Without an effective managing partner, a firm runs the risk of not reaching the next level of success. What best describes the role and responsibilities of a managing partner?

The key role is to be the shepherd, orchestra leader or quarterback (whichever analogy you prefer) of the partner group. Perhaps the simplest way to describe the shepherd role is to highlight what a successful managing partner is not.

A successful MP is not:

1. The No. 1 biller in the partner group

It’s someone who also isn’t the partner with the highest billable charge hours. Depending on the size of the firm, some day-to-day client responsibilities for a managing partner are essential. And while a successful MP usually carries a small client load to stay grounded in client service and to remain credible with the partner group, billings and chargeable hours are truly a small part of the job. A managing partner’s clients are the partners, giving them the opportunity to maximize their strengths while minimizing their weaknesses. A managing partner has to be readily available for big opportunities or problems and is someone who creates an environment of trust among the partners.

2. Someone who comes from outside the existing partner ranks

That’s too risky, particularly if someone comes from outside the professional services firm environment. We don’t know of one situation where such a tactic has been successful at one of the Top 100 firms. The “outsider” obviously doesn’t know the firm’s history or culture or the partners’ individual strengths and weaknesses. The “outsider” also isn’t attached to the firm’s vision and strategic plan. Please stay away.

3. Two partners functioning as co-managing partners

Oftentimes, in the spirit of political correctness, it is not unusual for firms to select co-managing partners. It’s a safe decision that doesn’t offend quality partners who are competing for the position.

From time to time, this kind of arrangement works, but oftentimes it doesn’t and should be taken with lots of caution. Too often firms with co-managing partners are plagued by inaction or conflicting directions, with little if any consistency on strategy. If co-managing partners can be avoided, firms should take the bold step and tough decision of selecting the right person for the job and make sure they do their best to retain the other contenders for the position. Admittedly, retention may not be easy to accomplish. So, the best advice is to avoid a scenario like this completely by being clear as to the characteristics a firm is looking for in a managing partner—then go for it.

4. A part-time committee

Firms shouldn’t be run by part-time committees. A firm needs to make decisions and move on. Sure, a firm needs oversight committees such as a management committee or an operations committee to provide oversight and direction to the day-to day operations. A firm also needs an executive committee for corporate governance, partner matters and strategy. But a firm can’t possibly prosper if the key leadership role is delegated to a part-time committee who reacts to situations when time permits. That’s a recipe for disaster. No one is steering the ship, thinking about strategy and the future while at the same time making sure the necessary blocking and tackling is being tended to. It’s important to make sure the firm is delivering on its metrics and performing high-quality services.

An effective managing partner has to set the tone at the top and has a very big impact on the firm’s culture, behavior and compensation of the partner group. Being a CPA firm leader requires a person to walk the talk, to lead by example, “to do as I do, not as I say.” It’s a challenging and daunting responsibility. As a leader, every word a managing partner says and every action taken has a tremendous impact, not only among the partner ranks but also throughout the firm.

So, why doesn’t every firm have one, full-time managing partner? In many cases, it comes down to trust and security.

Many firms select a new managing partner from their ranks at an age somewhere between 45 and 53. Candidates are usually excellent client relationship partners with substantial client service responsibilities. The thought of giving up a substantial portion, if not all, of the client relationships that have been developed over years of service, is scary to many. Sure, there is a risk in being a managing partner. Candidates ask:

What happens if I’m not successful? In the spirit of trust, I lose most of my client responsibilities and begin to lose touch with my outside referral sources. I’ll have nowhere to go but to exit the firm when I’m no longer managing partner.

This is a very real concern, and many firms do not want to recognize its severity. Instead firms say, “Trust us.” While that’s easy to say, history shows this trust has often been misplaced.

Firms need to be careful in selecting their managing partner. The goal should be to ensure a high probability of success. That’s not only good for the managing partner, but for the firm and future managing partners. Firms should consider “protecting” the managing partner with an agreement, with compensation and severance provisions, that ensures employment for two or three years after the person steps down as managing partner. While this is rarely done in today’s world, the lack of such an agreement could very well be one reason many firms have difficulty attracting effective managing partners and, as a result, are unable to achieve the next level of success.

Dom Esposito

Dom Esposito, CPA, is the CEO of Esposito CEO2CEO, LLC, a boutique advisory firm consulting with small and midsized CPA firms on strategy, practice management, mergers and acquisitions.