Having the right managing partner in place can make all the difference between success and failure, says Phil Shohet. So what are the right qualities for heading up a firm?
This article was first published in the February 2018 UK edition of Accounting and Business magazine.
As we keep hearing, accounting firms are facing unprecedented uncertainty. We know that firms need to embrace the digital revolution, enable the automation of process-driven activities and transform themselves into strategic advisers. Brexit is yet another known unknown, and navigating clients through the business aspects of political change could be a key marker of a successful firm.
In order to manage the migration from compliance work to offering value-added services, practices have become multi-functional groups where partners recognise that the best interests of the client and the firm lie in pooling knowledge and allowing clients access to every service the firm can provide.
So how, in this context, will the role of the managing partner change? Clearly they will require different characteristics from those deemed necessary in the past.
In all but the smallest practices, the job of managing partner is not a part-time position. Too many firms believe that this function can be undertaken in addition to normal client work. Managing partners are often reluctant to give up their client base, which has given them their power and recognition in the practice. But the reality is that, although it may be possible to retain a small amount of client work, anyone considering taking on the mantle of managing partner must be prepared to invest the majority of their time in running the business.
Some partners will never be comfortable in anything other than a technical role, and the idea of going out and generating new business is anathema. In firms where the balance between hunters and farmers is heavily biased towards the latter, there will be some hard decisions that cannot be made unless the managing partner has similar powers to a corporate managing director.
Managing partners need to be dynamic and daring – qualities not always associated with accountants. Nevertheless, the number of successful firms in the independent sector is proof that these qualities do exist.
The pressure for effective management is coming from all aspects of the firm’s business, including fee generation, efficiency, productivity, brand awareness and, to some extent, internationalisation. This has highlighted the need for change in the entire organisation and, above all, for better and more strategic people to head up the business.
The first stumbling block is the selection process. What is needed is a person with commercial acumen and a proven track-record in developing the business. However, what older and more conservative partners often want is someone that will let them stay in their comfort zones. Too often the job of managing partner is handed to someone who will maintain the status quo, rather than someone who can lead the business forward. Thus many managing partners are selected on their amenability, having neither the skills for the job, nor a mandate from their partners to manage the business in any effective and meaningful manner.
The managing partner must have the authority to manage the business, including the power to impose sanctions upon others for under-performance. They must have the support of all the partners and persuade them to accept both his or her authority and the fact that they must work as a team, each with their own individual roles to play. The model is perhaps something akin to a cabinet, but with the prime minister, or managing partner, having been delegated ultimate power and authority.
The job description of managing partners varies from firm to firm. In many cases it does not exist at all in any formal fashion, but is simply a vague and undefined ‘understanding’, so that neither the partners, the staff or the hapless individual are aware of the parameters within which he or she operates. Without definition and proper designation of powers, the position will not work effectively.
In a world dominated by technicians, the managing partner must be a ‘people person’ with good interpersonal skills. Accountancy training may not have equipped him or her for this. The managing partner must be able to influence the other partners, who will usually have strong individual authority and are not used to being told what to do. However, the managing partner must also encourage them to play to their own strengths, which is a key factor if the firm is to grow and prosper.
It is the managing partner’s job to drive the business forward and this will inevitably mean change. Unless all of the partners and the rest of the firm are on side, it will be an uphill struggle.
The fundamental measures for success remain the same. Is the budget being delivered and is the firm making the budgeted profits? Key issues are therefore strategy and guidance on overall performance and new investment (whether in people, IT, premises, marketing or other priorities) in which the managing partner’s role is that of a facilitator of change, managing the situation and monitoring colleagues.
In a modern practice, the skills of the managing partner are crucial to its success. Strong and effective leadership is required to help firms adapt to meet the changing needs of the modern marketplace. The right person must be at the helm.
Phil Shohet, senior consultant, Foulger Underwood