keep your firm from biting the dust

checklist: the 12 key objectives and 23 day-to-day responsibilities of successful managing partners.

by domenick j. esposito
8 steps to great

while there are lots of reasons why small and midsized cpa firms don’t realize their full potential – and, in some situations, fail or bite the dust – we have found that the downward spiral of a firm usually starts with the managing partner.

more on strategic planning: 6 ingredients for firm value | 4 ways to add $100,000 in new business fees every year | prune your firm: ‘rightsize’ managers and partners | ineffective management is hazardous to your firm’s health | profitability requires discipline | pitching vs. pursuing
exclusively for pro members. log in here or 2022世界杯足球排名 today.

the managing partner is the heart and soul of any cpa firm – the shepherd, orchestra leader, or quarterback, if you prefer, of the partner group – who didn’t fully understand the key objectives and day-to-day responsibilities of his or her role, and therefore, failed to operate on all cylinders.

by way of background, a few points are worthy of note:

at small and midsized firms, many managing partners “grew up” in small firm environments and have had little exposure, if any, to what it takes to move the firm to the next level. instead, these managing partners are usually the biggest billers, the best business development partners or the partners with the most billable hours.

at larger firms, particularly at the top 100, on the other hand, the managing partner usually is a developing professional who

- has been exposed to what it takes to operate a complex organization,
- exhibits the skills to build and leverage the resources of the firm and, therefore,
- has the potential to move the firm to the next level.

and while a successful managing partner – regardless of the size of the firm – usually carries a very small client load to stay grounded in client service and to remain credible with the partner group, billings and chargeable hours are truly a very small part of the job. in my view, a managing partner’s clients are the firm’s partners, giving them the opportunity to maximize their strengths while minimizing their weaknesses. it’s a very challenging and daunting responsibility.

as a leader, every word a managing partner says, and every action taken, has a tremendous impact not only among the partner group but also throughout the firm. this can’t be overemphasized!

many firms select a new managing partner from their ranks at an age somewhere between 45 and 53. candidates are usually excellent client relationship partners with substantial client service responsibilities. the thought of giving up a substantial portion, if not all, of the client relationships that have been developed over years of service is very scary to many. for sure, there is a risk in being a managing partner. candidates ask, “what happens if i’m not successful? in the spirit of trust, i lose most of my client responsibilities and begin to lose touch with my outside referral sources. i’ll have nowhere to go but to exit the firm when i’m no longer managing partner.”

“there are no secrets to success. it is the result of preparation, hard work and learning from failure.” – colin powell

this is a very real concern and i have found many firms do not want to recognize its severity. instead firms say, “trust us” and while that is easy to say, history has found that this trust has been misplaced.

my advice is that firms consider “protecting” the managing partner with an agreement – with compensation and severance provisions – that ensures employment for two or three years after the person steps down as managing partner. while this is rarely done in today’s world, i suggest that the absence of such an agreement could very well be one reason firms have difficulties in attracting effective managing partners and, as a result, are unable to achieve the next level of success.

in my opinion, managing partners at many small and midsized cpa firms would be much more successful if they went into the job with a better understanding of their key objectives and day-to-day responsibilities. to provide guidance and to help improve the success rate for new managing partners and for the firms that they lead, i am pleased to summarize the top 100 firm best practices to maximize opportunities and minimize risk.

of course, one size does not fit all and the practicality of this guidance depends on the size of the firm, number of offices, geographic coverage and individual strengths of the professionals. this guidance should prove to be particularly helpful to managing partners responsible for multiple offices or for those with a single office consisting of 15 or more partners.

key objectives

create a one-firm, firm first culture and instill a team philosophy that client service transcends geographic and office boundaries. this requires partners thinking “our clients” not “my clients.”
communicate effectively with partners/staff and the community.
take an active role in client service and communication plans and ensure that partners/staff are providing first-class, quality client service that can be measured in a number of ways including:
- timeliness of delivery
- technical expertise
- innovative ideas
- forward-thinking strategies
- frequent communications
- thought leadership
- client appreciation
establish effective corporate governance.
ensure a strong balance sheet.
drive revenue and profitability that results in market compensation for partners/managers.
implement best practices for communications, business growth and cost controls.
protect the firm and ensure that partners/staff are appropriately trained, evaluated and adhering to firm policies and evaluating client acceptance and continuation risk.
participate in the local community by being an active leader in nonprofit organizations.
function as the firm’s spokesperson with business and financial outlets and publications.
mentor future leaders.
maintain relationships with the leaders of other small and midsized cpa firms and nurture potential m&a activities.

