indicates that I touched a sensitive subject, when I suggested on November 10 –
here – that there was a mis-alignment in the compensation models of the large
accounting firms, who distribute immediate profits to their current partners
while the potentially devastating impact of related litigation takes years to
befall the succeeding generations.
Which suggests the broader personnel picture and the range of attitudes and strategies involved in obtaining, maintaining and retaining the staff necessary for an enterprise to thrive and survive.
Among the large
accounting firms, the topic of cut-backs, lay-offs and treatment of subordinates is under-reported but acutely felt – scrutinized by the bloggers and
their exploding audiences (see Re:TheAuditors and Going Concern), if mainly
ignored by the mainstream media.
As a way to measure corporate management’s behavior in the areas of governance, incentives and sustainability, consider a couple I know well, who in their “retirement“ are ranchers in southwestern Oregon. They tend the largest flock of Soay sheep in America – one of the oldest domesticated breeds known to human history – for which they have the indispensable aid of one spry border collie and a quartet of massive Anatolian sheep dogs.
This fall, as they
do every other year, they made a two-day round trip to fetch a new puppy from
their specialized breeder – bringing home an already formidable bundle of
energy, who will quickly grow to 125 pounds and demand enormous quantities of
both food and training.
With a quarter-ton of canine appetites already deployed around their pastures, why do they add this burden to their back-bending task of hauling dog food by the truckload of hundred-weight sacks?
Because eagles and
coyotes find special allure in the scent of baby lambs, and predators are kept
at bay only by the imposing presence of a four-footed guard force on 24/7
postings at their fences.
The demands on the recruiting directors of the banks and law firms and accountants are not different. They manage their personnel pipelines because, as a senior Big Four partner put it in a moment of candor, “the only reason we hire new staff is so we can re-stock our need for managers.”
There is a crucial
difference. An Anatolian has an average ten-year life span. And when the
inevitabilities of age or accident claim one of their veterans, the ranchers
cannot just drop into the nearest Pups-R-Us and charge a replacement to their
Amex card. “Staff maintenance” is not just a slogan, when safe-guarding the
inventory is quite literally a matter of life and death.
But whereas it takes about the same length of time to train a sheep dog as it does to convert a university graduate into a decent staff accountant or associate lawyer, there are a whole lot more of the latter on supply, and the sources are numerous and diverse.
I’ve largely been
of the view that the world’s anxious regulators should resist intrusion into
corporate hiring and compensation structures – there being almost nothing in
fragile and volatile business environments that cannot be further distorted or
broken by the tinkering of an over-eager bureaucrat.
But all interested parties – employees and shareholders and, yes, the public overseers of taxpayers’ bail-out funds – should at least evaluate whether a company’s bonus arrangements and staffing strategies extend over the length of a business cycle or are focused only on this year or this quarter.
How else could
anyone assess the credibility of pious recitals about the importance of
preserving and maintaining morale, tenure and talent?
So it is not a cynical observation that – unlike the coddled shepherd puppy whose specialization makes him uniquely difficult to replace – rookies in the professional services firms should both sign up and stay on with the open-eyed expectation that their tenure is likely to be limited.
suggestion for the realistic perspective of both new hires and young partners
at the large firms, then, is that all concerned should investigate and share a
common understanding -- whether promotion and retention prospects and decisions
will be made over time spans of the length used by a careful shepherd.
Well and good, if so.
And if not, there
are always greener pastures.
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