When firm leaders compare their performance with the profession, they often begin with a broad category: CPA firms. But CPA firms aren’t interchangeable.
A firm with $3 million in revenue operates very differently from one with $30 million. A firm focused on tax and accounting services may have a different staffing model than one with a large advisory practice. Geography, ownership structure, growth strategy, and service mix can all influence performance.
Broad profession data can still be useful, but leaders should ask: Are we comparing our firm with firms that are meaningfully similar to us?
The right peer group depends on the question
There isn’t one peer group that works for every decision.
A firm reviewing compensation may want to compare itself with similarly sized firms with a similar ownership structure. A firm evaluating billing rates may care more about market and service mix. A firm considering staffing levels may need to look at firms with similar services and workflows.
That’s why peer selection should begin with the business question. If leaders are evaluating pricing, geography and market conditions may matter most. If they’re examining partner capacity, firm size, leverage, and service delivery may be more important. If they’re preparing for succession, ownership structure, partner demographics, and leadership depth may deserve greater attention.
The comparison group should help answer the question at hand. It shouldn’t simply be the largest group available.
Firm size matters, but it doesn’t explain everything
Revenue is one of the most common ways to group firms. As firms grow, they may add management roles, formalize processes, expand service lines, and create additional levels between partners and entry-level staff.
But two firms with similar revenue may still have different partner structures, staffing models, client concentrations, or service mixes. One may have grown organically, while the other recently completed an acquisition. One may be investing for future growth, while the other is focused on maintaining its current size and profitability.
Revenue provides an important frame of reference. It doesn’t provide the entire picture.
Market and service mix can change the comparison
Where a firm operates can affect compensation, billing rates, recruiting, competition, and client expectations. A rate that appears high in one market may be typical in another.
Service mix matters for similar reasons. Tax, audit, client accounting services, consulting, and specialized advisory work don’t always require the same staffing structures or produce the same economics.
That doesn’t mean leaders should look for a firm that matches theirs in every way. It means they should understand which differences are most likely to affect the measure they’re reviewing.
Your firm may need more than one peer group
Firm leaders sometimes look for one set of peers that can serve as the comparison for every metric. In practice, a firm may need several.
One group might reflect the firm as it operates today: firms that are similar in size, structure, market, or service mix. Another might reflect where the firm is trying to go. A growing firm may want to examine firms in the next revenue range to understand how staffing, leadership, and operations tend to change.
A current peer comparison helps leaders understand where the firm stands now. An aspirational comparison may help them anticipate what needs to change next. Both can be useful, as long as the leadership team is clear about which question each comparison is meant to answer.
No peer group is perfect
Every firm has characteristics that make it different. A firm may operate in several markets, offer an unusual combination of services, or be in the middle of a major transition.
No benchmark can account for every variable. The goal isn’t to find firms that are identical. It’s to find a comparison that is similar enough to provide useful context, then recognize the differences that still matter.
Leaders shouldn’t dismiss every comparison because their firm is unique. At the same time, they shouldn’t force a comparison that clearly doesn’t fit simply because the data is available.
Before interpreting a benchmark, ask:
- What business question are we trying to answer?
- Which firm characteristics are most likely to affect this measure?
- Are we comparing ourselves with current peers or firms we hope to resemble?
- What differences should we keep in mind before drawing a conclusion?
These questions won’t create a perfect comparison. They’ll create a more useful one.
The purpose of peer benchmarking isn’t to prove that every firm should look the same. It’s to help leaders understand whether a result makes sense for a firm facing similar conditions and making similar choices.
The right peer group won’t answer every question. But it will give you a better place to start.
