A partner of an accounting firm is one of its principal decision-makers and oversees all aspects related to its operation. To rise to this position, a person must have extensive senior management experience within various accounting disciplines. Any managing partner of an accounting firm will need strong education and work experience in the field, including certifications such as CPA. The managing partners set up guidelines and regulations within the firm which conform to standard and accepted accounting practices for all operations. They also regularly review operations and procedures to ensure that all company measures regarding accounting and auditing are properly followed and documented. They are also expected to help retain and bring new clients to the firm, which frequently involves networking with prospective new business clients, as well as maintaining regular relations with current accounts. Managing partners essentially serve as the names and faces of the accounting firm and are expected to be visible and engaged with growing the firm's portfolio of clients. Their other overall concern is the financial health of the firm, and they typically review regular financial documentation and reporting to help assess and identify opportunities for the firm to grow.
But in recent times it is found out that these senior partners hold their position in the firm too long that it is tough for firm to transition when these senior partners retire. Too many small and mid sized firms continue to do a less than adequate job in passing the baton from senior partners to junior partners. Just like in a sports team if senior players don't give opportunities to young prospective players then the future of that team will be on a declining side. Similarly in accounting firm as well, senior partners should learn to make a way for young partners who are capable to replace them. All the good firms should place young partners to work with senior partners for few years so they get to learn and know how the work is done and maintain the client list with a high regard. Firm management lacks the discipline to enforce provisions in the partnership agreement that address retirement and obligations to transition client responsibilities. Many firms lag behind in making guidelines for right time when transition should take place. Especially small and mid sized firms hesitate to do transitioning as they do not want to disrespect the senior partner who has contributed so much for the firm. But transition and change is part of life and accounting firm need to learn how to set up guidelines.
Instead of building their own future partners, today’s leaders at many small and midsized firms usually turn to contingent and retained-fee search firms to find lateral hires who will hopefully fill their void of internal players. It is never a good option to put firms future in stake by hiring lateral hires. Such people do not know and understand the values and beliefs of the company. Partners should put their heart, mind, and soul towards the running of the firm, which is not possible to find that quality in lateral hires. All the firms should invest in young prospective partners who understand the values of the company. That is why it is important to transition in right time so young partners can learn from senior partners and maintain the same standard of the firm. If the transition process in not done effectively then it may result in dropping off the client rosters as new partners does not know how to handle the old clients and how they like to get services. This may result in massive loss from the firm as they might lose on important clients in hand of their competitors.
Top 20 or so firms long ago figured out that it’s smart business for them to pass the baton from senior partners who have successfully transitioned client relationships to the next generation. Just like how companies have to adapt with change in technology and preferences of consumers in the market to stay active and compete, similarly accounting firms have to transition in right time to maintain the client list. They need to make significant investments of both money and time in growing their own future leaders. Many accounting firms prepare their future partners by investing in them by giving them opportunities to pursue education at a recognised university so that they can come back and take in charge from the existing partners once they are on a verge of retirement. Companies also are willing to pay more to the prospective young partners to secure their stay in the firm for a longer period.
If accounting firm do not transition in the right time then most often than not all the small and mid sized firm have to merge in order to survive and remain in the market. Because of lack of leadership in the firm it is hard to take the business forward in a profitable direction which forces firms to merge. That is why it is very important to transition in a right time so that there are always a good mix of young and senior leaders who can take control of the firm. Managers and senior managers who have the potential of becoming partners look up the totem pole and come to the conclusion that there is little, if any, opportunity for admission to the partnership. This happens because some senior partners are not willing to give up their position which keeps young and deserving candidates deprived of their position in the firm which often than not result in them leaving when they find better opportunities somewhere else. When such talented and deserving candidates leave, it is very hard for company to bare that loss as they invested in them so that they can take company forward in the future.
Article author : Stanley Abie