How Does a New Partner’s Role Differ from a Manager?

This is a question that has long perplexed CPA firms. And of course, one reason why it’s perplexing is that you’ll get a different response depending on the firm you ask. On the one hand, the promotion to partner is a major event – both to the firm and the new partner. Generally speaking,  the role and expectations of a partner are quite different from a manager, though maybe not at the onset of the partner promotion.

On the other hand, most managers who are promoted to a partner made their mark in their firms by many years (usually 10-20) of terrific client service, tremendous loyalty, a strong work ethic, and great technical skills. The partners have relied heavily on them to service their clients and it would be cataclysmic to suddenly take these managers away from them. How can a new partner bridge the gap between these disparate scenarios?

To shed light on this question, we polled 21 managing partners of local, multi-partner CPA firms from across the country. Almost all of the firms’ annual revenue was $5-25M.

THE QUESTIONS WE ASKED

Many firms have long-time managers on board that are talented technicians, great with clients and wonderful people to have with your firm. Often, they are not good at bringing in business and haven’t spent much time trying, partially because they spend so much time managing clients for the partners and doing a great job at it. The partners would have heartburn if the manager(s) left.

Now, the firm promotes the manager(s) to a partner.

• How does the role of these new partners change, if at all?
• Do they continue working on the same clients they did as managers?
• Are they expected to build their own client base?
• How can they find time to do business development (BD) if they are so busy working on the clients of the existing partners?

THE RESPONSES

As often happens when issues of general practice are discussed, there was a wide variety in the 21 responses. Here is the consensus of the responses:

1. When managers are promoted to partner, initially, the role doesn’t change too much. New partners almost always continue to work on the same clients they were responsible for prior to the promotion.
2. The major change is that now as new partners, they are expected to delegate work to new managers so they can function more like partners than staff. This role includes not only delegating the work but developing the leadership skills of the managers on their team. This also frees up the new partners to (a) take on additional clients that other partners transfer to them and most importantly, (b) do business development.

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.

Read an Excerpt Here

3. For decades, CPA firms have debated the pros and cons of requiring people to bring in business to become eligible for partnership. Our 21 firms reflect this diversity of opinion. Several firms stated that it is important to have a balance between business-getting and technical partners. However, many more firms feel that the criteria for becoming a new partner should include bringing in business than those who don’t feel this way.
4. Several of the firms that were more insistent on BD as a requirement for becoming a partner stated that people with partner aspirations should have been engaged in BD activities well before being considered for partner.
5. An important factor in all the above issues is the increasing prevalence of firms having two kinds of partners: non-equity and equity. The vast majority of firms require BD skills to move from non-equity to equity.
6. Several firms stated that they like their new partners to have distinguished themselves as experts in a niche or specialty service.

Bringing in new partners is a key function of a growing firm, essential for transitioning the client base as the years go on. When expectations on what role the new partner needs to play in the firm are set before admitting them to the partnership, firms are better able to get what they need. If you have a talented manager that you want to retain, but doesn’t meet all the expectations you have in mind for an equity-partner position, consider the non-equity role as a win-win for all involved.