THE PARTNERSHIP

How Firm Decisions Get Made

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four people seated around conference table, one with thumb pointed down

BONUS: A voting decision grid.

By Marc Rosenberg
The Rosenberg Practice Management Library

“The force can have a strong influence on the weak-minded.” – Obi-Wan Kenobi

There are a number of alternative approaches that firms use to make decisions.

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1. Decision-making authority of the managing partner or executive committee (EC) granted by the partnership. The gold standard for the effective management of any organization is to establish a leader (president, executive director, managing partner, etc.) and bestow the position with sufficient decision-making authority, as contained in the organization’s operating charter or agreement, to manage the entity. This is the best practice for CPA firms’ decision-making.
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Non-Equity Partners a Growing Trend

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Two businessmen shaking hands

Why it works … and how it can fail.

By Marc Rosenberg
The Rosenberg Practice Management Library

“It is rare to find a partner who is selfless. If you are lucky, it happens once in a lifetime.” – Michael Eisner, former CEO of Disney

“The best thing a human being can do is to help another human being know more.” – Charlie Munger, former vice chair of Berkshire Hathaway

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The use of the non-equity partner position (some call it an income partner) has been on the rise at CPA firms for 20 years or so, as the data here, from a Rosenberg MAP Survey, show:
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Best Practices for Executive Committees

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six people meeting around a table

How many people? What do they do? And more.

By Marc Rosenberg
The Rosenberg Practice Management Library

“A group of the unprepared, appointed by the unwilling to do the unnecessary.” – Fred Allen

When firms are small or newly formed, the firm’s management philosophy is characterized by some or all of the following:

  1. “We all have a vote, and we make decisions as a group.”

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  1. Partners share profits and duties. “If we all pitch in and take responsibility for a certain area of the firm (admin, staff, quality control, marketing, etc.), our firm will be well managed, and we can save the cost of a firm administrator.”

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How to Evaluate Managing Partners

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Plus some thoughts on alternative management and perfectionism.

By Marc Rosenberg
The Rosenberg Practice Management Library

Evaluating the managing partner is really an upward evaluation. Like all upward evaluations, evaluating the managing partner should be limited to those people who can offer input based on actual experience, not hearsay.

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This means that at firms of fewer than 10-15 partners, all the partners will probably participate. But once a firm gets beyond 10-15 partners and has multiple offices, an increasing number of partners may not have enough direct contact with the managing partner to evaluate the person. Firms with executive committees may wish to limit the evaluation to those on the committee.
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What Millennial Managing Partners Face

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man seated at laptop talking on phone

Plus six tips for those aspiring to the role.

By Marc Rosenberg
The Rosenberg Practice Management Library

CPA firm managing partners often serve for long periods of time. A tenure of 20 to 25 years is not uncommon. For managing partners to serve that long, they command the unwavering respect of the partners, often cling to old practices and, toward the end, may not be the visionary they once were.

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When a new managing partner takes over, this presents the firm with tremendous opportunities to change and improve the firm. The worst mistake is for the new managing partner to carry on just like their predecessor.
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Twelve Nuggets of Advice for the New Managing Partner

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seated man wearing suit looking straight ahead

Plus some thoughts on compensation.

By Marc Rosenberg
The Rosenberg Practice Management Library

In an ideal world, a new managing partner will have been groomed and mentored by the existing managing partner for two or three years. A great way to do this is by executive committee participation. But alas, many things at firms under $30 million are not ideal. Unfortunately, we have seen many firms anoint their new managing partner with relatively little training and mentoring.

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So, our first piece of advice is to provide for a two- or three-year process of gradual transition from the current to the new managing partner. Regardless of the effectiveness of the transition period, here is advice that we always give to prospective managing partners:
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Why Have a Managing Partner?

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Businessman giving advice to female coworker

And how they should spend their time.

By Marc Rosenberg
The Rosenberg Practice Management Library

“You call it ‘nagging.’ I call it ‘Listen to what I said the first time!’” – Anonymous

After deciding on a management style for the firm, the next issue for the partners to decide is how the firm will be managed.

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The first question is: Do we want the firm managed by a leader, which for a CPA firm is the managing partner, or managed by one or more committees of partners?
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Partners Need to Respect Firm Culture

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With insight from our exclusive expert council: Dunn, Pipe, Grundy.

By Martin Bissett
Passport to Partnership

The Passport to Partnership study collated a number of responses from existing partners of accounting practices in a conversational style.

Examples that really stood out on the realities of individual variances in firm culture are showcased below.

