We are seeing a transition right now. More and more firms are finally making the switch from the long-time, baby boomer managing partner to a younger, less experienced managing partner.
It is a very difficult time for both of the people involved, and the firm, in general.
The outgoing MP struggles with relevancy and a long list of other important decisions about what to do with their remaining working years. But don’t ignore the challenges being faced by the new guy/gal.
One thing to remember is, as the managing partner of a growing, profitable firm, it is important to always be thinking of how you are spending your time.
One dilemma the new managing partner faces is how much time to continue to spend on client work and how much time do they really need to devote to actually managing the firm.
The MP should definitely keep a reasonable amount of client service work. How much varies. Much of this decision relates to the size of the firm.
Smaller firms require less management time and the MP should utilize a qualified office manager. Midsize and larger firms, of course, should have a professional firm administrator or COO who handles all administration and daily operations so that the managing partner can focus on coaching the other partners, being the community face and voice of the firm, and bringing new business to the firm.
For all firm partners, it is important to always focus on the important work. For line partners that means client relationships, nurturing team members and bringing new business to the firm.
Partners should not be doing manager work. Managers should not be doing senior and staff work. And, seniors and staff should not be looking for work.
Something at the firm is not going very well.
It could be one or more of numerous processes you follow. It could be non-stellar results in hiring the best students. It could be a significant increase in turnover. It could be a lack of timely financial information flowing to the partner group. It could be poor realization or poor utilization. It could be poor performance in attracting clients to one of your niches.
When something is not going well, the leadership group unites and begins asking probing questions of the managing partner, the COO, the director of audit, the director of tax or that high-profile niche leader. Often it turns into a finger-pointing, blame game frenzy with several people attempting to dodge the bullet and deflect the blame on others. The managing partner is overwhelmed with questions and maybe even accusations of poor leadership. It seems many people enjoy jumping on the bandwagon of doubt and uneasiness.
How much feedback happens when things at the firm are going really well? – – Not much
Do you reward your managing partner and other leaders when things are going really well? Probably not because you expect things to go well. After all, isn’t that why you pay the MP lots of money?
It’s not all about money. Try paying your firm management leaders lots of compliments.
We tend to blame leadership when things go awry but we forget to thank them, reward them or acknowledge them when the firm is successful, profitable, and recognized locally, regionally or nationally.
At some firms, when things are going well, the partner group thinks and says it’s all about “us”. When hiccups arise or the new idea is not implemented well, it’s “his/her” fault.
In these times of focusing intently on the people we employ, never forget that you wouldn’t need your staff members if you didn’t have clients.
I believe that many clients are at risk right now at the majority of CPA firms across the nation. Why? It is very simple, because so many partners are beginning to retire and these more senior partners have not wholeheartedly bought-in to a formalized client transition process.
The concept of finding and retaining applies to both employees and clients. You must find, hire and retain top talent. You must find, obtain and keep great clients.
Some of the same activities to accomplish these “musts” apply to both.
Recruiting and retaining, or as Tom Hood puts it, attracting and developing, the most talented young professionals begins by being visible to them. Consider how visible the large national firms are on college campuses. You can’t be that visible on as many campuses but you can certainly establish relationships with professors and participate in activities in the business school of the universities in your market.
You must have established a great culture that helps you build your brand. If you truly are a great place to work, that reputation will spread.
Attracting the best clients begins by being visible to them. Being visible in your business community and being active in charitable and civic organizations is still a major factor in attracting great clients. You build the relationship first, then you pursue the business. You and your firm must also be active and visible in social media. Your website is key. A prospective client will look at your website and assess your credibility before they ever have a serious talk with you about their business.
You must have established a great culture that attracts highly technical CPAs that can serve the needs of sophisticated business owners. You must build a brand that convinces clients and prospective clients that…. “we pay them a lot but they are definitely worth it.”
Inside many multi-partner CPA firms, there are usually some troubling issues. I have heard about these issues first-hand, as I network with partners from various firms. I also uncover many of these issues as I survey firm partners prior to a planning retreat.
Here are just a few of the more common CPA firm partner laments:
I rarely have any collection problem with MY clients BUT the other partners are always permitting clients to delay paying us. We have way too many accounts over 90 or 120 days. Some clients don’t pay us until we are ready to begin work on their account the following year!
We have never been able to establish a clear, long-term plan or vision for the firm that all partners can get behind. So, we have not focused on succession.
We have a fractured partner group. There is not enough collaboration and too much dissension between offices.
We need to get rid of some of our clients. My clients are fine but my partners hang on to some very unprofitable, troublesome, slow-paying clients.
We are having an increased amount of turnover and need to give more attention to retention.
Do any of these sound familiar? It’s time to stop lamenting and start doing something about the issues. One of the biggest roadblocks is communication. Bringing more open and honest conversations into your partner meetings is the first step.
I have worked through many merger negotiations, several as managing partner of my own firm, and even more during consulting engagements.
As an acquirer, there is one question I have always asked. I suggest that you should ask the same question as you approach any merger/acquisition situation.
Here’s the question: Do you have any sacred cows?
A “sacred cow” can be described as one that is often unreasonably immune from criticism or opposition. Someone or something that has been accepted or respected for a long time and that people are afraid or unwilling to criticize or question.
Often the topic of sacred cows does not come up when the two firms are in the discussion stage. However, if not talked about up front the sacred cow situation will undoubtedly surface once the two firms are living together. It is also wise for the firm being acquired to ask the same question of the acquirer.
Most often the situation is a long-time employee that cannot be terminated (for any reason). Sometimes, it is even a partner whose performance hasn’t been up to par for years.
