Building a Career Ladder: The Right Way for Accounting Firms
In this episode of A Look Into the Future, Paul Latham from Hayden Rock Solutions shares insights on creating an effective career ladder within accounting firms. Unlike traditional approaches, Paul’s method emphasizes structure, clear expectations, and opportunities for growth, fostering a strong, positive culture that encourages long-term retention and satisfaction.
The Problem with Traditional Career Ladders
Most firms struggle to implement a functional career ladder, often leading to high turnover and frustration. Paul explains that career development is tied to firm culture, and getting it wrong can drive employees out. By establishing a structured career ladder, firms can provide clear growth paths that motivate employees to stay and thrive.
Key Elements of the Career Ladder
At Paul’s former firm, Latham’s, they implemented a 10-grade internal career ladder that structured each employee's growth from entry-level to equity partner. Key aspects included:
- Internal Grading System – Employees were graded from 1 to 10, providing a clear progression path. This internal grading was separate from external client-facing titles.
- Consistent Structure for All Roles – The same grading system applied to both professional and admin teams, with differences only in salary bands.
This career ladder provided a foundation of stability, offering employees predictable growth opportunities and measurable expectations at each level.
Benefits of a Structured Career Ladder
Implementing a structured career ladder offered several benefits:
- Reduced Wage Drift – Clear guidelines prevented arbitrary raises, stabilizing payroll and aligning pay with performance.
- Meaningful Annual Appraisals – With established key performance indicators (KPIs), appraisals became purposeful and helped manage team expectations.
- Celebration of Promotions – Promotions were structured to be milestones, with formal celebrations, reinforcing a culture of achievement and recognition.
Key Steps in the Career Ladder
- Entry Levels (Grades 1-3) – Focus on building professional experience.
- Management Transition (Grade 4) – Employees begin managing people or client relationships, depending on their area (audit vs. tax, for example).
- Manager Grade (Grade 5) – This level signifies a key step into management.
- Senior Manager (Grade 7) – Further progression into leadership roles, often involving client management and higher responsibilities.
- Director and Partner Levels (Grades 8-10) – These levels distinguish technical versus equity partners internally, without external differentiation.
KPIs and Regular Appraisals
Each team member had three to five measurable KPIs set annually, tailored to their role. These KPIs provided clear performance metrics, whether in audit, tax, or another specialization, and were regularly reviewed—often quarterly or even monthly. This frequent feedback loop kept employees aware of their progress and motivated to achieve their goals.
Promotions as Celebrations
Promotion processes included interviews with the executive team, where candidates presented their achievements and future plans. These structured interviews turned promotions into celebrations, fostering strong connections between the executive team and high-potential employees. Paul notes that this process helped build a supportive culture, with the executive team “rooting” for employees’ success.
Creating Clear Expectations
The career ladder clarified expectations at each level, helping employees understand what was required for advancement. Paul’s method emphasized simple but clear KPIs and career goals, ensuring that each employee knew exactly what to focus on for progression. This structure separated employees into two groups:
- Those Happy with Their Current Level – Employees who preferred stability found fulfillment without feeling pressured to advance.
- Ambitious Climbers – Those eager to progress had a clear path, with set expectations for each level.
Conclusion: The Power of a Transparent Career Ladder
By establishing a career ladder with defined levels, measurable KPIs, and clear expectations, firms can foster a supportive and structured culture that retains talent. This approach not only encourages personal growth but also reinforces a positive, cohesive work environment, ultimately creating a firm where employees feel valued and motivated to contribute to long-term success.
