plus five things the other partners should expect from their leader.
by marc rosenberg
the rosenberg practice management library
baby boomer partners are rapidly approaching retirement age, creating a huge demographic shift. one result of this is a dramatic increase in new managing partners at firms.
many firms are skipping a generation and turning the reins over to “younger” partners. firms are also asking their new managing partners to divest themselves of a significant part of their client base to enable them to focus more on managing the firm.
how should the new managing partner be compensated?
- consider a fixed term for his/her first term. this provides time to decide if it’s a good fit. we see these terms range from two to five years because it takes that long to fully adjust to the job, tackle major initiatives and develop a style that is compatible with the partner group.
- giving up clients is a major risk for the new managing partner. he/she should receive two types of compensation guarantees:
-
- while managing partner, the guarantee should be no less than the percentage of total partner income earned in the year prior to assuming the managing partner job and
- if he/she steps down, the guarantee should be no less than the person’s percentage of total partner income during the last year as managing partner, for three to four years.
- the managing partner must be given sufficient authority to do his/her job, and not have to go to the board every time a decision needs to be made. the managing partner must have a major influence on partner compensation and have authority to hold partners accountable, with termination being an ultimate, though not preferred, option.
- before too long, the managing partner should not earn less than average income per equity partner.
- a factor (though never a 100 percent factor) in setting the managing partner’s compensation should be growth in the top and bottom lines. see below for more factors.
a short list of what partners should expect from their managing partner:
- manage and coach partner performance and behavior.
- drive profitability.
- ensure a high level of practice development and marketing activity by firm personnel.
- make the firm a great place to work where people continually advance because of excellence in training and mentoring.
- be a champion for the firm’s culture and core values, dealing swiftly with transgressions.