Phil Shohet and Andrew Jenner.
The management and leadership of the majority of independent accountancy practices is housed in a partnership structure and, although some firms are now looking to incorporate as limited liability partnerships, the fact remains that they are businesses being run in a fairly idiosyncratic manner. For the majority of practices in the independent sector, this means that the management of the business is in the hands of a group of partners, usually led by a senior or managing partner, but sometimes run by committee with all the partners having an equal say in decisions.
Although the partnership model has served the profession well for many years, the increasingly competitive commercial environment, changing client needs and the much enhanced role that the accountant now plays in the business marketplace have highlighted the need for change in the way firms are organised, and the need for better and stronger people to lead the business.
The old portfolio style of management is no longer appropriate. Partners cannot be expected to master every specialist service their clients need, so in order to ensure that they have access to the whole range of skills within the firm a departmental configuration is required. While lead partners will still have control of their own clients they must be prepared to bring in other partners and departments as necessary. This can only be effectively controlled and monitored within a departmental framework.
Some years ago the fastest growing firms that had previously been led by a senior partner started to appoint managing partners to share the burden of adapting to the needs of the marketplace and today that trend is spreading throughout the independent sector.
However, there is no blueprint or standard job description for the role of the managing partner. What are his exact duties and responsibilities?
How much power and authority should be delegated to him? How should he be selected? These are questions that every practice must answer and the future success of the business may well hinge on the decisions they reach.
In many cases the role does not exist at all in any formal fashion but is simply a vague and undefined understanding so that neither the partners, the staff nor the hapless individual himself are aware of the parameters within which he operates. Without definition the position will not work effectively. It requires an appreciation that there are two types of people in the business, the owners (partners) and others with different status and needs. Partners are the managing partner's equal in status (as owners) but have transferred responsibility to him for running the practice, whereas the others either aspire to be partners or are content to act in a supporting role as employees. Both need to be managed, but in very different ways.
In a world dominated by technicians the managing partner must be a people person with good interpersonal skills - something his training may not have equipped him for. As well as dealing with staff at all levels he must be able to influence the other partners, all of whom have strong individual authority and are not used to being dictated to. However, they must be told and understand what their role is in the business and each must be encouraged to play to their own strengths - a key factor if the firm is to grow and prosper and one which, when challenged, the vast majority of partners would accept.
Broadly speaking the job of managing partner can be divided into the following areas:Leadership
The managing partner must determine the firm's compelling proposition to its internal and external markets, ie, both for clients and colleagues, then share that vision with them. Show them how they fit in, how this is important and relevant for them, why they should continue with the firm, why they should join with the firm in playing their part. Often, this is referred to as 'getting buy in'. Without it there will be no real belief and commitment.Forward planning
The managing partner may often take the lead with the firm's business plan. Some of the partners will be very goal focused, but some will resent committing themselves to objectives that are actually measured and reported on. There will almost certainly be resistance, claims of irrelevance or even blank refusal when it comes to reporting measured performance.
Avoiding these problems comes down to the skill of the managing partner in getting the other partners to buy into the planning process and, ultimately to the business plan itself.Coaching
Some partners will automatically get on with the tasks in hand, others will lose focus to varying degrees and get distracted by other more immediate problems. The secret to refocusing on agreed goals, praising achievements and encouraging extra effort is coaching.
A coaching programme should be set up for all the partners reporting to the managing partner. For those with a substantial challenge it will be more frequent than for those who are taking matters more in their stride.
This helps the managing partner to identify and resolve problems quickly.Change management
In a traditionally conservative profession like accountancy, change is often viewed with great suspicion - particularly by some older partners.
It is the managing partner's responsibility to act as a facilitator for change. He must get the message across to any reluctant partners that although change is not compulsory, neither is survival.
Although there are some highly specialised niche practices, historically the majority of medium-sized independent firms could be described as GPs with certain individual partners having specialist skills that they could call upon as required. There was no structured approach to the provision of specialist services. The changing needs of clients mean that this type of structure is no longer appropriate.
Firms need to be organised into specialist departments with dedicated partners and staff. Although there can be some inter-departmental movement of staff either for training purposes or to cope with sudden influxes of work; each should be viewed as a separate profit centre with its own budget for HR and marketing and production purposes.
These are just some of the more important aspects of the managing partner's role. With such a considerable range of responsibilities it is not surprising that, in all but the smallest practices, the job of managing partner is not a part-time position. Unfortunately too many firms believe that this function can be undertaken in addition to normal client work. The reality is that, although it may be possible to retain a small amount of client work, anybody considering taking on the mantle of managing partner must be prepared to invest the vast majority of their time into running the business. Generally an effective managing partner will spend no more than 20% of his time on client work; the remaining 80% will be spent running the practice.
In a modern accountancy practice the skills of the managing partner are crucial to the success of the business. Strong and effective leadership is required to help firms adapt to meet the changing needs of the modern marketplace and they must ensure that the right person is at the helm.