Art of Accounting: New partner responsibilities
Many new partners continue as they were, but with a higher status, and more pay. However, there is plenty for new partners to know and do, and unfortunately many firms do not have any “new partner training,” yet they have expectations of an elevated degree of performance. Here are some things to consider.
(Comment: While this column is directed to new partners, much of this information would also apply to non-managing partners at any stage of their careers.)
First day as a partner
You may or may not feel different the first day you wake up as a partner, but you will be different.
People’s perceptions of you will have changed. You will now be a partner and, as such, an owner, a prestigious person within the profession and someone whose voice will have greater authority. Your clients will view you as someone who can represent the firm and bind the firm with mere utterances floating from your mouth — or in some cases from an unaware emotion or distempered facial expression. Your presence will also generate more excitement and authority.
Your previous co-workers will view you as one of their “bosses.” As a boss you will be perceived as someone who can fire them … or offer them a promotion at some point. You will no longer be one of the boys or girls; you will be one of “them” and will lose the simple frankness between colleagues.
To the outside world, you will have achieved an esteemed, respected position and will be deferred to if an opinion is required. You might even be sought out by reporters looking for an authoritative quote on some matter that people think accountants are expert in.
What you do, how you appear and dress, whether you show up on time, volunteer or provide an initial contribution to a fundraising effort will be scrutinized, thought about and possibly matched. An unguarded moment of anger, denigrating remark or off-color joke can create a negative impression of your firm that no amount of good works by the other partners could erase. Yet no one will know or recall the genesis of the negativity. Your responsiveness to emails, postal mail, phone calls and staff questions will determine your influence. A lack of responsiveness or tardiness will vitiate the impression you should want to promote. You will be a role model. Be one who should be emulated, not one who transmits an undesirable influence.
You will be different the first time you wake up as a partner, so you must behave as such. Let what you do reflect favorably on you, your firm and our profession. Perception does become the reality. Act in a way that shows you deserve the trust your partners placed in you. However, that first day when you wake up, do not act differently toward your family, friends or yourself — they, and you, will know the reality of who you are!
Learning to be a partner
In many situations, being a partner is a learn-on-your-own experience. There is no template, since many firms have different expectations. Some firms expect the new partner to miraculously become a new business machine. This is particularly so in larger firms. Others promote skilled technicians or staff with very close client relationships so they can retain them in the firm. Still other firms see potential and the new partner’s ability managing large numbers of staff, and some just don’t want to upset their applecart and promote to keep the status quo intact where the partner title is nothing more than a title. Regardless of the reason, we believe there are some things new partners need to do:
- You will need to face the reality that you are still “employed” by the firm, and the managing partner or the partner in charge of your office is still your boss.
- You need to manage your own growth.
- If you are given any points, you will be an owner and will need to be aware of how your investment is performing.
- You will need to develop your own brand within the confines of the firm’s brand.
- You will need to perpetuate the growth of the practice, and that means marketing, business development or sales, however it might be referred to in your firm.
- You will need to manage your book of business in a way that creates opportunities for staff under you to grow and to assume your responsibilities. This is called leverage and needs serious mentoring by you.
- You need to develop a growth plan for yourself — where will you be in five years? If it is not much further along than at present, you and the firm will not succeed or grow.
- You can help your plan by installing realistic and doable benchmarks.
- If necessary or helpful to crystallize your goals, discuss them with the managing partner. If that doesn’t seem possible (depending upon the firm dynamics), then set it up for yourself and make it work.
- Becoming a partner involves continual growth and doesn’t mark the pinnacle of a career, but another starting point; and that growth means venturing elsewhere on ground not yet walked.
- Set goals to perform additional services for existing clients. A reasonable goal is to obtain added engagements from 5 percent of your clients. A push goal is 10 percent of your clients. But do something!
- Getting engaged to perform additional services for existing clients is no harder than uncovering needs they have and then presenting solutions and justifying the excess of the value over your price. In case you need a term for this, it is called “selling.”
- You need to develop a growth mindset.
