MANAGEMENT

Management Philosophy of a CPA Firm

 

What many firms get backwards.

By Marc Rosenberg, CPA
Author of “CPA Firm Management and Governance.”

I have used the flowchart you see here for nearly 20 years and it has not lost one iota of relevance in demonstrating how to effectively manage a CPA firm. Its message is simple yet powerful.

Most firms make the mistake of managing from the bottom of the chart, and try to work their way up. The firm is primarily managed by:

  • Appointing a managing partner who usually is the guy with the biggest book of business but often is a lousy manager.
  • Allocating income based on an “eat what you kill” mentality. The partners reason that altering the size of one’s paycheck is the best way to provide feedback to a partner which will, in turn, lead to improved performance.

There are many flaws to this management approach, a couple of which are: