Leading an industry group isn’t easy. Frequently, CPA/professional services firms’ reporting structures and P&L responsibilities are based on geographic and service line hierarchies, leaving industry heads to achieve their goals through “influence” rather than “authority.” Authority and power within firms is usually established before management recognizes the importance of industry specialization. Once divvied up, sharing power with or reallocating it to another center of influence – namely, the industry practice group leaders – can be very hard. 

At a large national firm where I helped build a national industry strategy,  regional managing partners (RMPs) owned the P&L burden for their respective regions, which trickled down to office managing partners (OMPs). RMPs also controlled a regional compensation pool for the partners’ yearly profit sharing. There was a well-established hierarchy for national and regional service leaders where assurance, tax and consulting professionals reported up through the ranks for their annual reviews, raises, bonuses and promotions.

Although industry comprised the third leg of the matrixed firm ’s stool, it was the Johnny-come-lately. Unlike RMPs and OMPs, industry national and regional leaders had no responsibility for a true P&L; no compensation pool to incentivize professionals to build their respective industries; and no professionals who reported directly to them. They also had no direct influence over annual reviews, raises, bonuses and promotions. Industry leaders truly did have to lead using influence rather than authority ⎼ a major stumbling block to building effective and productive industry teams and professionals.

Over time, the firm’s senior leaders recognized that for industry practice groups to help accelerate growth, something had to change. They knew industries are firmwide or national ─ they cross all offices, regions and service lines. Industry knowledge could be leveraged as needed in any of the firm’s offices. Regardless of the specific services performed, industry expertise could and should be brought to the table to win new clients and to better serve existing clients, regardless of the industry professional’s service line. They enthusiastically embraced the concept that “industry should be interwoven into everything we do.” 

The industry practice took a huge step forward when firm leadership agreed to move from a regional to a national partner compensation pool. This change eliminated the major industry growth hurdles resulting from competition and hoarding of resources within regions. 

As you begin to build your industry teams

  • Consider how to motivate and incentivize your professionals to advance their careers to the next level with an industry specialty. 
  • Remember that even though the rewards of industry specialization can be compelling for your firm and your professionals, it won’t happen overnight. It takes time for professionals to develop the true expertise and experience that will equip them to deliver insightful and valued advice to your clients. 
  • Short-term financial incentives and public recognition are essential tactics smart firms have used to overcome power struggles and ensure professionals are motivated to change their mindset about the importance of developing an industry focus for their careers.