MORE: Five Thoughts about Your Firm’s Culture | Do Others Think You’re Ready to be Partner? | Attract Clients, Don’t Sell to Them | Think of It as Service, not Selling | Eight Questions That Target Personal Accountability | Are You Projecting Confidence? | Does Client Perception Match Your Firm’s Reality? | Firm Not Thriving? Five Fixes | Five Questions for Grading Prospects | Health, Wealth, Stealth: Challenges on the Path to Partnership
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“Our partners have articulate minds, and that’s what we want to be demonstrated by any new appointees.” Meaning, can they hold their own intellectually in more senior circles?

How would they then behave when meeting with other senior executives as a contemporary of theirs?
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Five Thoughts about Your Firm’s Culture

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four colleagues chatting around a water cooler

Make it work for you.

By Martin Bissett
Passport to Partnership

Cultural issues are dynamic, very broad and unique in each firm. As such it is a challenge to summarize them accurately and comprehensively.

MORE: Do Others Think You’re Ready to be Partner? | Competence Is Just the Beginning | How to Attract Clients | Eight Questions for Personal Preparation | How to Prepare for Partnership | Five Questions to Help Forecast Your Firm Growth | Do You Deliver on Your Website’s Promises? | Five Questions About Facing Challenges | Be Clear About Your ROI Proposition | It’s Time to Prepare the Next Generation | Who Are You More Committed to, Your Firm or Your Clients? | Nine Checkpoints Before Every Prospect Meeting | Three Questions about Conversion
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From our research, however, the wise choice for anyone wishing to get their passport to partnership appears to be to study

  • their firm’s existing culture,
  • that of its senior individuals and
  • that of those who have the ear of those senior individuals

to understand not only the route to partnership, but the terrain that they need to cross too.
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What to Do When a Partner Becomes Disabled

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man seated at desk in front of empty chair

What does the partnership agreement say? Oops …

By Ed Mendlowitz
202 Questions and Answers: Managing an Accounting Practice

QUESTION: My partner has been out sick for the past 3½ months, and he has been continuing to get his draw. It looks like he will be out for some time more, but not sure how long.

MORE: Do As Little As Possible | Want to Merge? Here Are 23 Things to Request | I’m Just Starting Out; Why Join an Association? | Don’t Blame the Client for Your Location | Realign Partners with Monthly Meetings | I’m 76. Should I Slow Down? How? | Who to Hire When It’s Time to Grow | Hourly Billing Doesn’t Cover the Value; Now What? | Ask for What You’re Worth | The Top Tip for Reviewing Tax Returns | You Have to Start Somewhere | Two Options for Collecting Past Due Fees | You Can’t Win with Lowballing | Nine Reasons Not to Specialize | When Board Service Gets Tricky
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He does make some calls from home, but isn’t really doing any work. Is there anything I can do?
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Partner Comp Earnings Gap: What’s the Right Spread?

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people standing on stacks of coins, representing income gaps

How do you get it right at your firm?

By Kristen Rampe
Partner Comp: Art & Science

There are many reasons for a sizeable spread in partner income at a CPA firm. For example, at a firm with both a founder nearing retirement and a first-year partner, the spread would be wide. Some firms are the opposite, with two to four founding partners agreeing to share all profits equally. There is no spread there.

MORE ON PARTNERS: Thirteen Traits of Partners You’ll Want to Keep | Six Rules for Keeping Partners Happy and Productive | Five Keys in Compensating New Managing Partners | Top 20 Tough Choices for the Partner Comp Committee | Voting on Ownership Basis? Three Better Methods | What Partners Do and Don’t Deserve | Tell Potentials What Partnership Takes | Five Steps to Transition to Partnership
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For most multipartner and multigeneration accounting firms, the situation gets more complicated. You’ll have some high performers and some who are on cruise control. You’ll have ones contributing notably more dollars to the bottom line and more to future leaders’ development.

But what about two partners who contribute relatively the same? Should their income allocation be similar? How similar?
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How to Prepare for Partnership

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Businesswoman sitting on table while talking with four coworkers

Our expert panel says first, consider why you want it.

By Martin Bissett
Passport to Partnership

The skill in producing financial reports is limited by the quality of the information presented to the CPA by the client. The motivation of the client to influence that financial information comes in many forms, some intentional and some unintentional. Competence comes first in being able to resist pressure and present a true and accurate position of the client’s organization.

MORE: Stop Waiting for Business to Come to You | Are You Projecting Confidence? | Does Client Perception Match Your Firm’s Reality? | Firm Not Thriving? Five Fixes | Five Questions for Grading Prospects | Health, Wealth, Stealth: Challenges on the Path to Partnership | Don’t Let Recurring Fees Kill Your Practice | Rate Your Personal Purpose | Five Ways to Make Selling Easier | Six Keys to Getting a Proposal Accepted
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Sounds obvious, doesn’t it? But there’s a twist.
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