiple, different attempts to create some behavioral change. But in this case we are assuming, based on what we see most of the time, that none of them have yielded the desired results.

WHAT HAS NOT WORKED

In our work with CPA firms, regardless of size, we’ve found a variety of different, unproductive approaches being pulled out of the armory for use in this battle of wills:

1. Ignore it; it’s not that bad, and he or she will figure it out for themselves. This is the path of least resistance—avoidance. What makes you think that ignoring the issue will make it go away? Actually, ignoring it creates a sense of empowerment or enablement for the person who is misbehaving. Not addressing the issue implies that you consent to it and approve of it. Why would I change if I am the miscreant and you simply ignore my bad behavior?
2. The collective “we” need to talk with him or her; we’ll figure out who will do the talking later. This normally leads back to the first alternative of ignoring it. If everyone is responsible, then no one really is responsible. At the next meeting, members of that group can make excuses as to why they individually didn’t get a chance to address it. The bottom line is that single‐point responsibility is needed pursue any changes with the individual who needs to change.
3. Bring up the need for the right kind of behavior in a general discussion at a group meeting that includes this person; they’ll understand how it applies to them and will change. Yeah—right. That always has worked in the past, hasn’t it? Usually all this does is aggravate the people who conscientiously attempt to behave properly while they sit through your generalized haranguing. It also reinforces in their minds the fact that you don’t have the courage to address the issue directly with the malefactor. Meanwhile the misbehaving person is either clueless about this (the “bull in the china closet”) or wondering if you’re going to actually talk to him or her about it, and becoming more secure in seeing this public display of powerlessness on your part.
4. Let’s send him or her to training; learning more will help them overcome this hurdle. In other words, we can’t handle him or her, and we can’t really enforce any consequences if change doesn’t occur. Therefore, we’ll send him or her to leadership class and let the instructors perform a complete professional makeover on them. The program instructors have far less authority over the program participants than management at their firm does. Tell me again why you think that this will take care of the problem. (Just to be clear—it won’t.). Even if in some unusual circumstance this approach would work, it might be compared to sending a dog to a professional dog training school, and then sending the dog back home to the same untrained owners. The dog will quickly revert back to his/her old habits because his/her owners are not providing the same environment of accountability that the school did. Sure, the dog knows how to behave differently now, but the dog won’t behave that way until the dog owners start behaving appropriately as well.
5. Confront him or her on it and suggest tactfully that it would be nice for change to occur and hope that the change actually occurs. For those of you old enough to remember, think of the refrain to the late Dusty Springfield’s song, “Wishin’ and Hopin.’” That’s what I’m talking about here. Yes, our performance interventions always need to be tactful. The message needs to be presented in a way that allows them to know what to change. Good enough so far—but—without follow‐up and accountability, why would we expect anything to change?

WHY THE FEAR?

At the outset, I mentioned the fear that we find in many organizations, that someone will leave if you try to hold them accountable. But why is this fear seemingly so widespread? We find one or more of the following issues playing into this irrational fear:

Demographics and market economics create a perceived scarcity of “good” talent. Conditions have improved over the last several years. Still, there continues to be a shortage of experienced professionals, not only in public accounting and consulting, but in other industries as well. This won’t get better in the foreseeable future. At the same time, market conditions have been good to great. Many firms have had terrific opportunities for growth. So, at a time when staffing shortages are being felt in many firms, conditions are exacerbated by having even more work available.

The PCPS Top Issues Survey bears this out. Finding and keeping qualified staff are high on the list of concerns of multi‐owner firms. Similarly, in the 2016 Succession Management Survey that we conducted in partnership with PCPS, the findings show that staff shortages will continue. Among multi‐owner firms most will be conservatively 12% more understaffed in the next three years than they presently are already. With all this going on, if someone leaves, even if their performance is only marginally acceptable, then the remaining people, perhaps including the boss of the person who left, probably will have to take on their work for some period of time. And no one wants to work any harder than they already are working.

Firms don’t provide clear expectations for their people. We will ask partners who have been struggling with what to do about someone’s performance what the partners have done about it. Sometimes the partners have not set out clear expectations for their people. They often do not have a competency framework in place to judge one’s performance against. They fail to set out clearly the most basic expectations for overall job performance, or for project or specific activity assignments. This makes it difficult later on to have a discussion about what’s not being done properly. The “properly” part was not defined to begin with.

