So many managing partners readily confess that they have no documentation about how or when a partner should retire.
Others tell me that they have two or three (or more) partners who have “retired,” meaning they have relinquished their ownership but they continue to work as they always have and still collect a paycheck while being paid their “retirement” dollars. There is no policy that limits their involvement in serving clients.
As a managing partner, address the issues this year and work with your partners in making the commitment to a defined process.
An important aspect is to clearly define what an owner’s responsibility is to develop people that will be able to replace them, in case of emergency and when retirement occurs.
Define the obvious other issues:
- At what age, must a partner retire (relinquish their ownership)?
- When must a partner notify the firm of retirement? Two years out, three?
- Is there a penalty for lack of notice?
- Document the process for the transition of clients, step-by-step.
- What is the pay-out and what is the period of time for the payout?
There are many more important topics/questions your group will need to discuss and identify.
Be sure to assign responsibility for actually drafting the Partner Retirement Process. It doesn’t have to be the managing partner.
If you need assistance, contact me.
Over the last couple of decades, the role of a partner in a CPA firm has evolved from simply maintaining a significant book of business to a much broader leadership role.
If you are a partner, you should be a role model for the entire team. It’s no longer about being highly billable, working extremely long hours and maintaining a book of business.
Partners must now be willing to be held accountable for a variety of activities. In fact, not too many years ago, becoming a partner was viewed as being “let off the hook” for performance. You had it made! Those days are history and you must now expand your role and become future-ready.
Here is just a partial listing of what is expected of a partner. You must:
- Bring in a significant amount of new business.
- Generate additional business from current clients.
- Cross-sell the expertise of your other partners and associates.
- Be active in recruiting and retaining top talent.
- Be visible and active in your community.
- Serve as a mentor to less experienced CPAs and groom them for leadership as part of the firm’s succession plan.
- Develop, and be a champion of, new service offerings.
- Become known for being an “expert” at something!
- Serve, as needed, on the Executive or Compensation Committees.
- Free up time by delegating a significant portion of your billable work so that managers and other team members have the opportunity to learn and expand their own expertise.
Where can you improve? What more do you need to do? Use this list to help you identify and set personal goals for 2020 and beyond.
I was recently re-reading some of David Maister’s material. In his book, Managing the Professional Service Firm. A story he tells about being sought out to give a keynote at an in-house event made me wonder how many firms (and the people within them) are living the firm’s published values.
Here’s the passage:
Most of the calls I receive about speaking to in-house company events are from companies that want a speech that is entertaining, informative, stimulating, or motivating. What they don’t seem to want is anything that specifically addresses the way they run their firms or the real-world changes they are really trying to make.
For example, I recently received an inquiry asking me to convey to the audience the importance of living up to the organization’s “sacred values” (including the need for collaboration). They wanted me to be inspiring.
However, when I asked if I could poll the audience as to how well the organization was currently performing on collaboration and what the current barriers to collaboration were, the organizers were terrified at the potential for disruption. I was not hired for that speech.
Here’s a link to an online article by Maister on the same topic.
I urge partners not to continue living in a world of denial when it comes to serious issues they must address. This applies to a serious issue in many firms, the need to “out-place” a partner.
One of the biggest challenges for managing partners, other partners, and firm administrators is to figure out how to design a partner compensation system that is effective, yet fair.
I hope you will join me on Wednesday as I discuss the most common compensation systems in use today and provide my perspective as a former managing partner of a top 200 firm. I will help you determine what is right for your firm and how a firm evolves from one system to the next as it grows. I will also give you some tips on setting up a performance-based system in your firm and how to align your compensation system to your firm’s strategic plan.
Wednesday – – September 4, 2019 – 1:00 to 1:50pm ET
The webinar is in conjunction with CPA Leadership Institute and is free to members. Become a member for only $49 and have access to all webinars.
Click here for more information and to register.
The managing partner is faced with many challenges. It is a juggling act, trying to keep a group of partners happy and continually push them out of their comfort zone.
You are now facing major changes in the profession and it is your job to pull the wagon of change up a steep hill. You are the leader and it is your responsibility to lead. Sure, you want to be loved and respected but forcing change and being loved usually does not go hand-in-hand inside a growing firm.
Certainly, you need to listen to your partners and discuss major changes. What I often observe is that the listening to partners and discussing can go on for months and even years!
As a leader, you need to take action and force change. It might not make you the most popular partner but you were given the role of leader, so lead.
Once you have all the input from the partners and the staff, make the decision, a decision that is in the best long-term interest of the firm. Always make your decisions based on “the good of the firm.” Never let individual interests over-shadow what is best for the long-term prosperity of the firm, as a whole.
Some new ideas result in failure. Take the blame and move on to other challenges. If the new idea is a great success, give credit to all those who helped make it possible.
As managing partner, daily you are walking a tightrope. Work on your balance!
The traditional way a CPA firm finds and uses a management consultant is to ask around and find out the names of consultants that other firms are using or have used. Or, you might identify someone you have heard speak at a management conference then hire them to facilitate your partner retreat.
The firm has budgeted a certain amount for the retreat facilitation and after the retreat, the consultant moves on to other engagements and the firm often does not want to spend the money to have them do follow-up work or assist with implementation and accountability
Find a consultant that you think fits your firm, based on size, service lines, people needs, partner problems, etc. You find these people by hearing them speak but also by assessing them in relation to their writings, use of social media, and ability to keep pace with current trends in business.
