Managing Partners and their Role in General Practice
Author:
Phil Shohet
In the last 15 years the face of the profession has changed with many firms experiencing enormous expansion and achieving turnovers well in excess of those recorded by many quoted companies. At this end of the scale are the large national and international firms which are now organised and run no differently from any other big commercial organisation: at the other are the small firms - either general practitioners or niche practices.
In the middle lie a much reduced number of medium-sized firms hanging onto their independence. Some have been extremely successful and created thriving businesses with ongoing growth potential. Others are struggling and the gulf between the excellent and the mediocre is becoming ever wider.
With few exceptions all these firms have one thing in common: their leadership and management 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. However, the changing role of the accountant in the business marketplace and the increasingly aggressive commercial environment in which firms must now operate requires a much greater level of business management skills. The pressures for effective management are coming from all aspects of the firm’s business, fees, efficiency, productivity, brand awareness, and to some limited extent internationalism. This has highlighted the need for change in the entire organisation and above all, for better and stronger people to lead the business.
Effective business management is the key to success and where many firms have failed is in their inability to create a management structure that will both operate the business efficiently and profitably and foster growth. Lack of long term planning is a significant factor in this failure with many firms concentrating all their efforts on the short term rather than creating and implementing a strategy for growth over a number of years.
The partners are responsible for creating and implementing the strategic business plan and - as with their director counterparts in industry and commerce - they must work together as a team in order to achieve predetermined goals. Those practices where the partners are little more than a collection of sole practitioners who just happen to be working under the same roof , or where there is no commitment to create a culture of incentive and reward from top to bottom , will need to undergo a radical shift in their attitudes if they are to succeed.
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 the transition to a more departmentalised structure. That trend has now spread throughout the independent sector.
However, there is no ‘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? How long should his period of appointment be? These are questions that every practice must answer and the future success of the business may well hinge on the decisions they reach.
Despite the fact that selecting the right person is vital to the success of the business, the appointment of a Managing Partner is too often left to chance.
What is needed is a person with commercial acumen and a proven track record in developing and expanding the business and creating new opportunities: unfortunately what many more conservative partners want is someone who won’t ‘rock the boat’; someone who will let them stay safely in their comfort zones until retirement and who won’t try anything new or risky. Thus many Managing Partners are selected for their amenability, having neither the skills for the job nor a mandate from their partners to manage the business in any effective or meaningful fashion. Needless to say, the results are usually disastrous.
The Managing Partner must have the authority to manage the business - including the power to impose sanctions upon others for non-performance. It is the non-acceptance of this aspect of the managing partner’s role by the other partners that can make the job so difficult so those best suited to the position often avoid it whilst the least qualified are thrust unwillingly into the spotlight.
The job of managing partner should not be considered as a part-time position in any but the smallest practices. 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.
In a world dominated by technicians the Managing Partner must be a ‘people person’ with good inter-personal 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.
The Managing Partner also needs to appreciate 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.
Broadly speaking the job of Managing Partner can be divided into:
- Leadership
- Forward planning
- Coaching
- Change management
- Practice organisation
- Culture and image
Although all of the partners will be involved to some degree in most of these areas, it is the Managing Partner who must take responsibility for the big picture.
In a typical professional firm almost 50% of the productive capacity is consumed with a higher priced person performing a lower-value task. This systematic under-delegation is as rife at partnership level as it is further down the chain of command. under-delegation means that the firm has a high priced delivery system and therefore the level of profit that can be brought into the bottom line is much reduced. It also means that the skill building that should be taking place in the lower levels of the firm is retarded and detracts senior people from the high value management tasks essential to the future success of the business.
Improving the efficiency of the partners; ie. ensuring that they are not spending their time on mundane technical tasks that can easily be undertaken by staff further down the chain of command, will automatically be drilled down through the firm, improving both efficiency and profitability. Systematic and successful delegation will result in the need to find replacement activities for partners that truly match their skills and experience. This may mean hauling them out of their ‘comfort zones’ and, once again, is the responsibility of the Managing Partner.
Unfortunately very few firms monitor partners’ non-chargeable hours. Given that, in some cases, this constitutes 50% of their time, it is essential that what is effectively their contribution to the management and development of the business is measured in order to ensure that they are making the best use of their skills. Using the criteria already established in the individual partners’ personal development plans (see Accountancy Ireland February 2006) the Managing Partner can accurately measure the success of the non-chargeable time investment and its value to the business.
Thus we can see that the Managing Partner has a key role to play in virtually every aspect of the firm’s operations. It is not a job for the faint-hearted or one to be taken lightly and it requires skills that are not generally associated with accountants. Nevertheless, looking at the most successful firms in the independent sector we find that they all have one thing in common: a strong and dynamic Managing Partner.
Phil Shohet and Andrew Jenner are Directors at Kato Consultancy.