L. Gary Boomer
The role of managing partner is becoming more important as firms focus on governance and the profession's changing landscape.
In some firms, the managing partners were selected for the position for the wrong reasons. Some examples are:
• Ability to get along with the majority of partners and staff;
• High-income producer and good with client relationships;
• Willingness to take the job while maintaining a significant book of business.
While many people feel these are important traits and characteristics, these traits don’t guarantee the success of the firm or the managing partner.
The more important requirements of the job include the ability to:
• Provide and develop leadership at all levels of the firm;
• Attract quality people to the firm -- and retain them;
• Make timely decisions;
• Develop a strategic vision;
• Build consensus on, and commitment to, the vision and core values of the firm;
• Teach and learn;
• Allocate and manage limited resources to strategic initiatives; and,
• Counsel partners and staff.
You and others may ask, "Why does anyone want the job in most firms?" In many firms, leaders know the job needs to be done and are fearful that if they don’t do it, the firm won’t get managed. In the well-managed firms, the managing partner position has evolved to a professional management and leadership position -- frequently titled chief executive in today’s environment.
Whether your firm has a seasoned professional or a new managing partner at the helm, there are some important initiatives that should be on their checklist in 2003. By focusing on these initiatives, the managing partner and firm stand a much higher chance of success and improving the return on investment of firm resources.
Not all of these initiatives will be popular with the other partners, due to the fact that they require significant investments of time, dollars and discipline. Most CPA owners prefer working in the business rather than on the business.
Here are 15 important strategic initiatives. Hopefully your firm is already engaged in many of them. While all of these strategic initiatives are important, some firms may simply have to select their top priorities and focus their resources on those priorities.
1. Update or develop your three-year strategic plan. Condense your plan to a one-page laminated brochure that every partner and staff person has in their briefcase and on their desk. Refer to it continually as you allocate resources and make decisions.
2. Develop a three-year technology budget that is incorporated into the firm’s annual operating budget. Technology is most firms’ second-largest investment behind people.
3. Hire a learning/training manager -- invest in your people and attract top-quality people. Someone must be responsible for developing the learning/
training environment. Education and personal development are high on professionals’ priority lists, especially those coming into the profession.
4. 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.
5. Join an association or network of firms -- peer comparisons and benchmarking are healthy. Involve other partners and key individuals (information technology director, training, HR, etc.) as well as yourself in these organizations. Leadership needs to be developed at all levels in the firm.
6. Utilize the "upside-down budget" approach with partners in formulating the strategic plan. Start with partners’ desired earnings and add estimated expenses to arrive at required revenue and growth.
Then develop strategies and personal revenue budgets to reach these goals. Set partner salaries or draws at a low enough level to provide the firm adequate cash flow and capital.
Remember that some of your partners are not necessarily motivated by what is best for the firm. Monitor and report on a monthly basis. This can also be driven down to the staff level if you have good systems, management and communications. Participating in the process is often more important than the end result.
7. Schedule a firm summit (some call it a retreat) now. Much like savings, if you don’t book the days now, you will have no days left late in the year to plan. Conduct the summit away from the office and mix entertainment with strategic thinking. Involve as many key people as possible in the process. Use outside speakers and facilitators. And don’t listen to those who think this is a waste of time.
8. Create or enhance your outside advisory board. Meet at least quarterly with these people and listen to their valuable insights. I suggest using clients, non-clients (wanna-be clients) and industry-knowledgeable consultants. This will force you to act and operate more like a chief executive in a publicly held company.
9. Review and communicate with staff at least quarterly. I know you and they are busy, but you need to manage your resources and make this a priority without exception. Utilize personal 90-day game plans and review them with a positive focus. Everyone gets better at managing themselves utilizing this cycle and tools (forms). Staff and partners will focus on priorities and their unique abilities, making them happier and more productive.
10. Conduct an annual strategic review utilizing an outside source that can interview and survey key people about critical issues and performance measures. Most firms are great at monitoring the financial goals, but less than adequate at monitoring learning and growth, internal processes and client satisfaction. Balance is important in both personal life and business. You get what you measure.
11. Cull the herd of low performers and people who do not fit the firm culture. This may include high-income producers who refuse to develop and train others, refuse to delegate, are arrogant or resist change. The firm cannot afford to have individuals who are negative and destructive. I am not referring to people who challenge in a positive manner. I am specifically referring to the bottom 10 percent of producers and those who will not work as a team.
12. Review and document standards, policies and procedures. Without firm standards, policies and procedures, it is impossible to train, and firms operate inefficiently. Firms must look for ways to reduce turnaround time and improve workflow. The technology is available and most firms have already invested in it. Train your end users and make them more productive.
13. Document management is a must in today’s digital world. The technology is available and a successful implementation is possible for those firms which establish standards, policies and procedures, plan strategically, train and have the discipline to stay the course.
Document management is much like the Fram oil filter commercial, "You can pay me now or pay me later!" There is pain in this initiative, but the reward is monumental from a client service, as well as a time savings, perspective.
Digital document management is happening today in the accounting profession. Early adopters are now profiting. The average person in an accounting firm uses four reams of paper per month. A great deal of it must be filed, stored and retrieved.
14. Develop an outsourcing strategy. We suggest doing a pilot project this year with one or more of the primary vendors starting with the preparation of 1040s. This will give your firm a perspective on the potential of the strategy, as well as introduce you to the capabilities of an improved workflow system.
Individual tax return preparation is the tip of the iceberg. You will see more labor-intensive services outsourced in the future. Don’t let your existing personnel’s paradigms get in the way of progress.
15. Have fun! Put balance into your firm and your personal life. Reward those with a positive attitude.
Don’t expect your managing partner to accomplish this list alone. Success requires trained players, a team effort, a well-designed game plan and an experienced coach. Leverage your resources and expect progress, not perfection!
