checklist

the 17 rules for making partner at a cpa firm

checklist: it’s a big job, after all.

by marc rosenberg
the rosenberg practice management library

we’ve all heard the names given to various generations of people over the past century. the lost generation. the greatest (wwii) generation. the silent generation. baby boomers. gen x. millennials. gen z. though i don’t know of any studies on this, i’m quite sure that every generation of cpa firm ownership has complained – bitterly – about the younger generation.

more: who shouldn’t be a partner? | nine reasons people are promoted to partner | how to make partner?
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baby boomers and gen xers love to complain that today’s staff don’t want to be partners. they cite this as a major reason why it’s so difficult to bring in new partners.

but the problem is not so much that young people don’t want to be partners. they simply don’t know what it means to be a partner and they don’t know what it takes to become a partner.

bringing in new partners: thresholds and core competencies

there are quite a few items on the list. before listing them all, i want to focus briefly on four really important items:

  1. trust. this doesn’t mean trust that the new partners won’t cheat on their expense reports or steal money. it’s trust that they will always be honest and truthful and make sound judgments in the performance of their work and their conduct within and outside the firm and will never jeopardize the firm’s reputation and commitment to quality. trust that they will always do the right thing. a firm should never make someone a partner unless it totally trusts the person.
  2. the beer/wine test. i apologize for this colloquial expression, but it captures the point. a potential partner may possess most or all of the skills needed to be a partner: technical, ability to manage relationships, work ethic, bringing in business. but one additional attribute is crucial: are you proud to call the new partner a “partner”? do you feel good about introducing your new partner to clients and others? do you respect the new partner? will you enjoy that person’s company? this doesn’t mean that partners need to be best friends or even see each other socially. it simply means that from time to time, you’d enjoy having a stein of beer or a glass of wine with your new partner because you enjoy their company.
  3. business development. this is easily the most controversial criterion in the cpa profession for becoming an equity partner. some firms believe that a staffer must prove his or her skill as a business-getter to qualify for partner because they firmly believe that’s what partners do: drive the firm by bringing in business. these firms would never consider promoting someone to equity partner unless he or she has brought in a targeted amount of business.

other firms do not have strict requirements for bringing business to become an equity partner. these firms would certainly prefer that new partners be business-getters. but for the following reasons, firms often promote non-business-getters to partners:

    • the partners are not great business-getters themselves, so they are reluctant to hold new partners to a standard they themselves can’t meet. as evidence, this anecdotal experience is shared by many of my fellow consultants: at firms under $10 million, perhaps only 20 percent of the partners would be considered truly effective business-getters. not rainmakers, but simply proficient at bringing in business.
    • the firm feels it has enough partners who are business-getters and what it really needs are a few partners whose primary focus is technical. the firm feels a strong need to bolster the work quality area of the firm, even if it means bringing in non-business-getters as partners.
    • some firms are fortunate to enjoy such an enviable rate of revenue growth that they periodically need to add new equity partners to manage their ever-expanding client base. a related situation is when a partner retires and the remaining partners are all too busy to absorb the retiring partner’s clients. in these cases, firms often bring in new partners to manage clients, even if they are not business-getters.
    • there is a tradition among firms under, say, $15 million to reward competent longtime managers by making them partner. these managers are great, highly valued employees but lack business development and leadership skills. promotion to partner is first, a reward for their hard work and proficiency. second, the partners reason that if they don’t promote a loyal, valuable staff person to partner, the person will eventually quit, and they can’t afford to lose that person.

generally speaking, the larger the firm, the more likely that bringing in business is a solid criterion for promotion to equity partner. there isn’t a right or wrong position on this. it’s up to each individual firm to set partner criteria for business development that they are comfortable with.

