bonuses: org charts for small, medium and large firms, plus 25 best practices.
by marc rosenberg
how to bring in new partners
when we discuss how cpa firms are managed, there are two kinds of firms.
more: how partner and staff actions impact profits | the business side of cpa firms | it shouldn’t take so long to make partner | three types of skills you need to become a partner | seventeen basic expectations of partners | nine ways to woo a prospective partner
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the first kind of firm argues that there is not much that needs to be managed at a cpa firm. these cynics might say, “come on. running a cpa firm isn’t rocket science. you hang out your shingle. you get clients. you hire staff. you do the work. bill and collect. what needs to be managed?”
unfortunately, many cpa firm partners think this way – maybe not consciously, but it has the same effect. when firms learn that the lack of commitment to firm management shown by this attitude creates problems, they often hire consultants like me to help them address these types of issues:
- staff turnover is high.
- partners work like lone rangers – no teamwork.
- computer systems are unreliable.
- partners complain that the firm never has enough staff and definitely doesn’t have the right staff.
- bills go out late and are collected even later.
- the firm’s policies and procedures vary, sometimes greatly, according to which partner you ask.
- revenues and profits stagnate and disappoint.
the second kind of firm understands that cpa firms are just like other businesses. for them to be successful, these areas must be actively and effectively managed:
- human resources: staff must be recruited, trained and supervised effectively in order to provide partners with competent support.
- marketing and business development: clients aren’t low-hanging fruit waiting to be picked from trees. bringing in clients is extremely difficult for most cpas. to be successful at it, the firm needs a marketing plan and accountability for business development.
- systems and technology: computers have revolutionized how cpas’ work is done. these days, if the firm’s power goes out, people have to go home; that’s how much they rely on their computers. providing the firm with current technology and the systems that go along with it requires a substantial management effort.
- administrative duties: if partners must routinely tend to the myriad of administrative tasks required to run a firm, their available time to bring in business, do client work and mentor the staff is greatly reduced. they need competent, experienced people like firm administrators, marketing directors, hr specialists and it directors to keep the firm operating on a day-to-day basis.
- managing partner: and finally, to ensure that all of these tasks are done expertly (and prevent the partners from killing each other), the firm needs someone to serve as the leader. a managing partner usually fills this bill.
overarching philosophies for managing a cpa firm
accounting firms generally gravitate to one or the other extreme in each of the following areas:
- partnership vs. corporate style.
- the partnership style is very much a democratic style. all partners are involved in all decisions, large and small. they vote on everything. they split up the admin duties, so everyone does their share. no partner would ever be trusted to make important decisions for all partners.
- corporate style. a cpa firm is a business and needs to be managed like one. partners should do two things: take care of clients and take care of staff. leave the firm’s management to professionals hired for this purpose. very few votes are ever taken because authority for making most day-to-day decisions is vested with management, not the partners.
- a team vs. a bunch of lone rangers. teamwork is the belief that the firm can achieve more when people work together than separately. lone rangers generally work alone and achieve success mostly as a result of their own individual efforts.
- core values vs. a lack of values. attitudes and beliefs define the firm’s culture. core values are what the firm stands for, what is held dear and what the partners believe in. the acid test of whether or not a firm truly has a set of core values is the extent to which transgressions are allowed. if partners are free to define their own core values and allowed to violate these values willy-nilly, then there really are no core values.
- production vs. a strategic vision. most firms agree that strategic planning is important. some never allow the pursuit of the strategic plan to be trumped by production (bringing in business and working billable hours). others value production above all else, addressing strategic planning only when they have spare time.
what needs to be managed?
| strategic planning | the firm is driven by a vision of what the partners would like it to look like in 5-10 years. |
| productivity | · keeping staff busy; formal scheduling of staff
· achieving individual targets for charge hours · achieving standards for quality of work · using nonbillable time effectively |
| processes | will the firm do its work the same way, regardless of who is in charge of the client project? or will the firm allow each partner to do it their way?
examples: doing an audit doing a tax return filing for an extension filling out a timesheet doing a physical inventory |
| administration | renting office space internal accounting
insurance paying bills budgeting office equipment firm policies billing system and collections |
| quality control | creation of written policies and standards for doing audit, accounting and tax work. includes procedures to test personnel’s compliance with the firm’s standards. |
| human resources/ staff issues | compensation benefits personnel policies
training orientation mentoring feedback promotions recruiting/hiring
|
| marketing of the firm | marketing is all the things that promote the firm and get name recognition. examples: branding, brochures, direct mail, seminars, speeches, articles |
| technology | · a dozen or so cpa-firm-specific software programs
· security, privacy, client portals · mobile devices, remote access |
organization charts
25 best practices of the most successful firms
these 25 best practices have been extracted from my work with great firms over the past 20 years. few firms do them all, but the best firms do most of them.
- pursue proactive business-getting efforts, with lots of team selling.
- exploit potential with existing clients.
- use the power of niche marketing and develop specialized expertise.
- provide world-class service.
- be a higher-priced, lower-volume firm.
- provide effective management, governance structure and leadership.
- franchise procedures.
- institutionalize client contacts; sell and service as a team.
- partners mess with clients and staff, staying out of administration.
- survey clients and staff to find out what they think of you.
- maximize staff-partner leverage. partners are delegators, not doers.
- have a clear strategic plan. vision. direction. implementation.
- get the right people on the bus and the wrong people off the bus; create a common focus and culture.
- provide a diversity of services.
- tenaciously commit to making your firm a great place to work.
- make sure partners are good bosses so staff stay and get promoted.
- provide proactive leadership development.
- offer world-class training.
- do succession planning, including client account transition.
- maintain good partner relations; address conflicts.
- practice partner accountability and good corporate citizenship.
- all partners and staff should have goals and targets.
- make partner compensation performance-based.
- put technology to work for you.
- benchmark to improve firm performance.