Should the Managing Partner Position Be Rotated?

QUESTION FROM A READER:

Should the managing partner be a permanent position or rotated among partners?

ROSENBERG RESPONSE:

Important first question
Current and future MPs need to ask themselves if they will commit to being a permanent MP (assuming the other partners are okay with this). There are lots of positives to this. Leaders like to lead. They feel that they can positively impact the success of the firm, and they usually do. They enjoy managing the firm as much as, or more than, serving clients. They inherently know that they would be the best MP among the partners (and, let’s be honest, MPs know that other partners would make lousy MPs).

There are negatives to being an MP (but don’t all great jobs have parts that we don’t like?):

• Reduced time on client activities
• The arduous challenge of herding cats (the partners)
• The frustrations and pressure that come along with any position of authority
• Holding partners accountable for their performance and behavior
• Inevitably, longer work hours—at least at first, because most MPs juggle firm management with client duties.

It’s never advisable to rotate MPs as a matter of policy
Why? Because firms are lucky to have even one partner with the skill, desire and credibility with the partners to be an effective MP. When firms start rotating, they inevitably put someone in the MP role who is destined to fail or at least function in a so-so manner. Remember, partners rarely have the education in management, specific training to be an MP, or the experience. This means that many CPA firm partners are unqualified to be MP. Given this lack of “MP pipeline”, 90+% of all MPs serve until they near retirement. It’s okay to have terms of office, and it should definitely be in the firm’s partner agreement. But the vote is essentially a poll of confidence in the MP’s continuation. Elections are almost never contested and it’s rare to see MPs unseated, though the term will allow for this in the event it is needed.

Our book The Role of the Managing Partner includes: how the best MPs in the country impact their firm’s success • how the MP manages the other partners • getting partner accountability • increasing profitability • management vs. leadership • authority that the MP should have • 25 best practices that the MP should focus on • the MP’s role in managing staff and revenue growth • how MPs lead the charge in merging in other firms • why it’s critically important for the MP to assemble a great management team • partner compensation-a potent weapon in the MP’s arsenal • observations of how the very best MPs operate • essential organizational skills for MPs • evaluating the MP • why and how MPs fail • great quotes from great leaders. Order your copy today!

If it ain’t broke, why fix it?
Finding a good managing partner among the partner ranks is hard. When new MPs are elected and they proceed to do a reasonably good job of managing the firm during their fixed term of office, why would the firm require that person to step down so that another, less qualified partner gets a chance? It makes no sense.

Instead of falling back on some ill-advised rule that restricts MPs to one or two terms, firms should say to the MP: “Keep it up! How can we help you? Tell us what you need from the partners to help you continue this trend of excellence? We love you!”

A good analogy is the way firms seat executive committee members
A big mistake is when firms prohibit EC members from serving consecutive terms. The partners feel that this checks-and-balances policy prevents EC members from becoming too powerful. But it harms the firm more than benefits it. Rotating EC members only ensures that (a) EC members who are doing a great job are summarily dismissed after a short tenure, and (b) people will get on the committee who lack the skills, credibility and judgment to lead. I apologize for sounding negative, but many partners who are great at client service and technical excellence have no clue how to manage a firm.

The firm needs to have the ability to remove the MP if necessary
This should be spelled out in the firm’s partner agreement. Removing ineffective partners takes a lot of courage, and unseating MPs who are elected for a lifetime in office becomes very awkward, if not impossible.

I once had a case like this. The firm clearly had an ineffective MP. Firm revenues and profits were flat for years. The firm’s long-time policy was that the partner with the most years in the firm automatically became the MP. When I asked the other six partners why they didn’t remove the present MP, they said because it was written in the partner agreement, by name, that so-and-so would serve as the MP. I advised them to change the partner agreement and give the outgoing MP an exalted title (chairman, senior partner, etc.), which enabled the MP to save face. This was done, and it worked out great.

Conclusion
Forced rotations of leaders might work for governments, and for internal control purposes, but not for the leadership of a complex, thriving organization. An MP with a watered-down job description with more limits than authorities is ill-advised. To manage a sophisticated CPA firm with a laundry list of issues to be addressed, a leader—someone with broad authority to get the job done—is critically important. This is hard to achieve if MPs know that in four or six years, they have to step down and let someone else carry on.

So, to answer the reader’s question: It’s never advisable to require the rotation of MPs.