  1. client management experience. this goes beyond the technical performance of the work. it’s responsibility for managing client relationships and satisfying their needs. it includes engagement planning, billing, growing the firm’s services with clients and getting referrals from them.

no firm’s criteria for promotion to partner include all of the items in the list that follows. it is a compilation of policies and documents i have seen while working with many great firms. i encourage you to review this list, modify it and add to it until the end result is a policy your partners are comfortable with.

all of the items here are important. those that your humble author considers the most important are in boldface type.

bringing in a new partner: thresholds and core competencies

intangibles

  1. inspires trust. integrity, honesty, sound ethical behavior, and judgment
  2. has credibility with partners and staff
  3. encourages client confidence; clients are comfortable calling the partner-potential first rather than the originating partner
  4. has strong work ethic
  5. shows loyalty and commitment
  6. is a team player
  7. can pass the “beer/wine” test
  8. has communication and interpersonal skills
  9. has leadership skills and high self-esteem

financial and legal

  1. is willing and able to buy-in
  2. is willing to take on retirement obligations
  3. is willing to sign a non-solicitation agreement
  4. demonstrates personal financial stability

business development

  1. originates x amount of business
  2. constantly pursues meetings with clients, prospects and referral sources to get new business
  3. actively seeks opportunities to cross-sell additional services to existing clients
  4. has been active for at least several years in building up a network of business contacts
  5. has distinguished self as an expert in at least one service or industry

production and client management

  1. manages x number of clients (billing, relationship and engagement management)
  2. achieves x billable hours …
  3. … at x realization

technical

  1. demonstrates a high level of analytical and problem-solving skills; solves clients’ problems
  2. exhibits enough technical skill so the firm is comfortable that once the partner candidate has finished a client project, no one else needs to review it to make sure it was done right; the candidate has proven ability to complete highly technical projects with minimal assistance

supervision

  1. has solid experience and effectiveness in supervising staff
  2. is a delegator
  3. is able to develop others

administration

  1. follows and complies with all firm policies, procedures and deadlines
  2. is willing and able to perform administrative duties as required by your firm

basic role and expectations of partners

the following apocryphal vignette plays out at partner retreats on a regular basis: the partners brainstorm what is expected of partners at their firm. they have a spirited, productive discussion that results in a dozen items written on a flipchart. all of a sudden, one of the partners yells, “oh, no!” the startled partners ask him what’s wrong. he points at the flipchart: “none of us qualify!”

as with the previous list, there is not one firm whose policy on what a partner reads exactly like the one below. this is a collection of what i have seen at many great firms i have had the pleasure of working with.

here are 17 basic expectations of partners. think twice before promoting anyone who can’t meet them all.

  1. drive firm growth, profitability, and success.
  2. be trustworthy. it’s not about stealing money. instead, it’s about exercising good judgment, never circumventing policies and procedures, and upholding professional standards and ethics.
  3. be a leader. partners earn credibility with fellow partners and the staff by being good role models, inspiring others to follow their lead. the firm is evaluated by the partners’ conduct.
  4. manage the firm, to the extent that the partner has a formal role in this area. this includes the managing partner, executive committee member, compensation committee member or a pic (partner in charge) of an office, department, or industry team.
  5. manage client relationships and engagements effectively. be attentive to their needs; establish strong client loyalty to maximize retention. move clients upscale and grow their fees, while giving them the full value of your attention. bill and collect promptly.
  6. train and mentor staff. don’t just be a “nice” partner; also help staff develop, grow and advance under your tutelage. this will impact staff retention. treat staff with at least as much respect as clients.
  7. bring in business. contribute to business development in some way; develop and cultivate referral sources.
  8. provide outstanding client service. exceed clients’ expectations. deliver on commitments.
  9. be a team player; develop a strong team beneath you; ensure that your largest clients have multiple touchpoints within the firm; share work with others. always be willing to assist other partners and staff as needed.
  10. achieve your written goals, both production and intangible. fulfill your role in the firm.
  11. push work down to staff wherever possible; do only partner-level work. keep the staff busy.
  12. live and breathe the firm’s core values, every day. respect the firm, its decisions, and its partners.
  13. protect the firm. establish required technical skills, then keep them updated and maintained; never do work beyond your capability. never stop learning. commit to the highest professional ethics.
  14. be a good corporate citizen. obey the firm’s policies and procedures, even if you don’t agree with them. treat people respectfully. respond in a timely manner to voicemails, emails, etc.
  15. practice good communications at all levels. let people know what’s going on with you.
  16. be accountable for your performance and behavior.
  17. do all of the above as a full-time partner. partners give it their all. they don’t have other commitments, such as managing a separate business or fulfilling a role outside the firm, perhaps in a charitable or civic organization, that prevent them from performing their partner duties on a 24/7 basis.