Have you wondered how long the partnership, ownership model for public accounting firms will continue? I have. If you are at all in tune with the changing workforce, this topic must have crossed your mind.
Baby Boomer partners came of age in a different environment. If they worked long and hard they had a good chance of becoming a partner. Most did not even have to prove themselves as significant rainmakers. It was mostly about technical expertise and work ethic. You just had to prove that you were willing to work 60, 70 or more hours per week and that your work was accurate.
As business development became more and more important, many firms found that they had too many non-business getting partners and the sales aspect of the firm rested on the shoulders of a few, sometimes just one partner.
The current public accounting workforce desires a more balanced lifestyle. They question the process of becoming a partner and wonder if it is all too political. Is it all about who you know and not what you know?
All of this came to mind because of a very interesting post by Caleb Newquist on Going Concern titled, To Partner or Not to Partner, That is the Senior Manager’s Question.
Newquist explores the role of the CPA Senior Manager. Some senior managers share the fact they wonder if they really want to be a partner in a public accounting firm. They also see through the ploy of the non-equity partner, or Director, role as a mere parking lot for people who will never be a partner.
Read the article and see if any of it applies to your own firm.
One of the first questions I ask when I interview the managing partner of a potential CPA firm client is, “When was the last time you updated your partner agreements?”
In almost every case, they tell me that it has been quite some time ago. Partner agreements seem to be the type of thing that accountants don’t worry about until a crisis is upon them.
One of my on-going goals is to give you tools and tips that you can use in your firm, and hopefully nudge you into action before that “crisis” happens.
Here is a short checklist that you can use to review your firm’s partner agreements. It contains some guidelines that will get you started. We’ve also included some of the latest information on retirement provisions and current thinking that the profession is embracing.
If you’re like most firms and it has been quite a while since you updated your agreements, make it an important goal for 2016.
Last week’s blog post provided you with a very simple job description for the managing partner of an accounting firm. However, I am sure many of you find it quite a bit more complex. I must admit, sometimes it seems like the role continually expands.
Gary Boomer of Boomer Consulting has written much about the various aspects of the role of the managing partner. In his Boomer’s Blueprint column in the December issue of Accounting today, Boomer gives us “the more important requirements of the job”.
Here’s Boomer’s list:
- Grow the firm
- Build a unique ability management team
- Provide and develop leadership at all levels of the firm
- Stay connected with peers and the profession’s leaders
- Attract, retain and develop quality people
- Make timely decisions
- Develop a strategic vision
- Build consensus and commitment to the vision and core values
- Teach and learn
- Allocate and manage limited resources to strategic (priority) initiatives
- Counsel partners and staff — accountability
Be sure to read his article. He also provides 13 initiatives that should be on the managing partner checklist. This checklist can be very valuable to the many new managing partners that are beginning to take the role from a long-time, retiring MP.
Here’s one I think is very important: Focus on improving revenue per full-time equivalent – Charge hours are not a measure of value. Benchmark the past two years by taking total revenue and dividing by the number of FTEs (total hours divided by 2,080). Just like in golf, improvement should be your focus. This one metric summarizes utilization, realization and pricing.
I will first give Bill Reeb due credit for the metaphor. Bill used a slide at a partner retreat that has stuck with me for a number of years. The slide showed a boat in the water in the middle of several islands. The boat was spinning because several people were rowing one direction, several were rowing the other direction and some didn’t have their paddles in the water at all. The boat had no chance of reaching any island.
Hopefully this doesn’t sound like your firm or partner group. But, unfortunately it is a pretty accurate depiction of a lot of accounting firms that I have known. The sad truth is that the choice of which island to paddle for is probably not the most important question. Actually, any island would be better than spinning in the boat.
The bigger issue is how do you get everyone to row the same direction or at least keep their paddles out of the water. You’ll get there slower if everyone isn’t rowing but at least you’ll get there.
If you think about your firm and the initiatives that you have undertaken in your practice where you have failed or achieved less than you wanted, how many people in the three groups in the boat did you have?
The moral of the story is that we spend a lot of time intellectually strategizing about a direction or initiative in our firms and far to little time talking about how we will each personally support it. Getting that buy in and personal commitment from your partners up front is critical.
Pick an island that you have a chance of reaching.
Most of us are thrust into the Managing Partner role in our firms with little or no training or coaching. Who teaches you to be an effective MP? How do you know if you’re performing well? Your partners won’t tell you. If you’re new to the job, do you just do it the same way as your predecessor? Is that the best approach for the firm? Who will mentor you?
As I can attest from experience in running my firm for over 20 years, it is a thankless job. I just took a deep breath and jumped in. The best feedback that most of us get is from other managing partners and from benchmarking ourselves against other firms. There are not too many places to turn for help.
Whether you are new at the job or a veteran, here is an approach to organizing the job into six buckets that will help you. It is how I approached the responsibilities and it lends itself to dividing and conquering with the ability to delegate some responsibilities.