How to Attract New Partners from Inside and Outside Your Firmby
By Alexandra DeFelice
Firms looking to add new partners need to abandon "archaic approaches" to doing so, be it with existing staff or when looking at outside candidates.
This is the message from How to Bring in New Partners, written by Marc Rosenberg of The Rosenberg Associates consulting firm. Rosenberg's guide aims to help firm owners change their way of thinking in order to successfully bring new blood into the mix.
When the topic of succession planning surfaces at conferences or during everyday conversation among CPAs, a recurring explanation for why there's a lack of potential candidates is that today's accountants don't want to be owners. However, Rosenberg theorizes that the younger generation just doesn't know what it means to be a partner or what it takes to become one.
Let's start with the obvious: compensation.
If staff knew how much their superiors earned, their ears might perk up a bit more when asked whether they want to make partner. True, money isn't the only important factor in making such a career choice, but it can't be dismissed, especially in firms where average annual partner salaries are well north of $250 thousand. Yet more often than not, owners' salaries aren't broadcast.
"Partners tend to be secretive about their compensation, feeling that it's confidential", Rosenberg writes. "A common belief among older partners is that money doesn't mean much to young people. This couldn't be further from the truth."
Addressing the issue of what it takes to get there, many firms don't have written criteria for making partner, according to Rosenberg.
"The main explanation we hear for not documenting such information in writing is the concern it could backfire", he says in the guide. "Partners fear that staff will prematurely march in to the [managing partner's] office waving this document, insisting that they've fulfilled all the criteria for making partner and demanding a date when the coronation will take place."
Existing partners want to hold on to the ability to factor in other considerations when deciding who to promote to partner, Rosenberg explains. But if they avoid conversing with staff about core criteria necessary to advance, then the firm suffers because its ability to develop existing employees is greatly impeded.
Another issue relating to an inadequate amount of communication ties into older partners wanting their potential successors to learn on their own without any "hand holding", according to Rosenberg.
"Partners' attitudes all too often seem like 'staff must come to us first and tell us they want to be partner. Then and only then we will step in and show them the way,'" he writes.
How to Bring in New Partners addresses several other topics, including:
- What is a partner these days?
- Should you have non-equity partners?
- What does one get for the buy-in?
- How do new partners get compensated?
- What should a partner's buy-in be?
- How should voting work?
- How does capital get determined?
- What about non-solicitation agreements?
- How do partner buyout plans work?
Whether your firm has never made anyone a new partner, or if you haven't done so in some time and need to reevaluate the process used in the past, you'll find Rosenberg's guide a helpful resource.
Rosenberg is a nationally known consultant, author, and speaker on CPA firm management, strategy, and partner issues. In addition, he’s founder of the authoritative annual survey of midsized CPA firm performance statistics in the country – The Rosenberg Survey.
To purchase the guide or to download sample pages, visit the Bay Street Group website.
About the author:
Alexandra DeFelice is senior manager of communication and program development for Moore Stephens North America, and a regional member of Moore Stephens International Limited, a network of more than 360 accounting and consulting firms with nearly 650 offices in 100 countries. Alexandra can be reached at [email protected].