Partner Perspectives | Fall 2017
The Risks of Alternative Facts
Many CPA firm partners are stretching the truth to their own detriment.
Marc Rosenberg, CPA
President, The Rosenberg Associates
Moving Your Firm Forward
When asked to defend a clear distortion of fact, a straight-faced presidential advisor now
infamously known by all said the distortions were “alternative facts,” inventing what’s
become a ubiquitous term.
Oddly enough, I’ve witnessed many partners and their CPA firms creating their own alternative
facts that, left unchecked, create substantial risks for the sustainability of their practices.
Here are some examples—and the hard truths:
Q: Are you active in practice development?
“I’m constantly talking to clients and referral sources about new
This is often a defensive response at best. Every partner knows that practice development
is important, but many simply aren’t comfortable doing it. At the same time,
they’re just as uncomfortable admitting that they don’t like “selling.” Like most things, if
the attitude isn’t there, the results won’t be there either. My research shows that 80 percent
of all partners at firms with revenues below $10 million do very little to bring in new business,
but cite the alternative fact above to anyone who will ask or listen.
Q: How important is your staff?
“They’re just as important as our clients; we couldn’t service our clients
without them. Our partners are able to manage large client bases because the staff excels
at doing a great job.”
Truth: Today, it’s trendy to say staff members are just as important as clients, but it’s probably
the best example of firms failing to walk the talk. Most partners spend insufficient
time helping staff learn and grow because they’re too busy with client production, lack
the skills to mentor staff, and participate in partner comp systems with little or no reward
for developing staff.
Q: Why are your billable hours so high?
“If I do the work myself, it gets done quicker and better.” “When the
work is done at my billing rate, we make more money.” “The firm does a lousy job of
hiring good people and training them. So they’re of limited use to me.”
Many partners perform staff-level work because they like it; they don’t trust their
staff; they’re not comfortable or skilled as delegators; or, the firm’s comp formula pays them
handsomely for billable hours. In my experience, perhaps the worst transgression of any
partner is taking a pass on the training and development of staff, which hinders their development
and abilities to perform the work that should be delegated to them, preventing the
firm’s successful execution of its succession plan.
Q: Does your firm have a
“Sure we do. It’s very simple:
We want to stay independent and pass
on the firm to new partners.”
That’s not a plan; that’s a dream. A
succession plan is one of those things that
firms can’t “say” they have unless they
actually have it. Succession plans must be
detailed in writing and include proactive
systems and processes for developing
future leaders, provide for effective mentoring
of up-and-coming staff, and
addresses the transition of roles. And most
important, there must be accountability for
implementing the plan’s action steps.
Q: Does your firm have a
“Of course we do. We
talk about it all the time.”
Talk is cheap. If you ask the partners
and staff at most firms to cite the firm’s
mission or vision, they couldn’t come
close. To “have” a strategic plan, a firm
needs to have a written plan document
with SMART goals that support achievement
of the firm’s vision, partner accountability,
and rewards for those who achieve
their goals. Without these, strategic planning
is an alternative fact, not the truth.
The good news is that partners can be
cured of their tendencies to cite alternative
facts. Why are partners at many firms even
allowed to cite alternative facts? The
answer, unfortunately, is that they can—
there are few consequences for partners
performing and behaving in a manner that
runs counter to the firm’s vision, policies,
and practices. So the cure lies in two interrelated
management practices: First, hold
partners accountable for their performance
and behavior. Second, the managing
partner, perhaps with other members of
the firm’s leadership, must coach and
mentor the partners to live and breathe
the firm’s core values and practices instead
of abusing them.
Perennially cited by
Inside Public Accounting
as one of the 10 most recommended
consultants in the country, Marc Rosenberg, CPA is a nationally renowned consultant,
author, and speaker on CPA firm management,
strategy, and partner issues. His 14
practice management books are available online, and
Marc can be reached at 847-251-7100.