by L. Gary Boomer
Seldom does a week go by when I don’t hear from a managing partner concerning problems within their partner group.
Many issues can be classified as “to be expected,” while others are simply the result of making new partners for the wrong reasons.
When asked why the troublemaker was made a partner in the first place, too often the answer is: “We were afraid he would leave.” Some go as far as to explain that they were afraid that a group might leave and take their clients with them.
Is this a symptom of other problems? Too often, firms select partners from a defensive, rather than an offensive, position. Great firms avoid these common problems through good leadership, management and a well-defined process for selecting owners.
The ideal partner1. A team player |
When existing partners are asked to list what they want in a new partner, they tend to come up with a list of skills and criteria for which many of them probably would not qualify. To go David Letterman one better, I’ve included a Top 11 list, in random order (see box).These are all admirable characteristics and traits; however, it is unrealistic to expect every partner to excel at them all.
I believe that the ownership partner selection challenge boils down to the firm’s strategy with regard to economics, culture, leadership and growth. Firms that operate from a well-defined strategic plan tend to make fewer errors than firms who instinctively play the hand of cards that they are dealt.
The key to ownership success is to build consensus with regard to strategy rather than attempting to manage individual strategies while sharing overhead.
This is the most common scenario we see in the accounting profession among small and midsized firms. These organizations really aren’t firms; they are overhead-sharing arrangements holding themselves out to the public as firms. Sooner or later, the multiple perspectives will cause severe problems for these firms related to:
● Compensation;
● Their ability to attract and retain quality personnel;
● Their ability to attract and retain quality clients; and,
● Their ability to focus.
As you see from the Top 11 list, most partners place a high emphasis on technical skills. I know many successful CPA firm partners and business owners, and “technical” is not the term I would use in explaining their unique abilities and reasons for success.
In fact, many will tell you that their key to success is that they hire smart people who fit the job description. They simply manage resources in order to ensure success.
A good friend, who was once a partner in a small CPA firm and is now a vice president in a Fortune 500 company, explains his role today and when he was a CPA firm partner with statements like the following: “The higher you go, the less you know. My job is to make people feel good. Seriously, my job is to see that we have the right people in the right job, and that they have the resources to make themselves successful.”
This may sound too simple to many of you, but complex problems tend to have simple answers if you can step back from the problem.
Furthermore, the problem is that too many CPA firm owners are caught up in the problem and, therefore, cannot see the solution, or often won’t even admit that the problem exists.
The good news is that firms are starting to realize that leadership and management are important. There are consultants who can assist firms in the development of a strategic plan and tools that can help you get the right people in the right jobs.
As Jim Collins states, in “From Good to Great,” the challenge is to get the right people on the bus, the wrong people off the bus, and the right people in the right seats on the bus.
If you are thinking of adding a partner, or are currently having partner issues such as underperformance that need to be addressed, you should consider developing some of the following basics.
This is also a good list for potential owners in firms. You may want to ask firm leadership about these documents and tools. If they don’t exist, don’t be surprised in the future when things don’t work out the way you thought they would when you took the job.
● An elected CEO or managing partner with a job description and employment contract.
● A current three-year strategic plan (including marketing, technology and human resources, staffing and training).
● Annual firm summits to address strategic initiatives and objectives.
● Agreed-upon average revenue amount per full-time equivalent and owner.
● Current partnership or stockholder agreements.
● Employment agreements for professional staff.
● Written owner compensation and incentive plans.
● A completed Kolbe Index for each partner and prospective partner.
● A completed synergy report (Kolbe) for the management team or partner group.
● Annual game plans for all owners with scheduled quarterly reviews.
Granted, most firms will not have all of these items or issues completed and up to date; however, it will give you a good indication if your firm is being managed or simply reacting to issues.
Remember that all progress starts with the truth. A creative mind in motion is closer to a solution than a critical mind that is focused on the obstacles.