day-to-day responsibilities

design and develop a strategic plan and direct its implementation.
work with firm’s executive committee (strategy, firm and partner matters) and management committee (day-to-day execution).
be readily available for big opportunities or problems.
create an environment of trust among the partners.
walk the talk and lead by example (“do as i do, not as i say”).
ensure that partners set stretch goals and that they are held accountable for progress.
ensure that partners receive the appropriate compensation for their contribution to the firm’s success.
coach and/or outplace ineffective partners.
develop relationships with major clients and potential clients.
market and sell the firm’s products and services to clients and potential clients; an effective developer of new business is very desirable.
ensure compliance with firm policies regarding capital expenditures and operating expenses.
prepare and internally communicate an annual operating budget and be held accountable for its achievement.
ensure an effective personnel plan for current and future client service needs.
seek laterals who can beef up bench strength and diversification.
oversee key internal go-to-market and functional partner/staff meetings.
hold monthly partner meetings to discuss financial performance and other firm matters. topics usually include:
- financial performance, billed hours, collected rate per hour, personnel costs, utilization, etc.
- firm operations including key issues and opportunities
- developments at major clients
- marketing and business development activities
- business development and pipeline reporting
- personnel updates
- functional (audit, tax and consulting) updates
- risk management
- scheduling and staffing capacities
ensure an effective utilization of administrative management and financial information systems.
resolve significant professional disagreements among the partners.
implement and maintain effective client billing and collection protocols.
promote diversification of services by introducing new products and services.
work with the hr department on significant office personnel hiring and termination matters.
monitor partner/manager fee realization vs. plan and recommend actions for improvement.
oversee client service transition planning for retiring partners.

in conclusion

firms need to be very careful in selecting and developing their managing partner. the goal should be to ensure a high probability of success. that’s not only good for the managing partner, it’s also good for the firm and for future managing partners.

don’t shortchange the importance of the role; too many firms fail when the managing partner doesn’t have the capability to move the firm forward. i strongly encourage firms to make the necessary investment in an effective managing partner.

posted on may 3, 2019

dom esposito

about the author

domenick j. esposito was the ceo of grant thornton, vice-chair of bdo, and national growth director at cohnreznick.

he is the author of "8 steps to great: the eight essential strategies driving success at the world's largest cpa firms. and how to apply the lessons at firms of all sizes," published by 卡塔尔世界杯常规比赛时间.

a life in public accounting

in 2016, esposito, then a former ceo of bdo, moved from a 46-year career in public accounting into the next phase of his professional life – consulting to cpa firms, launching a boutique advisory firm, esposito ceo2ceo, that provides advice to ceos, managing partners and other senior partners of cpa firms focused on the mid-market throughout the u.s.

with the launch, esposito authored “8 steps to great," a guide for ceos, managing partners, and other senior partners on how to move their firm to the next level.

cohnreznick national growth director

esposito was one of the most qualified individuals in the country to advise cpa firms on growth and profitability. through 2015, he was national practice & growth director and an executive board member of cohnreznick, llp, a mid-market sustainable brand and the tenth-largest cpa firm in the united states. he oversaw cohnreznick’s go-to-market industry specialization and consulting and advisory service lines. he was also intimately involved in the firm’s mergers and acquisitions and strategic and tactical activities for its public company and capital markets initiatives. dom joined the predecessor firm of j.h. cohn in 2002 as the chief operating officer and executive board member.

dom was also an independent director of ethan allen interiors inc. for several years (through 2014), dom was a member of the nasdaq listing and qualifications committee to the organization’s board of directors. he formerly served as the leader of the new york state society of cpas committee for large and medium-sized firms practice management. he also was an adjunct accounting professor at c.w. post/long island university.

bdo and grant thornton

through october 2002, dom was vice chairman at bdo, a mid-market sustainable brand and the seventh-largest international accounting and consulting firm in the u.s., with almost 50 offices and 3,400 employees. during his brief time with bdo, he was responsible for the alliance distribution network (at the time consisting of over 80 cpa firms, 10 law firms, and 25 consulting firms). he was also responsible for attracting and servicing a number of clients.

from 1979 through 2001, dom was with grant thornton, another mid-market sustainable brand and the sixth-largest international accounting and consulting firm in the u.s., with over 50 offices and 4,500 employees. he joined grant as an audit manager, became a partner in 1981, led the long island office from 1984 to 1986, became assistant managing partner of the new york office in 1986, and from 1988 to 1999, led the new york office. in 1999, esposito became a regional managing partner and for two years, through 2001, was the firm’s chief executive officer.

cpa, partner, mba, leader, influencer, media celebrity

between 1996 and 1998, and while he was ceo, esposito was on the partner board and was also on the board of grant thornton international – the worldwide umbrella organization. in these capacities, he developed strong experience in strategic thinking and execution, international relationships, corporate governance, partnership matters, branding, expense control, client relationships, and new business development.

as ceo, he took grant thornton to record earnings, consummated the largest line-of-business sale in the firm’s history, developed a major joint venture with axa financial, and made the largest practice acquisition in the firm’s history. from 1969 to 1979, esposito was with price waterhouse (now pwc), servicing ibm when he was promoted to manager in 1976.

dom was a cpa, has been quoted in national and local media, and has appeared on radio and cable tv.

esposito also testified before the securities and exchange commission.

he received his m.b.a. from st. john’s university and his b.s. from ferris state university. accountingtoday, one of the leading trade journals for the accounting profession, named esposito one of the most influential people in the profession for two consecutive years.

he passed away in 2021 at the age of 74.

click here for more by dom esposito