partnership

how large and small firms allocate income

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dollar on question markhow many of these 8 criteria does your firm use?

by marc rosenberg
partner comp: art & science

for purposes of this post, we will group cpa firms according to five different sizes:

more on partner compensation: integrating partner comp with strategic planning | crash course: operating a compensation committee | partner pay: open vs. closed compensation systems | the 3 best partner compensation formulas | 11 points in designing a partner comp system | what partners earn and how they earn it | why most partner comp systems are performance-based

  1. the big 4. they are the ultimate of sophistication, running their firms as true, colossal corporations, regardless of their legal entity. virtually none of this post relates to big 4 firms.
  1. the top 100 firms, excluding the big 4. the 100th largest firm was $33 million in 2015.
  1. multipartner firms from $15 million to $33 million.
  1. multipartner firms from $5 million to $15 million.
  1. multipartner firms below $5 million.

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the checks and balances your firm needs

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businessman pointing to transparent board with text: governancewhy your firm should be a republic, not a democracy.

by auqust aquila
creating the effective partnership

what checks and balances exist in your firm to keep it strong but also to protect the minority interest?

more on leadership for pro members: how to build a better firm through teamwork | drop politics, be accountable | what makes a successful strategic plan? | innovate or die | partners love, hate leadership | 8 ways leaders destroy firms | today’s top 6 partner compensation trends

maybe it’s time for more firms to consider a republic instead of a so-called democracy. the larger firms in the country are surely run more like a republic than a democracy. smaller firms would be well advised to change their governance to mirror the larger firms. but let’s start with the dictatorial form of governance – commonly found, sometimes wildly successful, but only to a point.

5 ways to get buy-in for firm culture

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industrial metal number 5change management is one of the keys.

by martin bissett

cultural issues are dynamic, very broad and unique in each firm. as such it is a challenge to summarize them accurately and comprehensively.

more on the passport to partnership: competence: more than technical skills | experts advise what partnership takes | partnership: competence is just the foot in the door | are you partner material? maybe not

from our research, however, the wise choice for anyone wishing to get their passport to partnership appears to be to study

  • their firm’s existing culture,
  • that of its senior individuals and
  • that of those who have the ear of those senior individuals

to understand not only the route to partnership, but the terrain that they need to cross too.
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why some partners don’t deserve equity shares

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woman and man shaking handsuse these 7 sets of criteria to decide.

by domenick j. esposito
8 steps to great

i suggest two lines of business for a sustainable cpa firm brand. given that, let’s begin with a basic principle: every firm should have two classes of partners:

  • equity partners and
  • non-equity partners.

more on strategic planning: start with sound firm governance, economics | how to develop tactics for your strategic plan | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity

equity partners are those partners who have demonstrated that they consistently build enterprise value through a combination of relationship, business development, technical and management skills. these partners contribute capital to the firm, usually each and every year.
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competence: more than technical skills

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businessman correcting an underling12 ways to determine your competence.

by martin bissett

the passport to partnership study collated a number of responses in a conversational style. two brief but succinct examples that really stood out on the realities of how a firm assesses an individual’s “competence” to lead are showcased below.

more on the passport to partnership: experts advise what partnership takes | partnership: competence is just the foot in the door | are you partner material? maybe not

  1. they need to explain technical data to me in a way that i know they understand it.
  2. what kind of lifestyle does this person have outside of work? we’ll be looking at facebook, twitter and google to find out.

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crash course: operating a compensation committee

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business people working in office18 lessons to take to heart. and a few words of warning.

by marc rosenberg
partner comp: art & science

operating a compensation committee isn’t for the faint of heart. here are points all members would do well to heed.

more on partner compensation: 5 other systems for paying partners | the 3 best partner compensation formulas | 11 points in designing a partner comp system | what partners earn and how they earn it | how partners view compensation: it’s not all about the money | why most partner comp systems are performance-based

1. the partners must understand the heart and soul of the compensation committee (cc) approach: the system can only work if the people being judged are willing to trust the judges. period. if the partners aren’t comfortable with this, they should not use the cc.
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experts advise what partnership takes

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back view of a businessman holding a briefcase and walking forward on white backgrounddefining what competence means for partners.

by martin bissett

the skill in producing financial reports is limited by the quality of the information presented to the cpa by the client. motivation of the client to influence that financial information comes in many forms, some intentional and some unintentional. competence comes first in being able to resist pressure and present a true and accurate position of the client’s organization.

