3 Mar 2014 12:49pm

Partnership management model outdated?

The traditional partner-management model has come in for criticism. What could practices achieve, asks Nick Martindale, if they looked outside the profession for their management talent?

The world of accountancy is not renowned for its love of change. The old partnership model has served it, and other professional services, well over a long period. It is based on the concept of promoting people from within to partner level, at which point they are expected to take on more responsibility for developing the business and overseeing its broader growth strategy. Yet this model is not without flaws; the most obvious being that such activity can end up being undertaken by those who are not best suited to it – potentially at the expense of fee-earning work and future business – or it can be overlooked altogether.

Jonathan Fox is managing partner of national top 20 firm Saffery Champness, and a rare example of someone heading an accountancy practice without having any formal training in the discipline. He worked for 12 years in retail before joining law firm DLA Piper, where he became a board-level director responsible for all business development and client care. From there he took on the post of chief executive of law firm Collyer Bristow, with a specific brief from the senior partner to “rough them up a bit”, before taking on his current role in 2007.

“I wasn’t recruited to be a managing partner; I was recruited to be an executive partner to support a client-facing managing partner.” That, he says, was recognition that the daily routine for a busy client-facing partner is increasingly arduous. “After about 18 months there was an election due. I was asked if I would stand and was voted in.” That was back in 2009; last year he was elected for a second term, taking him to 2018. He strongly believes in bringing in a specialist business development professional with experience in sectors outside accountancy. “I’ve never understood the model where client-facing managing partners have to give up elements of their portfolio and get loaded with more management,” he says. “I’m staggered by how many times I see a client and they say I’m the first person from any professional services business to come and see them. But that requires individuals to have time to do it.”

Simon Collins, chairman and senior partner at KPMG, is a qualified accountant but spent 12 years working in banking before moving back, initially to build a debt advisory business in a client-facing role. “I’m responsible for everything we do,” he says. “My day can involve discussing audit with the Competition Commission or Financial Reporting Council, meeting big audit clients or non-audit clients, interviewing people for jobs, talking about businesses we might acquire or speaking to groups such as the CBI. I’m not delivering very much work, but I would like to think I have a material role in winning it, because of the work I do enhancing our brand and my direct work with senior clients.”

Collins is careful not to dismiss the experience he would have gained had he worked in the profession for those 12 years, but believes there is a benefit in combining this with external expertise. He’s keen to encourage those already in the profession to get this kind of experience without leaving the firm altogether, suggesting overseas assignments or secondments as a means of broadening horizons. “The world is changing so fast that it can be really dangerous to do nothing different,” he says.

Smaller firms, too, are beginning to see the benefit of bringing in dedicated professionals to help with business development. Simon Brownbill is a partner and director of practice development at Manchester firm HURST – with 70 people including 13 partners, and three offices – having originally joined as marketing director.

“That is quite different straight away for a firm of our size, but I quickly took on a range of other responsibilities that included business development, HR, customer services, our international business plan and other income lines, and I also look after strategic projects such as new office set-ups,” he says.

In this case, fee-earning partners remain involved on the commercial side, but Brownbill sees his role as helping to co-ordinate that and ensure it doesn’t adversely impact on the day job. “Before I was here, they all realised they needed to do business development; some were good at it and some were bad at it,” he says. “Consequently some of the clients we brought in were good and some were bad, and we’d end up under-servicing some and over-servicing others. It was a mess.

“I’ve put in a proper, well thought-out strategy and defined it, for them to go out there and do it,” he says. “So I might go and meet a prospect and say they need to meet so-and-so because they’re a good match, whereas in the past it was hit and miss. If partner A didn’t get on with prospect A we would lose the opportunity.”

Jonathan Russell is managing partner at ReesRussell and Russell Phillips, which collectively employ around 25 people. He started his career as an accountant before buying his way into his existing practices. He takes on most of the business development himself, but says this is only because this is where his skills are best suited, and questions the conventional model around which the profession has developed.

If I want someone to run my business, why don’t I employ someone who can?

“I’m one of those who says why make someone who is a good tax person a partner?” he says. “Just employ them. Equally if I want someone to run my business, why don’t I employ someone who can? One of the problems is that, for people such as myself, most of the work is business advisory so I tend to think of myself as able to run a business. Potentially that’s more common in the smaller practices because we have to run our businesses. But when you get to even the mid-size regional practices, they have become corporate structures in their own right.” The accountancy sector lags behind law firms and GP practices in its willingness to bring in people to grow the business, he believes; something he attributes to the belief that such skills are inherently part of an accountancy firm’s speciality.

