Six Rules for Keeping Partners Happy and Productive

Group of four business people talking to each other during a business meeting, with one man holding an electronic tablet in his hands with graphs and charts on the display

Plus the first nine questions they must embrace for optimal profitability.

By Marc Rosenberg
The Rosenberg Practice Management Library

“When a corporation says move left, everybody takes a step left. In a partnership, when you say move left, three people go to the bathroom, four people move right and five people leave the firm.”Richard Ungaretti, Ungaretti & Harris

MORE: Why Strategic Thinking Impacts Your Firm’s Future | Seven Things Good Firms Must Do | Don’t Make Firm Profitability a Goal | Top 20 Tough Choices for the Partner Comp Committee | Tell Potentials What Partnership Takes | Disturb the Present to Improve the Future
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In CPA firms, as the partners go, so goes the firm. The partners

  • bring in most of the business,
  • manage most of the client relationships and engagements,
  • develop and mentor the staff and
  • manage the firm.

If the partners don’t perform these functions effectively, it is virtually impossible to be profitable and successful.
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Why Strategic Thinking Impacts Your Firm’s Future

What do “disturbing the present” and “paradigm shift” really mean?

By Marc Rosenberg
The Rosenberg Practice Management Library

Roberto Goizueta, the late Chairman of Coca-Cola, and certainly one of the top two or three CEOs of the last 30 years, said it best: “Challenging the status quo when you have been successful is difficult. If you think you will be successful running your business in the next 10 years the way you did the last 10 years, you’re out of your mind. To succeed, we have to disturb the present.”

MORE: Seven Things Good Firms Must Do | Five Ways to Separate Accounting Winners from Losers | Core Values: Why Your Firm Needs Them | Voting on Ownership Basis? Three Better Methods | Fifteen Big Questions for Your Next Strategy Session
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Compared to most vocations, CPA partners make a pretty good living. Their success has been attributable primarily to a combination of the following:

  1. Bringing in business
  2. Providing great service to clients, which results in client retention and moving clients upscale in terms of services
  3. Strong technical skills
  4. Developing staff into leaders
  5. Strong interpersonal skills

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Seven Things Good Firms Must Do

six people meeting around office conference table

Good management gets them there.

By Marc Rosenberg
The Rosenberg Practice Management Library

If partners of firms across the country were asked what the key was to the success of legendary Fortune 500 companies such as General Electric, Coca-Cola, IBM and countless others, I’m sure that the words “strong management” and “strong leadership” would dominate their responses. Yet, ask those same partners to evaluate their own firms’ management, and if they are honest, their responses would not be very flattering.

MORE: Five Ways to Separate Accounting Winners from Losers | Two Factors Determine Firm Profitability | Five Keys in Compensating New Managing Partners | What Partners Do and Don’t Deserve | Five Steps to Transition to Partnership
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Of all of the techniques for improving CPA firm profitability, none is more effective than strong management and leadership. Yet, nothing is more elusive. Why is this?
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Five Ways to Separate Accounting Winners from Losers

two women looking at laptop screen

How many of these are you expert in?

By Marc Rosenberg
The Rosenberg Practice Management Library

If CPA firms did everything “right,” they could easily double or triple their income. Doing things right includes effectively bringing in clients, charging high billing rates, maintaining strong realization, high leverage of staff to partners and keeping expenses down. It’s the rare firm that does well in all of these categories.

MORE: Two Factors Determine Firm Profitability | Don’t Make Firm Profitability a Goal | Top 20 Tough Choices for the Partner Comp Committee |Tell Potentials What Partnership Takes | Disturb the Present to Improve the Future
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The path to profitability is different for every firm. But the truly profitable firms are successful at achieving one or more of the following:
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Two Factors Determine Firm Profitability

magnifying glass showing bar charts

You’d think accountants could agree on a common definition. Nope.

By Marc Rosenberg
The Rosenberg Practice Management Library

If you asked the president of a Fortune 500 company or the owner of a restaurant to define profitability, they would be able to give a quick, definitive answer. Not so with CPAs.

Surely, you’ve heard the story, perhaps apocryphal, of the company that was interviewing for a new CPA firm. Only one question was asked of each candidate: “How much is two plus two?” The firm that won the bid gave the answer, “How much would you like it to be?”

MORE: Don’t Make Firm Profitability a Goal | Core Values: Why Your Firm Needs Them | Voting on Ownership Basis? Three Better Methods | Fifteen Big Questions for Your Next Strategy Session
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The same can be true of CPA firm profitability. How do we measure it? You would think that the uncontested champions of measuring financial data, CPAs, would have this down to a science. But such is not the case.
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Don’t Make Firm Profitability a Goal

An example from outside the accounting profession.

By Marc Rosenberg
The Rosenberg Practice Management Library

It has been said that organizations should never have profitability as a goal. Why? Because profitability should be the result of an organization’s efforts, not its goal.

MORE: Core Values: Why Your Firm Needs Them | Five Keys in Compensating New Managing Partners | What Partners Do and Don’t Deserve | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
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Profitability is a measure of success in accomplishing core business goals. The Disney Corporation probably says it best in their mission statement, which is short and sweet, but very powerful: “Our mission is to make millions happy.”
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Core Values: Why Your Firm Needs Them

Plus 12 examples. Which work for you?

By Marc Rosenberg
The Rosenberg Practice Management Library

Core values are the attitudes and beliefs that define a firm’s culture and a critical ingredient in a successful compensation plan.

MORE: Five Keys in Compensating New Managing Partners | Top 20 Tough Choices for the Partner Comp Committee | Tell Potentials What Partnership Takes | Disturb the Present to Improve the Future
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Partners talk about the firm’s core values all the time, pointing out instances when someone’s behavior has clearly been impacted by them. These values are incorporated in processes throughout the firm, such as in the development and evaluation process, in the way income is allocated to partners, and in what raises are given to staff.
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