more on the passport to partnership: are you partner material? maybe not | communication: putting it all together | what does the next generation of practice leaders face? | businesses place value on expertise

sounds obvious, doesn’t it? but there’s a twist.
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13 steps in succession planning

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3 businessmen looking down at a giant red jigsaw puzzle pieceplus 20 questions for introducing the topic at a retreat.

by marc rosenberg
cpa firm retreats

the best succession planning takes a step-by-step approach.

more on retreats: staff likes and dislikes about the accounting profession | 20 questions to benchmark profitability | 27 tough questions every firm needs to address | 10 benchmarking missteps | 18 essential management questions to cover at a retreat | 30 marketing and growth questions to cover at a retreat | thinking of merging? discuss it at a retreat | leave your retreat with a to do list | who should participate in a retreat? | retreat logistics: how long, what kind? | why do cpa firms conduct retreats?

1. strategic planning: what do we want the firm to look like in 5-10 years?
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partner pay: recapping the compensation systems

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the popularity, pros, and cons of each.

chart of compensation system usage
compensation systems in use, by size of partnership

by marc rosenberg
partner comp: art & science

what is the actual usage of compensation by firms?

more on partner compensation:5 other systems for paying partners | 3 non-performance-based comp systems | the 3 best partner compensation formulas |why firms use partner comp formulas|3 subjective compensation systems|11 points in designing a partner comp system | 3 tiers of compensation | partner compensation 101|what partners earn and how they earn it | partner compensation: an art, not a science | how partners view compensation: it’s not all about the money | why most partner comp systems are performance-based 

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observations & analysis:

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managing the managing partner

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businessman standing at conference table with 4 colleagues seated behindchecks and balances are key.

by bill reeb and dominic cingoranelli

as past success and personal development continuously demonstrate, organizations operate more effectively when people are managed. and since partners are people, rather than gods or superheroes, it makes sense that we put something in place to manage them as well.

more on performance management: accountability is for everyone | succession plan requirements | base retirement on today’s operations | how involved should retired owners be? | firms say what would change retirement pay | 4 ways to create more capacity | 7 succession questions to ignore for now | how partner ratings factor into equity | hazards of not reallocating equity | 5 harmful management attitudes (and how to fix them) | do cpa firms need management or leadership? |  job 1 for the practice owner: client management

with this general background in mind, let’s dive a little deeper into how a managing partner goal-setting process might work.
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5 reasons cpa firms are bad at succession planning

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older businessman with younger businessman trailing behind himplus 6 aspects of a good succession plan.

by marc rosenberg
cpa firm retreats

what is succession planning?

most of us think of succession planning as a process for identifying and devel­oping people with the potential to fill key leadership positions.

more on retreats: 25 ways to turn good firms into great firms | partner buyout 101 | 27 tough questions every firm needs to address | make more money | 10 benchmarking missteps | how to address partner compensation at a retreat | how marketing for cpa firms is different | why create a marketing plan? | thinking of merging? discuss it at a retreat | how to take action after a retreat | every retreat needs a leader, but who? | retreats are no place for clowns | what should cpa firms discuss at retreats? | why do cpa firms conduct retreats?

there is no question that leadership development is the most important part of succession planning. but at cpa firms, much more is necessary. a successful succession plan requires:
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partner pay: why your book of business isn’t worth as much

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young businessman walking on bungee cord between question mark and dollar signfour reasons behind the decline. plus the impact on buyouts and retirements.

by marc rosenberg
partner comp: art & science

i’m sure many people see the title of this post as a form of practice management heresy.

more on partner compensation: 5 other systems for paying partners | 3 non-performance-based comp systems | 3 subjective compensation systems | partner compensation 101 | what partners earn and how they earn it | partner compensation: an art, not a science | why most partner comp systems are performance-based

the message is: the weighting of book of business is trending from being the “end-all” in allocating partner income, or close to it, to a factor that is still important, but less so.
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are you partner material? maybe not

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businessman holding hand upresearch shows wide gap between partners and partners-to-be.

by martin bissett
passport to partnership

have you ever wondered what the partners of your firm are looking for from you, beyond your technical abilities?

more on the passport to partnership: 9 things to stop doing now | the dna of a practice leader | why hitting your numbers isn’t enough | what do your true colors say about your commitment? | what commitment really means for partners | how well do you represent your firm? | communication: putting it all together | the 4 winning communications habits of top accountants

for full disclosure, i am not an accountant, but i have spent decades working with accounting firms of all shapes and sizes in the united kingdom, the united states and europe.
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