Growth cannot be accomplished without relinquishing some of the current workload. This is done by enabling and empowering managers and supervisors to step up to assume the roles you had before becoming elevated to partner. It also means stepping away from the responsibilities you assumed so you could become a partner. You became a partner because you did your boss’s job … each step of the way. Now you have to let others do yours.
Partners need to grow. The following are 10 ways to grow:
1. Organic growth by providing added services to existing clients, having your clients accept annual fee increases and maintaining the present client base;
2. Growing externally by bringing in new clients;
3. Acquiring additional skills that could be provided to clients and/or establishing yourself as an expert in an area making you a recognized “go-to” person;
4. Expanding industry knowledge, presence and your reputation as an industry expert;
5. Being available and cooperative to support firm marketing efforts;
6. Becoming a leader in staff growth and development and in extending staff longevity, i.e., reduced staff turnover;
7. Keeping current technically, particularly by reading the journals you subscribe to and attending the right CPE programs;
8. Being properly trained and using the most current technology;
9. Having happy clients who refer you; and,
10. Being active in accounting societies and developing a network of colleagues in your area, nationally, and perhaps internationally depending on your practice.
We suggest that each partner, and in particular new partners, come up with their annual goals in each area and review their performance quarterly.
Partners cannot stagnate; they need to grow, so the firm can grow.
Reducing your workload
We’ve spoken to many new partners from firms of all sizes all over the country, and we hear a common question: “If I reduce my client involvement, where will my chargeable time come from?” Another concern is that while reducing client load is important for a partner to grow, a problem with this is that the reduction of or loss of the relationship lessens the “client equity” of a partner.
In most smaller firms, client equity is a quantifiable value in a practice that likely will be sold at some point. There the price is based primarily on gross billings. Within a larger firm there are other measures valuing the buyout of partners. Individual book of business is usually not as important.
However, the greater the client relationship base, the more power a partner has within a firm. This is not always clearly articulated or espoused, but that is the reality. Accordingly it becomes important for new partners to reduce their workload while at the same time maintaining their relationships but also creating the opportunities for others to advance. We might suggest that if chargeable time is the primary measure of a partner’s performance and value, the firm either has a current growth problem, or one will be forthcoming.
- Reality 1: If the partner doesn’t reduce their workload, they will not be able to grow, nor will staff under them grow. When staff members don’t grow, they will leave — at least the good ones will.
- Reality 2: If staff members don’t move up to take over a partner’s work, the partner cannot grow. Without growth, partners will either lose their value or remain locked into a dead-end position.
- Reality 3: Good staffers want to grow, take over relationships, build bonds with clients and be elevated to partnership. Opportunities must exist for them.
Transferring client service responsibilities
It is a balancing act because each of these realities depends upon the others. Here is a template for what a new partner needs to do to transfer their responsibilities:
- Transition the responsibility for the client engagement to a manager.
- Explain the nuances of the engagement, what makes it different, client preferences and distinctions, and client internal staffing issues.
- Let the manager understand you will be available for planning discussions and consultations on new or unusual issues as requested by the manager, but it is the manager’s responsibility to control the engagement.
- Maintain a review and oversight process, but expect to find work with no errors or changes. Work that has changes uncovered by you indicates that the manager is not yet ready to assume full responsibility as expected and needed by you and the firm.
- Continue to hold exit meetings with the client and have managers attend when it has been shown they can deliver error-free work to you.
- The objective of bringing the manager to the meetings is to introduce them as a responsible firm participant in servicing the client and handling their affairs.
- A part of evaluating the manager’s performance is their follow-up after client meetings based on issues raised at those meetings.
- When it has become evident the manager can step up, the partner should skip the third meeting and have the manager run it with the client.
- The partner should attend the next meeting and then step aside.
- The partner should maintain contact with the client through frequent phone calls and perhaps an occasional breakfast or lunch.
- Concurrent with the workload reduction, the new partner should be looking to step up to take over relationships from more senior partners, developing additional services from existing clients, getting referrals from them and bringing in new business, and following through on the items on their growth list.
Each partner should understand that as the firm grows and is strengthened, each partner’s equity and value will be enhanced. It is no longer about you, but about “us.” The alternative to firm growth is stagnation and sluggishness.