Choose wisely from the start and avoid problems later.
By Marc Rosenberg
The Rosenberg Practice Management Library
What characteristics do you want someone to possess before you invite them to be a partner?
Leading firms across the country generally choose from the following:
Plus the first nine questions they must embrace for optimal profitability.
By Marc Rosenberg
The Rosenberg Practice Management Library
“When a corporation says move left, everybody takes a step left. In a partnership, when you say move left, three people go to the bathroom, four people move right and five people leave the firm.” – Richard Ungaretti, Ungaretti & Harris
MORE: Why Strategic Thinking Impacts Your Firm’s Future | Seven Things Good Firms Must Do | Don’t Make Firm Profitability a Goal | Top 20 Tough Choices for the Partner Comp Committee | Tell Potentials What Partnership Takes | Disturb the Present to Improve the Future
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In CPA firms, as the partners go, so goes the firm. The partners
If the partners don’t perform these functions effectively, it is virtually impossible to be profitable and successful.
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Good management gets them there.
By Marc Rosenberg
The Rosenberg Practice Management Library
If partners of firms across the country were asked what the key was to the success of legendary Fortune 500 companies such as General Electric, Coca-Cola, IBM and countless others, I’m sure that the words “strong management” and “strong leadership” would dominate their responses. Yet, ask those same partners to evaluate their own firms’ management, and if they are honest, their responses would not be very flattering.
MORE: Five Ways to Separate Accounting Winners from Losers | Two Factors Determine Firm Profitability | Five Keys in Compensating New Managing Partners | What Partners Do and Don’t Deserve | Five Steps to Transition to Partnership
Of all of the techniques for improving CPA firm profitability, none is more effective than strong management and leadership. Yet, nothing is more elusive. Why is this?
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How many of these are you expert in?
By Marc Rosenberg
The Rosenberg Practice Management Library
If CPA firms did everything “right,” they could easily double or triple their income. Doing things right includes effectively bringing in clients, charging high billing rates, maintaining strong realization, high leverage of staff to partners and keeping expenses down. It’s the rare firm that does well in all of these categories.
MORE: Two Factors Determine Firm Profitability | Don’t Make Firm Profitability a Goal | Top 20 Tough Choices for the Partner Comp Committee |Tell Potentials What Partnership Takes | Disturb the Present to Improve the Future
The path to profitability is different for every firm. But the truly profitable firms are successful at achieving one or more of the following:
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You’d think accountants could agree on a common definition. Nope.
By Marc Rosenberg
The Rosenberg Practice Management Library
If you asked the president of a Fortune 500 company or the owner of a restaurant to define profitability, they would be able to give a quick, definitive answer. Not so with CPAs.
Surely, you’ve heard the story, perhaps apocryphal, of the company that was interviewing for a new CPA firm. Only one question was asked of each candidate: “How much is two plus two?” The firm that won the bid gave the answer, “How much would you like it to be?”
MORE: Don’t Make Firm Profitability a Goal | Core Values: Why Your Firm Needs Them | Voting on Ownership Basis? Three Better Methods | Fifteen Big Questions for Your Next Strategy Session
The same can be true of CPA firm profitability. How do we measure it? You would think that the uncontested champions of measuring financial data, CPAs, would have this down to a science. But such is not the case.
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Plus 12 examples. Which work for you?
By Marc Rosenberg
The Rosenberg Practice Management Library
Core values are the attitudes and beliefs that define a firm’s culture and a critical ingredient in a successful compensation plan.
MORE: Five Keys in Compensating New Managing Partners | Top 20 Tough Choices for the Partner Comp Committee | Tell Potentials What Partnership Takes | Disturb the Present to Improve the Future
Partners talk about the firm’s core values all the time, pointing out instances when someone’s behavior has clearly been impacted by them. These values are incorporated in processes throughout the firm, such as in the development and evaluation process, in the way income is allocated to partners, and in what raises are given to staff.
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Plus five things the other partners should expect from their leader.
By Marc Rosenberg
The Rosenberg Practice Management Library
Production isn’t all that matters.
By Marc Rosenberg
The Rosenberg Practice Management Library
Increasingly, CPA firms are adopting the compensation committee system for allocating partner income. Firms are finding that systems such as formulas, pay based on ownership percentage or pay-equal no longer work.
MORE: Voting on Ownership Basis? Three Better Methods | What Partners Do and Don’t Deserve | Tell Potentials What Partnership Takes | Fifteen Big Questions for Your Next Strategy Session | Five Steps to Transition to Partnership | Disturb the Present to Improve the Future
If there is one overarching cause for this significant trend, it’s that firms are understanding that their partners need to be something more than production machines. In addition to bringing in business, managing a client base and working billable hours (all of which continue to be important values in a compensation committee), partners need to excel in intangible areas such as helping staff grow and develop, developing specialized expertise and teamwork. The compensation committee is one of the best systems available to CPA firms to allocate income based on this diverse array of performance criteria.
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