Another example is software. I have heard many firm leaders say, “We will not change our tax package.” To me, that is a deal breaker. For optimum efficiency, the entire firm should be using the same software packages. Develop the entire technology plan (hardware and software) up front and document how the conversion will be implemented.
Before you sign on the dotted line, be sure you can live with the sacred cows.
I facilitate a lot of partner retreats. Yes, it is often like herding cats.
I find that some firms are disciplined about their retreats. They have 100% attendance, they stay focused on the agenda topics and everyone participates. I also find that some firms struggle with these concepts.
If you are planning a strategic planning session this year, here are a few reminders:
Set the strategic planning meeting or retreat dates with plenty of advance notice and get a firm commitment from stakeholders to attend.
Plan the agenda carefully to make sure you are using the time wisely.
Send out the agenda and other special reading well before the meeting date so that attendees can be informed and prepared.
Expectations matter. Clarify expectations in advance of the meeting and again at the start of the session.
Logistic details are very important. Make sure everything is in place and confirmed so that valuable time is not wasted.
Begin and end on time. If a topic needs further discussion, ask permission to extend the discussion time.
After the session, summarize the discussions and document action items. Send these to participants in a timely manner.
The most important step…. don’t procrastinate with implementation of the agreed upon action steps.
When I am coaching managing partners, I often go to some of the lessons I learned from David Maister. If you don’t know of David Maister, I urge you to visit his website and read his bio and some of his articles.
Until his retirement in 2009, David Maister was widely acknowledged as one of the world’s leading authorities on the management of professional service firms (such as law, accounting, and consulting firms, and companies providing engineering, advertising and executive search services).
For three decades he advised the top firms in these professions, around the world, covering all strategic and managerial issues.
He is the author of the bestselling books:
- Managing the Professional Service Firm (1993),
- True Professionalism (1997),
- The Trusted Advisor (2000),
- Practice What You Preach (2001),
- First Among Equals (2002),
- Strategy and the Fat Smoker (2008).
At my firm, we gave True Professionalism to every new accounting graduate and asked them to read the first two chapters right away and the rest at their leisure.
Maister would often talk about, “What do you want to be famous for? What’s going to make you distinctive?” He had a great story about how he was asked that question when he was a new professor at Harvard. Of course, he was stumped at first but his mentor asked him to think about it and respond in a few days. He more or less blundered into professional service firms and the rest is history.
As you work with your partners, to coach them to more success, try asking them what they want to be famous for.
Here are some David Maister examples:
What Do You Want To Be Famous For?
(What’s going to make you distinctive?)
Intellectual thought leader in a particular service area
Superior client counseling skills
Special abilities in practice development
Special ability to work with certain types of clients (such as, entrepreneurs, high net worth individuals, etc.)
Superior ability to transfer skills to others
In the world of public accounting, when we say the word “marketing” different professionals and different generations can view it in many different ways.
To some partners it means keeping their current clients happy. Others will argue that a constant flow of new clients keeps the firm healthy and growing. And, still others will say that marketing means being visible and active in the local business community.
All of these viewpoints are accurate. I learned much about marketing from the writings of David Maister (retired consultant guru to professional service firms). Maister said that professional firms must execute a FULL PACKAGE of practice development steps covering five main categories of activity:
Broadcasting. It includes all the activities that generate leads and opportunities with new clients.Think of webinars, articles, blogs, social media, newsletters and speaking.
Courting. When you do get a lead, it turns into courting. You are no longer addressing a group, your are addressing a specific prospect. When a client hires you, the client is entering into a relationship, so your activities are better described as courtship.
Super-Pleasing. The easiest marketing is super-pleasing your current clients. Word of mouth is very powerful and a client will only talk about you if the client is truly delighted and eager to work with the individuals inside your firm.
Nurturing. Sometimes when we are focused on pursuing NEW business we might forget about current clients. For relationships to remain strong, they must be nurtured (just like a marriage).
Listening. To round out your marketing (or practice growth, as they call it now) activities, you must listen to the market and continually gather market intelligence. The better you understand how your clients think, the better you are able to serve them. Don’t guess or assume what your clients want, ask them and LISTEN.
As mentioned last week, an important duty of the managing partner is to help the other partners set goals and accomplish them.
When identifying goals for individual partners be sure they are goals and not just what I call hygiene items. These items are just like brushing your teeth in the morning – you just need to do it and you really shouldn’t be rewarded for it.
Your firm should have minimum expectations for partners that include things like recording your time, doing your billings, collecting your receivables, etc. They are not goals. Partners should be impact players and their goals should have a high impact on the firm’s success.
For a CPA firm managing partner, coaching and mentoring the other partners is a key part of the managing partner’s responsibilities. Partner goal-setting is part of that process.
Any one-on-one time between the MP and another partner can be a powerful tool in creating a one-firm culture and bringing more consistency to the roles of the individual partners.
One aspect of coaching partners is the process of partner goal-setting. In the next few weeks, I will address the various aspects of partner goal-setting on this blog.
The managing partner must be committed. Coaching and mentoring the firm’s partners is one of the most important if not the most important responsibility of your managing partner. Depending on the size of your firm, the managing partner may personally do it or get others involved.
The goal setting process is a joint operation. The MP schedules a time to down with each of the individual partners and together they come up with the goals. Equally important is the involvement of the MP in follow up meetings to discuss progress. A good rule of thumb is that you need to have a dialogue every sixty days or so.
The biggest reason why goal setting programs fail is lack of follow up by firm leadership. Once the goals are established it is up to the MP to be the accountability czar.