bonus: a list of 28 core competencies. which matter to your firm?
by marc rosenberg
how to bring in new partners
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 sure that every generation of cpa firm ownership has complained bitterly about the younger generation.
more: five people to keep out of partnership | nine ways to woo a prospective partner | tell potential partners what it takes
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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 bringing in new partners is so difficult.
i think 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.
there are quite a few items on the list that appears below. before listing them all, i want to focus briefly on four really important items:
- 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 their work performance and 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 trusts the person.
- 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.
- 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 partners 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:
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- 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 revenue growth rate that they periodically need to add new equity partners to manage their ever-expanding client base. a related situation is where 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 $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.
- 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.
bringing in a new partner: thresholds and core competencies
no firm’s criteria for promotion to partner include all of the items in the following list. 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.
intangibles
- inspires trust: integrity, honesty, sound ethical behavior and judgment
- has credibility with partners and staff
- encourages client confidence: clients are comfortable calling the partner-potential first rather than the originating partner
- has strong work ethic
- shows loyalty and commitment
- is a team player
- can pass the “beer/wine” test
- has communication and interpersonal skills
- has leadership skills and high self-esteem
financial and legal
- is willing and able to buy in
- is willing to take on retirement obligations
- is willing to sign a nonsolicitation agreement
- demonstrates personal financial stability
business development
- originates x amount of business
- constantly pursues meetings with clients, prospects and referral sources to get new business
- actively seeks opportunities to cross-sell additional services to existing clients
- has been active for at least several years in building up a network of business contacts
- has distinguished self as an expert in at least one service or industry
production and client management
- manages x number of clients (billing, relationship and engagement management)
- achieves x billable hours …
- … at x realization
technical
- demonstrates a high level of analytical and problem-solving skills; solves clients’ problems
- 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; candidate has proven ability to complete highly technical projects with minimal assistance
supervision
- has solid experience and effectiveness in supervising staff
- is a delegator
- is able to develop others
administration
- follows and complies with all firm policies, procedures and deadlines
- is willing and able to perform administrative duties as required by your firm