Firms don’t provide appropriate monitoring and feedback to their people. At some firms, performance feedback comes once or twice a year. A lot can go wrong within those timeframes. Even if a firm is attempting to monitor and provide feedback more often, the frequency and specificity of the feedback may be inappropriate. For example, if you give me some behavioral changes to make and leave me to my own devices for two or three months, we could both be in trouble. Why? If I haven’t been behaving in the way you wanted me to, this change will take a lot of effort on my part, perhaps with some two‐steps‐forward and one‐step‐backward progress. That’s assuming I even know how to make the changes. And there’s a strong likelihood that I don’t know how to really do it. Because of these reasons, plus the fact that I may be a little hesitant about the changes to begin with, I need very frequent monitoring and feedback to achieve success. Most CPAs severely underestimate the amount of monitoring and feedback their people need in order to embrace change effectively.

Inertia has set in. Change is hard. Dealing with problem people can be a difficult task for most of us. Because of this, together with a pattern of unproductive behavior from management, firms let nonperformers stay on far too long in most cases. We believe that, in the current environment, a professional who has performance problems of any kind probably will safely keep his or her job for two to three years before management musters up the resolve to cut them loose. In fact, we’ve actually seen cases run far longer than this. The longer the firm puts up with the problem, the more difficult the discussion will be when it’s time to let someone go. Just think about it from the employee’s perspective. They’ve probably been getting mixed signals and feedback about performance, if they’ve received much feedback at all. No matter what the feedback has been, they’ve continued to stay employed at the      firm, usually with annual raises, and often with bonuses and even promotions! Where in any of this is a clear and consistent message being given to the problem employee that he or she is not cutting it?

TAKING BACK CONTROL

No matter how far down the nonaccountability path your firm has gone, there are some tangible steps you can take now, to take back control. First of all, your owner group needs to commit to doing what’s right for the firm. Temporary pain will pay off with disproportionately high rewards if you commit to making the changes that are necessary. Think about it in this context: if you want to run a marathon, the training for the marathon will be a pain, literally, but you put yourself in contention for a successful outcome, for winning the race. Entrepreneurially we need to do what’s necessary to win the competitive race in the marketplace. This means doing what’s right for the firm, including making difficult decisions. Making those decisions early lets us reinvest our money in someone else, and that someone else might evolve into the firm’s best‐performing future partner. Maintaining an investment in an underperforming asset is not supported in the wealth management world, so why it is considered a reasonable solution in a CPA firm?

In addition to creating a commitment to change, consider the following actions to beef up your accountability, retake control and build the kind of firm in which people want to become partners:

Set clear expectations. Do this for each level of position in your firm. Create or use a competency framework that outlines what behaviors someone must master to be successful at each level. Let entry level staff see this so they can use it map out their career path in the firm. For specific job assignments, be clear as to what you’re looking for from them by addressing:

1. Scope – what activities must they undertake to successfully complete this project?
2. Deliverable – what’s the end product supposed to look like—for example, is it a working trial balance or draft of financials?
3. Due date – when must you have it back?
4. Budget – how much time should it take for them to do this project?
5. Resources – if they have questions or need help, where do they go for this?
6. Monitoring – who frequently will you be checking in with them and in what manner?

Monitor, monitor, monitor and provide feedback. As I mentioned earlier, we find that most CPAs monitor far less frequently than they should. This allows someone who is trying to do things right, to go from making small learning mistakes, to creating huge failures. Small learning mistakes are to be expected and can actually be motivating to the person learning if the mistakes are handled properly. Large failures are what will drive people out of your firm into one of your competitors (and yet, you will have footed a large part of their training bill).

Get your people trained in delegation. We find that many CPAs have learned delegation from watching what others did as they grew up in the profession. In many cases this emulation ends up replicating ineffective behaviors. There are better ways to delegate to, to supervise and to coach others. Invest in your firm and your people and get them up to speed. This will be leverageable and will help you create the staff and cadre of leaders you need to sustain the success of your firm into the future. As this happens, the anxiety that occurs when you realize someone no longer fits will be diminished.

Be ready to make the tough decisions. Be sure you’ve set clear expectations, monitored, provided appropriate feedback and used appropriate delegation and coaching techniques. Spend time working with your people to help them improve. Coach them, monitor their efforts and their outcomes. In the rare cases when someone just can’t seem to improve, be ready to have that discussion now—not later. Cut your losses and move on.

In the end, by actually taking the time to manage your people, holding them accountable to clear expectations, providing feedback frequently, and when someone is not fitting in, cut‐ ting them, you create a performance culture while simultaneously taking care of your best people. You are taking care of your best people every time you:

1. 1. • Stop asking them to cover for their marginal coworkers,
      • Reinvest your resources quickly in someone who can help them carry the current and future work load,
      • Clearly state what you expect from them and hold everyone, including them, accountable to those

Don’t protect the marginal and sacrifice the strong.   Stop letting the inmates run the asylum, because crazy doesn’t get better by adding more crazy. You are in charge. It is time for you to take back control!

@2017 Succession Institute, LLC. All rights reserved. Reprinted from CPA Trendlines.