Especially with the high pressures during tax season, CPAs start to wonder whether they are in the right business! To top it off, becoming a partner has increasingly become less of a priority for talented members of the staff at accounting firms. This reality is upsetting for the profession, but perhaps the reason is not just about desire; it may also be about what the deal is or will be. If you want to make your most talented team members strive to become partner, be sure to deliver the following:
Real Seat at the Table. An up-and-comer is unlikely to have the funds to become a majority owner. If making partner is tied exclusively to equity, being an owner—especially a minority owner—can be a frustration. Create governance with operational issues determined on consensus with no weighting for equity, or a system that creates points based on a managed book not on ownership. Ultra-sensitive issues like promotion to partner, dismissal, what happens in a merger or sale and other matters will, of course, need to take equity into consideration.
Money. The potential to make money is meaningful, but not as meaningful as the actuality of making it! There will need to be a guarantee of pay and benefit increases and a bridge plan to participate in the compensation plan for owners. In many transition transactions, formulas are used to secure the exit-minded player’s compensation; similar approaches are necessary for partners.
Gratification. Making more for doing the same tasks will not resonate. Making more and being more valuable by getting new responsibilities will. Structure a transition of work responsibilities over the first three years of partnership for maximum appeal.
Security and Incentive. There must be significant improvement in the terms of employment and narrowed steps to orchestrate dismissal and penalties. Furthermore, the virtue in staying longer once promoted to partner needs to be incorporated into compensation and pricing to incentivize interest in ownership.
Candidates for promotion are much more independent and have many options. It’s no different than selling any product, especially a luxury product. The buyer has to see the value, the benefit and the upside.