[IMGCAP(1)]A talent war is taking place as competition intensifies for quality high-level positions.
The time to react to this marketplace crisis has become significantly shorter, especially for firms with baby boomer partners. Talented, creative and innovative professionals are in high demand for pivotal positions to not only replace the “old guard” but also deliver new and innovative services.
The rules of the new game dictate that CPA firms seeking to remain independent must attract game-changer types of partners and move quickly to bring them aboard. Firms may also have to revise the multifaceted, traditional one-partner-per-client approach and more frequently use multiple hyper-specialized partners who perform small aspects of client service.
It is absolutely critical that your firm, regardless of its size has both effective governance and operating models and the right partners on the bus. Without these essential ingredients, your firm will find it difficult to achieve growth at an acceptable rate. Think about your firm’s future and where you want to be three to five years from now. With growth comes larger and more complex governance and operational models. It’s not always easy to accomplish, but firms must always look to attract and retain the highest-performing partners and rising stars. Without them, your firm will eventually stagnate and die.
More often than not, larger firms (and those that aspire to be larger) look to one partner group to govern, usually referred to as an executive board, partner board or executive committee, along with a second group of partners, the senior operating leadership team, to drive strategy and to oversee day-to-day operations. To be most effective, these two groups need to complement each other. They should include different partners to foster healthy checks and balances within the firm. Unfortunately, all too often at many small and midsize firms, these two groups and their responsibilities are vested with just a single governance and operating committee appointed by the CEO.
While it’s easy to fall into this trap, this isn’t a healthy way to run a firm. Sometimes it creates a mentality of us versus them. It also creates a good old boys network that becomes inbred. This unhealthy environment often creates favoritism (which is terrible for morale), hampers revenue growth (which is terrible for partner wallets), and makes it difficult to nurture future leaders (which threatens the viability of a firm).
Operationally, the audit and tax compliance business—service lines with thin margins—is driven by geography because it requires boots on the ground and long-term relationships in the business community. Nevertheless, audit and tax compliance practices usually identify opportunities for high-margin services, generally delivered by advisory and consulting partners.
This high-margin advisory or consulting is not necessarily driven by geography. Instead, this work is project driven. The projects tend to be short in duration and are awarded on the basis of skills, credentials and the ability to deliver within a certain timeline at a reasonable price. It is imperative that your operating model reflects this environment.
Here’s my view of effective governance and operations and getting the right partners on the bus.
Effective governance at any size firm can be achieved by an executive board comprising both senior partners and more junior, high-potential partners—perhaps five to nine in total, depending on the size and complexity of your firm. Generally, the CEO or managing partner is an appointed member and other members are elected by the partners at large to rotating three-year terms, with a limit of two years.
The executive board usually meets one day a month (twice when it gets close to compensation time). In the interim, between face-to-face meetings, the executive board holds a video conference or conference call to discuss matters that can’t wait for the next regularly scheduled meeting. The responsibilities of the executive board usually include approving the firm’s strategic plan and holding the CEO and other firm leaders accountable for the plan’s implementation; approving mergers, acquisitions or a firm name change; and overseeing successful resolution of partner matters (such as compensation, lateral hire outplacements and new internal admissions).
Senior Operating Leadership Team
Depending on the size of your firm, effective day-to-day operations are best accomplished through a senior operating leadership team comprising the CEO, chief operating officer, regional managing partners, office managing partners, a “go to market” leader, and audit, tax and consulting leaders. Again, some of these positions may not be appropriate in your firm today because of its critical mass, number of service lines and number of locations. Nevertheless, regardless of size, in addition to the CEO, I highly recommend that every firm, at a minimum, have an office managing partner, both an audit and a tax leader, and a go to market leader (many firms do not have this position today).
While all positions are important, I want to emphasize the importance of a go to market leader, who is typically responsible for driving industry and consulting strategies both at the operating office and individual partner levels. This partner, who generally has a small client load and a reduced number of billable hours when compared to other partners, is the partner shepherd who leverages strategic skills into others. If you don’t currently have such a partner in your firm, I highly recommend you consider one.
The senior leadership operating team usually meets one day a month. These meetings create subtle peer competition and promote the sharing of best practices. In between face-to-face meetings (typically held to handle an opportunity that requires quick collaboration), the operating team usually holds a video conference or a conference call. The operating team’s responsibilities usually include reviews of key management tools that enable a firm to execute success.
How many of these partners are on the bus in your firm today? Odds are that without adding more to your ranks, you will be falling behind your competition.
Dom Esposito, CPA, is the CEO of Esposito CEO2CEO, LLC, a boutique advisory firm consulting with small and midsized CPA firms on strategy, practice management, mergers and acquisitions. Dom was voted one of the most influential people in the profession for two consecutive years by Accounting Today. He has written a book, “8 Steps to Great,” a primer for CEOs, managing partners and other senior partners, published by www.CPATrendlines.com. Dom welcomes questions and can be contacted at email@example.com or (203) 292-3277.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access