Initially, they will facilitate your retreat or conduct a planning day or two with your partners or management leaders. Then they attend your monthly partner meetings or executive committee meetings (60 to 90 minutes per month via Skype or another virtual resource) to continually contribute and to hold you accountable. The firm budgets an amount for the 2-day planning session and another amount for the 12-month on-going involvement.
Result: You have a much better shot at actually getting things done, at moving your firm ahead, at recruiting and retaining top talent and developing a culture within your firm of continual change and improvement. That’s the culture the new workforce wants to experience.
As the firm leader, you have many very important responsibilities. Sometimes you do what is easiest and sometimes you do what you like the best.
For example, you really need to focus on guiding the firm to a better workflow process but, a client calls with an interesting project and you take it on yourself rather than delegating. Putting client work first is an easy-out for many partners and especially managing partners. It’s something you know, understand and enjoy.
Almost daily, you feel pulled in too many directions and it’s not just your office life, it includes your home life, too. You are faced with:
- Exercising for personal health
- Home responsibilities, like yard work
- Hobbies, because you enjoy them (like golf)
- Taking on the duties of assistant coach for your son’s soccer team
- Giving attention to those scores of emails in your inbox
- Returning phone calls from clients
- Filling out that performance review questionnaire on a staff person
- Scheduling mentoring meetings
- Conducting goal sessions with the other partners
- Meeting with the firm administrator to handle operational questions
- Meeting with the technology director about security issues
- Review work on client engagements
- Checking firm production for the previous day (or week)
- This list could go on and on……
First of all, you are not alone. Most of your partners and staff feel the same way!
Just remember, you don’t have to do everything yourself. Help is there, if you ask. Delegate as much as possible to your firm administrator (practice manager). Allow the staff to take on more difficult client assignments. It will help them stretch and grow.
There is an old saying, doing ten things half way is not the same as doing two things as best as you can. Make thoughtful choices and never forget, it is okay to simply say, “No”.
I have occasionally heard the phrase, “I Led Three Lives.” I never realized where it originated so I Googled it. It was a TV series that aired during the 1950s about a spy.
The managing partner of a CPA firm lives three lives. Two lives in their professional life and, of course, their personal life.
Their two professional lives are comprised of the outside-the-firm life and the inside-the-firm life.
The managing partner is the face and voice of the firm. The MP represents the firm in the business community and in the civic/charitable community. The MP speaks on behalf of the firm in media relations and as part of the Chamber of Commerce or other business related organizations. The MP often serves on several outside Boards of Directors and may even be active, on behalf of the firm, on social media.
Of course, all partners in the firm should also be leading two lives at the firm – inside and outside, just like the MP/CEO, but maybe not quite as high-profile.
I often observe that while some client service partners fill a prominent role inside the firm, they rarely venture outside to be visible in the business community or on social media. Yes, they do interact with clients but rarely generate new business themselves.
It is a partner’s responsibility to generate new business. If this is something you are not comfortable with, make it a goal for 2018 to be more involved in the business community. Take it a step at a time. Maybe you can begin by accompanying a rainmaker to an event or join with your other partners and their spouses to support a local charitable event or banquet.
Don’t forget that third life – your personal life with friends and family. Too many partners work too many hours. I have often heard a partner confess, “Work is my life.” When partners show workaholic tendencies it discourages younger accountants from ever wanting to be a partner in your firm and often they leave to join a competitor.
Throughout my managing partner career, I read a lot of books and articles by David Maister. I also heard him speak many times over the years. His comments, almost always, hit home with me.
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 often talked about a topic that has stayed with me. I have also been involved in this issue many times during my consulting and retreat facilitation activities:
Why do accountants in public accounting continue to work with clients they dislike…. even dread?
Maister learned from a survey of professionals around the world, that they enjoy their work 20 to 30 percent of the time, and can tolerate the rest. The report also found that professionals like the clients they work for and find the clients’ sector interesting about 30 to 40 percent of the time. Again, the rest is acceptable.
Maister’s (and my) question for you is: If you don’t love what you do or those you do it for, why would you want to go out and get more of it?
Some CPAs will honestly tell you that they continue to put up with clients they do not like because those clients are willing to pay. So, they are doing it for the money.
If you didn’t have to spend so much time on these unlikeable clients and doing work you hate, you would have much more time to work with likeable clients doing work that is challenging and interesting. It would be fun!
Isn’t it time, as a partner group, to commit to reviewing the firm’s complete client list and out-place about 20% of your clients? Then, do it again next year?
As Jim Rohn once said, “We generally change ourselves for one of two reasons: inspiration or desperation.”
As I work with CPA firms around the country, I am finding that the BIG topic of change has been ignored, delayed or swept under the rug. It seems many partner groups are thinking, “If we procrastinate about these ideas and initiatives, maybe we won’t have to change after all.” Not true. In fact, it is a much bigger topic than working on “the firm” and making it better.
The bigger issue is, if you want your firm to change, you have to change yourself. If you want your firm to become better – a top-notch, well-known, progressive firm, then you, as an individual, have to change. You have to become better, a top-notch, well-known, progressive professional. Keeping up-to-date isn’t good enough, you must commit to personal, stretch goals.
If you are the managing partner, you should hold all of your partners accountable for reading inspirational self-development books and working harder on their own self-development goals.
Among CPA firm partners, we often belabor the topic of partner compensation. What I would like partners to ask themselves is, “What am I becoming?” and not, “What am I getting?”
To prepare your firm for the future, you need to focus on people, technology and culture. Better people, technology and culture will not ever happen if firm leaders are not preparing themselves for the future.
If you wait too long, it will no longer be an issue of finding the inspiration to change, it will become an issue of desperation because your competition and the business world have changed and moved on without you.