How Committees Kill Firms

Businesswoman working at deskWhy managing partners need to be accountable.

By Bill Reeb and Dominic Cingoranelli

As we have said so many times before, everyone likes the idea that “I” will hold “me” accountable. But few like the idea of “anyone else” holding “them” accountable.

MORE ON PERFORMANCE MANAGEMENT: The Job of Managing Partner: Empowered or Emasculated? | Partners as Role Models: The Good, Bad & Ugly | Managing the Managing Partner | Pay Varies When Performance Varies | Accountability Is for Everyone | Who Decides What? | CPA Firm Performance Assessments: 15 Core Competencies, 21 Questions

So, once it is decided that accountability is important and someone needs to be responsible for implementation, the discussion quickly shifts to “let’s form a group of people, like an executive committee or a compensation committee to hold us accountable.”
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The Job of Managing Partner: Empowered or Emasculated?

Woman executive coaching a male employee across deskWhy eat-what-you-kill firm cultures produce weak CEOs.

By Bill Reeb and Dominic Cingoranelli

Let's review some best practices as to how the managing partner is elected, what is expected, for what term and how he or she is protected if removed from that role.

MORE ON PERFORMANCE MANAGEMENT: How to Monitor Goal Progress | How to Implement Strategy, Step by Step | How to Decide Who Decides Pay | Accountability Includes Partners | Succession Plan Requirements | How Retired Partners Are Robbing their Own Firms | 4 Ways to Create More Capacity | Partner Retirement and the War for Clients | Succession: The Questions to Care About | Hazards of Not Reallocating Equity | CPA Firm Performance Assessments: 15 Core Competencies, 21 Questions | 5 Harmful Management Attitudes (and How to Fix Them)

The job differs whether it is being filled under the Eat What You Kill (EWYK) or Building a Village (BAV) models. For example, under the EWYK model, the managing partner is likely the largest equity partner, or if not, then the default would be that the role of the managing partner would be that of administrative partner.  Because the EWYK model is usually a silo model built around superstars, the managing partner’s role is to handle all of the matters that the other partners don’t want to do.  It is not uncommon in these scenarios that the managing partner earns a stipend to fill that position, and that the stipend is not very much (maybe $25,000 to $75,000 a year).

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Partners as Role Models: The Good, Bad & Ugly

Two older businessmen talkingAccountability and reviews are more important at higher levels, not less.

By Bill Reeb and Dominic Cingoranelli

Evaluation of performance and goal achievement is something done that should be performed multiple times during the year. Unfortunately, many CPAs tend to think of management as a waste of time, and evaluations as purely a human resources requirement created by the government to protect employees to the disadvantage of the organization.

MORE ON PERFORMANCE MANAGEMENT: How to Implement Strategy, Step by Step | How the Best Managing Partners Turn Ideas into Reality | Make Accountability a Process | Accountability Requires Clear Expectations | Base Retirement on Today’s Operations | How Involved Should Retired Owners Be? | How to Find a Partner’s Replacement

Well, that is one way to look at it. But we think it’s the wrong way.
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How to Implement Strategy, Step by Step

Businessman's shoes toeing words "What's your next step?"Be specific and find ways to "catch" the partner in action.

By Bill Reeb and Dominic Cingoranelli

An Example of the Process

It's one thing to say "the managing partner implements strategy," another to put it into action.

MORE ON PERFORMANCE MANAGEMENT: Make Accountability a Process | Pay Varies When Performance Varies | Accountability Is for Everyone | Who Decides What? | Firms Say What Would Change Retirement Pay | Action Plans for Transitioning Partners | How Retirement Issues Affect Succession Planning | How Partner Ratings Factor Into Equity | Develop Your Employees or Suffer the Consequences

Following is an example of this process, providing more detail to show how it might look in actual practice. Let’s assume that one of the goals of a partner is to increase the Most Trusted Business Advisor Activity for his or her top clients. In the initial goal sheet, for this one goal from the managing partner, that might look like this:
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How the Best Managing Partners Turn Ideas into Reality

Man and woman in meeting across deskApproaches can differ dramatically from one partner to another.

By Bill Reeb and Dominic Cingoranelli

How can the managing partner operationalize the strategy within the policies, process and budget set forth by the partner group?

MORE ON PERFORMANCE MANAGEMENT: Accountability Includes Partners | Accountability Requires Clear Expectations | Base Retirement on Today’s Operations | How Involved Should Retired Owners Be? | How to Find a Partner’s Replacement | Best Practices for Mandatory Retirement | 7 Succession Questions to Ignore for Now

To keep this simple, because it can get very complex extremely fast, let’s say that the firm has three strategies the partner group has mandated:
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Managing the Managing Partner

Businessman standing at conference table with 4 colleagues seated behindChecks and balances are key.

By Bill Reeb and Dominic Cingoranelli
CPA Trendlines / Succession Institute

As past success and personal development continuously demonstrate, organizations operate more effectively when people are managed. And since partners are people, rather than gods or superheroes, it makes sense that we put something in place to manage them as well.

MORE ON PERFORMANCE MANAGEMENT: Accountability Is for Everyone | Succession Plan Requirements | Base Retirement on Today’s Operations | How Involved Should Retired Owners Be? | Firms Say What Would Change Retirement Pay | 4 Ways to Create More Capacity | 7 Succession Questions to Ignore for Now | How Partner Ratings Factor Into Equity | Hazards of Not Reallocating Equity | 5 Harmful Management Attitudes (and How to Fix Them) | Do CPA Firms Need Management or Leadership? |  Job 1 for The Practice Owner: Client Management

With this general background in mind, let’s dive a little deeper into how a managing partner goal-setting process might work.
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How to Decide Who Decides Pay

Woman on building roof spraying out dollars with a garden hoseWhere to draw the line between managing partner and compensation committee.

By Bill Reeb and Dominic Cingoranelli
CPA Trendlines / Succession Institute

Everyone likes the idea that “I” will hold “me” accountable. But few like the idea of “anyone else” holding “them” accountable.

MORE ON PERFORMANCE MANAGEMENT: Accountability Requires Clear Expectations | Base Retirement on Today’s Operations | Who Decides What? | How Retired Partners Are Robbing their Own Firms | Best Practices for Mandatory Retirement | How Retirement Issues Affect Succession Planning | Succession: The Questions to Care About | How to Target What Skills to Develop Now | What Having Your Employees’ Backs Means | 5 Harmful Management Attitudes (and How to Fix Them) | Do CPA Firms Need Management or Leadership? |  Job 1 for The Practice Owner: Client Management

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So, once the decision has been made to implement systemic changes to hold partners accountable to specific performance expectations rather than just relying on everyone to put in a self-proclaimed “good day’s work,” the next battleground is determining who will be holding whom accountable. The discussion always shifts to “let’s have a group of people, like a compensation committee, hold us accountable.”
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