How Partners Delude Themselves

CPA firm partners are by and large a straight-shooting bunch. They don’t intentionally set out to deceive themselves – or firm management. But common answers to questions posed to CPA firm partners frequently reflect the way things should be, not the way they really are.  Here are some examples:

What are you doing to bring in business?

Typical partner response: I’m constantly talking to clients and referral sources about getting business from them.

My take: Bringing in business is a proactive effort, not sitting back and waiting for opportunities to come to you.

If a partner’s billable hours are 1,100 and total work hours are 2,400, and the partner has no admin duties, what is the partner doing with the other 1,300 hours?

Typical partner response: I’m primarily meeting with prospects and referral sources, mentoring staff, billing clients and attending partner meetings.

My take: Any answer is somewhat difficult to believe. My sense is that partners spend 200-400 hours on client work that they don’t record as billable time.

Why doesn’t your firm have a written partner retirement/buyout plan?

Typical partner response: We’ve been too busy and we can’t seem to get to it. But we will.

My take: The partners know that if they meet and try to hash out a plan, there will be disagreements. Some partners will insist on a number that exceeds what they deserve. Many firms, whether stated or unstated, feel their likeliest exit strategy will be to merge up, so why bother creating a plan?

Some of these firms are in for a rude awakening when they find it tough to get the merger deal they want.

Do you think there should be partner accountability in a CPA firm?

Typical partner response: Absolutely!

My take: What many partners are thinking, but for obvious reasons won’t say, is “I’m all for partner accountability…as long as it doesn’t affect me.”

Or they might think “I’m a partner and that means I have the right to do whatever I please.”

For firms to progress they have to be managed like real businesses. Partner accountability and formalization of goals, procedures and policies are all part of the process of managing and governing a firm effectively.  Consult our monograph CPA Firm Management and Governance for guidance on implementing firm policies and procedures that will enable the partner group to function successfully together as a team rather than a group of solos under one roof.