10 Steps to New Partner Development

As featured in the CPA Leadership Journal.

Do you want your CPA firm to thrive for years to come? Invest in the future of your firm by prioritizing new partner development. Use these ten best practices in new partner development to guide your firm to a bright future.

1.  Communicate the Benefits of Partnership

Never assume that potential partners understand or recognize all the benefits of being a partner. Go out of your way to make the positive aspects of partnership clear to as many team members as possible. Each firm offers a unique set of benefits, but following are a few common partner perks you can share with your staff:

• • Higher compensation: Avoid revealing specific salaries but share a range of partner salaries at your firm to motivate potential partners.
  • The opportunity to contribute to the goodwill value of the firm.
  • Increased responsibility and influence in the management of the business.
  • Greater control over work hours.

2.  Create a Path to Partner Framework and Timeline

Without a clearly communicated path to partner, potential partners are left to wonder about next steps. Avoid confusion and discouragement by creating and communicating a clear path to partner and an associated timeline.

A path to partner should:

• • Be in writing with clearly defined criteria;
  • Explain that the needs of the firm will be a key determining factor as to whether a candidate becomes partner;
  • Be used to evaluate potential partners regularly, leading to constructive conversations and further professional development;
  • Provide opportunities for development in the disciplines required for making partner; and
  • Include a defined timeline so candidates can establish accurate expectations.

3.  Define Partner Criteria and Expectations

It’s possible that your firm has not written down partner criteria and expectations, and that they are assumed within the firm but not clarified. As the firm looks to the future, all partners and staff benefit by having clearly defined and written partner criteria and expectations.

Here are some basic partner criteria your firm can use as a starting point for creating a more personalized list.

Requirements to be considered a partner candidate:

• • Accomplished technical skills
  • Excellent client service abilities

Must-haves to become a partner:

• • Alignment with the firm’s core values
  • Adequate business development skills (varying skill levels are acceptable.)
  • Ability to delegate, mentor, and develop staff
  • Other intangibles, such as people skills, etc.

4.  Hold Future Leader Discussions

At regular partner meetings — at least semi-annually — discuss future leaders of the firm. The partner group should ask the following questions.

• • • Who are our potential future leaders? Identify promising staff members by name.
    • Where do potential candidates currently excel?
    • What opportunities should existing partners provide to groom these individuals into partner candidates?

Our book How to Bring in New Partners is written for firms fortunate enough to have staff with the right stuff to be a partner. This book addresses all of these areas and more, including: ►how do firms develop staff into partners and when are they ready ► should we have non-equity partners ► what is the process for bringing in a new partner ► how do new partners get compensated ► what should the buy-in amount be.

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5.  Track the Path to Partner With 12 Milestones

Use these 12 milestones as a checklist for overseeing and managing the path to partner at your firm.

1. 1. Gauge an individual’s interest in joining the partnership.
   2. Identify and develop partner-level skills needed by candidates.
   3. Explain the partner role and expectations at your firm.
   4. Explain how partnership and buy-in works.
   5. Evaluate fitness for partnership utilizing the partner candidate checklist.
   6. Define the timeline for non-equity and equity partner admission.
   7. Discuss partnership buyout, firm financials, and any needed progression.
   8. Vote on offering partnership (equity and non-equity) to a candidate.
   9. Present an offer.
   10. Sign the offer.
   11. Celebrate! Do this at the time of promotion, whether the new partner is joining as non-equity or equity.
   12. Set goals and expectations for the new partner.

Following are outlines for three conversations your firm’s leadership should initiate with staff members who have partner potential.

6.  Have Potential Partner Conversations: #1 — What partnership looks like and assessment of interest.

Non-partner staff at any level can be a part of high-level conversations to share information about the role and gauge initial interest.

• • Ask the question, “Are you interested in becoming a partner at our firm?”
    • Present this question in a lightweight manner to determine the person’s level of interest in partnership, not as an offer to jump on the partner fast track.
  • Share the role and benefits of being a partner.
    • Describe the role and its benefits, such as increased schedule flexibility or the opportunity to make significant decisions affecting the firm, etc.
  • Ask, “Are there important topics you would like the firm to train you on?”
    • This is a valuable discussion whether or not the individual has hopes for partnership.

7.  Have Potential Partner Conversations: #2 — More In-Depth on Partnership

This conversation is best to have with potential partners who are becoming more senior in their role — possibly at the manager level.

• • Ask what the candidate would like to know about becoming a partner or owner at the firm.
  • Help candidates understand:
    • The criteria for making partner
    • For equity partner candidates only, buy-in details, including the amount, payment period, and why it works that way. Appropriately communicating these details builds trust.
    • How partners are compensated — explain the system used.
  • Ask candidates how they feel about being a partner, including their concerns and what excites them about the possibility.
  • In which areas would they like to receive further training?

8.  Mentor With Intention

Once your partner group has identified potential partner candidates at any level, move forward with intentional mentoring:

• • Assign each potential candidate to an existing partner.
  • Determine and communicate the expected frequency of mentoring meetings — should be multiple times a year.
  • Get to know the potential candidate and actively address the individual’s needs, concerns, and interests regarding growth within the firm and possible partnership.
  • Commit to accountability among the partners to ensure that mentoring happens as outlined by the group. Without partner accountability, some potential partner candidates may not receive proper mentoring, to their own detriment and to the detriment of the firm.

9.  Have Potential Partner Conversations: #3 — Financial Data and Agreements

Discussions get more in-depth with qualified partner candidates who are interested in partnership and who have the support of the partner group for moving forward. The purpose of the conversation is to equip the candidate with the necessary information to make an informed decision about joining the partnership. Answer the candidate’s questions and provide all relevant information the candidate will need to factor into the partnership decision.

• • Provide the firm’s financial, production, and operational data.
  • Share the partnership agreement, the buyout plan, and any other crucial partnership documents.
  • Offer your assessment of the individual’s skills and identify any remaining development areas prior to giving an offer.

10.  Pass the Torch

Require new partners to develop the next new partners. Communicate from the start of a new partner’s tenure that they will be expected to invest in building future partner candidates. The longevity and health of your firm largely depends on how well you invest in your next generation of leaders.