A recent survey of public accounting firms in global accounting association BKR International’s Americas Region noted that, over the past three years, the number of equity partners has declined slightly while non-equity partner growth through additions and promotions has increased by 33 percent.
Most of these new partners are the next generation to lead their firms and the challenges they face will be substantial: technology integration, digital mobility, succession planning, evolving client service demands, talent shortages, and the impact of AI on the profession, just to name a few.
This new crop of partners will take what they’ve learned in the coming years and likely change how accounting firms are managed. BKR International identified five ways that tomorrow’s MPs will potentially change the industry:
Profit Follows Vision
While there will certainly be an emphasis on growth and profit, tomorrow’s managing partners will emphasize the personal meaning and value of accounting. “Partners will build team cultures, for sure, but they want each individual to understand why the firm exists and why they matter,” says Maureen Schwartz, BKR International executive director.
More than ever before, Schwartz says, young accounting professionals are seeking a sense of purpose in their work. When they understand, for example, that their efforts are helping a hardworking business owner to successfully transition his company to a deserving son or daughter, they are more likely to feel that accounting makes a difference.
Factors driving this need for meaning among younger partners include their belief that work should fit their life rather than the other way around. “They don’t view work and life as separate like previous generations. One can flow into the other as long as their personal goals are respected,” Schwartz says.
Benefits like paid volunteer time or sabbaticals may become more extensive across firms as managing partners support this balance of firm vision with a meaningful life, Schwartz adds.
BKR also anticipates that more partners will tie personal interests and causes into their work. If a partner love sports, for instance, they might create a niche related to a sports industry in order to work with people who share their interests.
Communication is Fluid and Multi-Channeled
Tomorrow’s managing partners won’t distinguish online communication from in-person communication. In fact, their focus on video conferencing and future communication methods in the profession will support in-house communication as well as client communication.
Alex Weidner, CPA, CFE, is a recently named shareholder at BKR International member firm Rudler, PSC. He says that online communication has eased the transition to remote work outside the firm’s headquarters in Northern Kentucky. “Our employee in Baltimore communicates with us through [video conference], and it works great to keep everyone connected.”
Weidner believes the use of instant text, voice, and video messaging will continue to evolve as more firms move to a more flexible work schedule. “As a result, I think we will start to see more firms use short on-demand recorded videos for in-house communications, instead of memos, emails, and even staff meetings,” Weidner says. “I also think we will start to see these channels used with client communications which will replace the monthly/quarterly communications that are sent out to clients now.”
Rounding out this new approach to communication--Weidner believes firms will begin to use many, varied platforms, including social media and firm created cell phone apps, to deliver both internal and external communications.
Relationships Come Before Formalities
“Clients want contact. They want service,” says Steve Erickson, a leading consultant for accounting firms who spoke recently to BKR International’s young professionals practice group. He emphasizes that tomorrow’s leaders will focus on internal as well as external service in order to meet the high expectations of clients. It’s a positive that the next generation is already familiar with collaborating in groups and getting feedback before making decisions, he says.
As they lose the strict formalities of business attire, young professionals are also less likely to carry and present paper business cards like a gift in meetings.
“Conversations with clients or employees don’t always have to be formal and ostentatious,” Erickson says. “The level of formality depends on the client, but the tone should always be sincere.”
Firm leaders will still need to pay attention to the culture of their firms, however, Schwartz says, to support the retention of top talent. “Missing mid-tier talent can signal concerns to a growing client that your firm doesn’t have the capacity to support them long-term,” Schwartz says. Options like remote work, flexible schedules and ongoing training are necessary to build your team culture and create highly knowledgeable practices.
Peer Learning is Omnipresent
Firms in BKR International are also starting to send their younger partners to conferences as well as getting them involved in specialty practice groups to network and learn. This transition, along with internal peer cohort learning groups, will become the norm.
BKR member firm Kevin P. Martin & Associates, P.C. in Boston recently held several trainings for internal emerging leaders on social selling techniques — giving these young professionals the tools for building a book of business in the online world. “We can’t expect tomorrow’s leaders to build business the same way we have for decades,” says Kevin P. Martin, managing director. “They need a mix of online and interpersonal tools to be effective.”
Working with Specialists is Critical
Tomorrow’s managing partners will also accept the requirement to work with specialists. “The accounting industry environment demands proactive and multi-disciplined guidance for clients at an unprecedented pace,” Schwartz says. “People are used to getting instant information, and young managing partners will want to match that pace by leveraging consultants.”
These outside consultants will range from technical experts — those who specialize in various tax and accounting specialties such as research and development tax credits or international financial reporting standards — to consultants who specialize in internal firm operations.
On the technical side, for example, Schwartz says, the melding of accounting foresight with operational and labor force consulting “will necessitate that tomorrow’s partners have a large network of trusted resources — in-house or outsourced — to ensure happy clients and growth.”
Consultants with an internal focus can be used to train accountants how to run their firm more profitably and build strong and effective leaders among their management teams.
“CPAs can remain the ‘first call’ when clients have a need if they have developed networks across these disciplines and can integrate them seamlessly into engagements,” Schwartz says. “Tomorrow’s leaders will be more open to these types of arrangements. They know that they can’t be experts in everything, and they want to provide the best resources for their clients.”