Yet not everyone is convinced about the benefits of bringing in those from outside the industry to senior positions. “As accountants we like to think we know how to run a business,” says Stephen Corner, a partner at London firm Barnes Roffe and member of ICAEW’s Practice Committee. “We’re constantly tuning and discussing problems between ourselves to work out where the trends are, and we don’t have too much trouble working out what does and doesn’t work in our business. We see ourselves predominantly as businesspeople providing a service rather than accountants.”

Corner also warns over the potential to disrupt relationships based on personal trust and quality of service. “We can’t get away from the fact that our clients are not numbers and that our business at the level we are is based on personal relationships,” he says. “If we try to get away from that we may be able to do it for a short time but we run the risk of turning our services into commodities, so clients may not necessarily have any loyalty to us. Ultimately it comes down to people.” He concedes, however, that there may be instances where businesses are not as profitable as they should be where bringing in someone to handle business development might be appropriate.

For some – particularly smaller organisations – non-executive directors can fill this void, drawing on expertise from outside the profession and providing a more rounded perspective. This is an approach that Ian Selwood, managing partner at Randall & Payne, has taken. The firm’s most recent non-executive recruitment experience saw a number of individuals with general business portfolios shortlisted, before someone with an accounting background was chosen.

“The firm has grown up dealing with an awful lot of small clients, and we were looking to broaden our horizons,” he says. “All of our partners have trained with us, so we’ve got very little fresh blood at the top end. That was one of the things we were trying to make up for. In the end it was a fairly easy choice to give it to the one who had grown an accountancy practice in that way.” Interestingly, though, that three-year period has now come to an end and when the firm looks to recruit another non-executive, Selwood believes it will be less inclined to concentrate on the profession when assessing candidates.

The non-executive concept does not always work out, however, and often it can be that wider business experience that is to blame, suggests Russell. “There’s a whole raft of consultants and non-executives out there who want to support small businesses and you find that their history is working in big businesses,” he says. “You get people from large businesses or the Big Four accountancy practices advising, say, John Smith & Son Engineering Works turning over £1.5m a year, where the owner’s aim is to make enough money to send the kids to school, pay the mortgage and go on holiday twice a year. It’s a different mindset.”

Accountants are their own worst enemies here, he believes, and should have more confidence in their own expertise and experience. “I will see on average 300 businesses a year and I’ve been doing it for 35 years, and that’s a lot of experience on how businesses run,” he says. “If you want a non-executive who understands small business, your best bet is to talk to an accountant who deals with small businesses.”

Herein, though, lies the irony: accountancy firms may be failing to apply the kind of strategic thinking they offer clients – around growing the business, moving day-to-day responsibility for delivering the work away from founders and directors, and developing a strong management team – to their own enterprises. “In firms of our size, bearing in mind where most of us come from, it would be hard to think of someone not actually working, at a technical level,” says Corner. “It’s a difficult concept for us to get our heads around. We run the mantra that if it ain’t broke, you don’t fix it.”


Crunch time for traditional firms

Crunch Accounting – the online accounting platform for micro-businesses and freelancers – was partly borne out of the unwillingness of the traditional accounting model to adapt, and problems arising from overworked partners, says Darren Fell, the founder and managing director.

“I’d had two accountants delivering appalling service,” he says. “They were brilliant in the first meeting, but then they took on too many clients and failed to scale the business. I thought I could provide small businesses with a fair, fixed price, with accountants always on the phone but with technology that could streamline everything.”

Fell is an entrepreneur – his previous venture was an email marketing company – rather than an accountant, although he relies heavily on his business partner Steve Crouch for that expertise. But, significantly, he believes innovation such as his own disruptive business model is most likely to come from outside the profession.
“The belief I had was to do something different, offering pristine service and expert advice, and that isn’t necessarily going to come from someone who has trained to be an expert accountant,” he says. “It takes a completely different approach; an accountant would want to get the revenue flowing so would create an ordinary practice, rather than saying ‘our target market is one to 14 employees and we’re only going to do service-based businesses for now’. Any competitors to us would need to be from a different background.”

Nick Martindale


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