you enjoy herding cats, right?
by august j. aquila
what makes a great partnership
wanted: managing partner
requirements: unique individual who can lead a group of independent-minded professionals; keep some semblance of normality; deal with super egos, unproductive partners and dysfunctional partners; grow the business, stay competitive in a rapidly changing and unfriendly environment, and figure out how to compensate everyone fairly. interested parties should send resume and salary requirements to box aa.
why would you want this job? managing a practice today has never been more difficult, but it doesn’t mean that it’s impossible or not rewarding. it all depends on your focus and your willingness to solve the important problems at hand.
more: eleven things partners must do | do your partners pay their own way? | how to create firm accountability | five questions to ask your partners about accountability
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it has been said that the “firm can never be something the leader is not.” it should be added that the “firm can never be something that the partners are not.”
leaders by themselves can’t change the firm’s dna unless they change or replace partners. if you want to win the game, you need to form a team with the motivated and skillful players.
and, just like in sports, the team that wins the championship one year is not necessarily the team that wins it again next year. i’m not suggesting that you want to change players each year, but you need to be constantly reviewing your talent.
you need to maximize your current stars, develop upcoming stars and cull those who don’t or can’t perform. the hardest part about building a winning team is that you have to replace some of the current players unless you can find new and more productive roles for them. unless you are willing to get the right people in the right positions, significantly changing and improving the practice will never happen. the call is up to you. just don’t expect different results unless you make some changes.
managing the herd is difficult
managing an accounting firm has often been compared to herding cats. partners in accounting firms are a rare breed and are extremely difficult to manage. the typical partner exhibits many of the following personality traits:
- they highly value self-direction. in other words, they don’t want to be told what to do.
- most partners don’t want to be accountable. “i’ve made it this far, haven’t i? i know what needs to be done.”
- many are just focused on today, getting the work done for the client, and don’t think strategically about the firm.
- partners are owners and believe they should be involved in all management and operational decisions.
- too many still think that the “m” in firm stands for me.
if the above characteristics weren’t hard enough for managing partners to deal with, many managing partners also feel hampered in making difficult decisions when it comes to a fellow partner because:
- when a partner leaves the firm, usually a corresponding amount of revenue also leaves. the net effect, however, may not be as dramatic as first thought, because the revenue is offset by the partner’s compensation and overall profitability of the clients.
- the relationship with the departing partner usually extends beyond the business. partners become friends, spouses develop relationships outside of the practice and children often attend the same schools. chances are you will continue to see the departing partner at the country club or local social events. this often makes the decision-making process extremely stressful for the managing partner and causes many not to face the issue.
not taking action, however, is the same as saying that the firm does not take its own performance standards seriously. that’s an extremely dangerous message to give out.
- the managing partner also feels a certain amount of guilt. the partner he is letting go usually is not a bad person or an incompetent professional. there are many other reasons why the business relationship is no longer working. understand the real reason behind the underperformance. is there trouble at home? health? burnout? insecurity because of changes in the firm?
know your cats
there are a multiple of roles partners play in a practice. managing the firm well requires that you know your partners’ skills and strengths so that you can get them in the right roles and get them to focus on the success of the firm rather than on their individual success.
first, all partners are owners of a business. this role is similar to shareholders of a publicly traded corporation. as shareholders they should have the long-term health of the firm always foremost in their minds. owners need to place the firm first, because their livelihood is intimately tied into its vitality and success.
second, some partners are suited to be rainmakers, also called finders or salespeople. rainmakers enjoy the hunt but may not always be good at client relationships, managing others or even bringing in profitable engagements. really good rainmakers are concerned about the quality of the business they bring in as well as ongoing client relationships. if you have a problem rainmaker don’t waste a lot of time trying to rationalize, rather than correct, the problem at hand.
third, there are partners who are very good as client relationship leaders. give them a relationship and sit back and watch it blossom. not enough credit is given to building long-term client relationships. this is unfortunate because it is a core competency of a successful firm.
fourth, all partners must be producers in the sense that they add long-term value and increase the wealth of the firm.
a key secret of effective managing the herd is not only knowing who is best at doing one or two of these roles, but also getting the partners to understand that as the firm does better, each one of them will also do better.
how to herd the cats
there are days when you think, “why could anyone want this job?” the challenges are many, but the rewards and satisfaction can also be great. here are five suggestions to follow to help you better manage the firm.
first, clearly define and articulate your firm’s culture. there needs to be some glue that holds a firm together. most managing partners would say that it’s the firm culture, i.e., the common thread and reasons why the firm exists. what does the firm expect, not only of its staff but also of its partners? only you and your partners can determine your firm’s culture. take your time in identifying this culture. it should not be something that changes frequently; otherwise it becomes meaningless.
second, implement a performance management system in the firm. clearly stating what is expected by the partner group in general and each individual partner is the critical first step.
no termination should ever be a surprise. partners should know that their performance is substandard and specific things they need to do to improve their performance.
third, bring in an outside professional to perform a skills and personality assessment on each partner. place your partners in the roles that fit their skills and personality best. just because joe is a great rainmaker, that may not make him a good practice leader.
fourth, develop your compensation system to change your culture; don’t let your existing culture determine your compensation system. it’s okay to give partners a certain return on their equity, but it’s more important to compensate them based on a performance-based system. a good compensation system achieves many different results from motivating partners and modifying their behavior, rewarding for results first and efforts second, to making new partners based on economic reason. finally the system needs to be viewed as equitable by the partners.
finally, act with speed. if you are going to shake up the organization, do it as quickly and humanely as possible. your biggest challenge is to align your stars and create a culture that motivates your partners. it’s always easier to look the other way or spend time with your own clients. but that’s not what you get paid for.