Key Components of Great Partner Relations


  • Make sure you have a partnership or shareholder agreement. There are so many that are unsigned which means there is no agreement – otherwise why hasn’t it been signed!
  • Conduct an annual retreat and regular partner meetings.
  • Develop as a minimum an agreed mission statement. This will contribute greatly to the process of getting all partners to pull together.
  • Does each of the owners have written goals with accountability?
  • Do you have a fair performance profit sharing system? This necessarily requires the partners to agree on a system of values: How much will billable time be valued vs. winning business vs. client based management?
  • Introduce partner impact reporting.
  • Do you have partner evaluations? How about 360˚ evaluations? Or have the staff rank the partner on a scale as to how it was to work with them. This focuses on helping partners to develop staff. In your firm, mentoring should be a high priority. Start this process at manager level – leave it any later and by the time they are partner it is probably too late.
  • Do you have written basic firm philosophies and minimum standards that all partners agree and abide by?
  • Managing partner – Is there a written job description with clear authority of what the duties and boundaries are?
  • Are there written criteria for promotion to partner?
  • Are there written criteria for what a partner is and partner duties and responsibilities?
  • Do partners fully understand their exposure?
  • Do you have partners who freeze in the headlights when a serious problem occurs? How can they be supported?
  • Who is coaching your partners? People will always accomplish more if they have a coach. Who is the encourager/motivator in your firm?


Yet another area where arrangements go from one end of the scale to another. Many firms have arrangements that are cast in stone as a result of a signed partnership agreement. If there are too many baby boomer / Gen X partners looking forward to an ongoing retirement revenue/capital stream there may need to be some adjustment. Equally, if the partnership agreement contains entitlement to goodwill, this again may hoist too high a financial commitment onto younger owners. Yes, I understand the argument that this is what the baby boomers / Gen X paid, but a lot has changed since that generation entered into partnership. Remember, those partners who have the responsibility to pay out may choose to do something different.

So, let’s ask the question “what are firms doing in this area?” Put succinctly where firms have arrangements that do not conform to the above they are usually based on a pay-out that is linked to the income of the last year or the average of, say, the last three. This base number is then paid out, possibly as follows:

  • Salaried partners – 1x profit
  • Equity partners – 2x profit

Time to revisit your retirement arrangements? Why not? Set aside your own self-interest and calculate the total liability to pay out retiring partners. Is it manageable? If the answer is no, then somehow this has to be addressed – or maybe there are problems ahead. It is better to address these matters now when there is time rather than later on when division and dissention may arise – and that could even result in a forced sale [merger] or dissolution.


“What are you doing to train up your successor?” This is a major responsibility for every managing partner/CEO. The question as to who should succeed the managing partner is one that has historically caused some angst and is often managing partners’ answer to the question “what keeps you awake at night?” The new managing partner has responsibility for much, including protecting the legacy and carrying it forward. Rather than a vote you need to evolve a

selection process. You might consider some outside help. Find out what other firms have done and develop a managing partner competency model. Maybe it would be wise to look for successors rather than focus on just one person.

There have been many firms in recent years that have skipped a generation. Learning from other firms, maybe it would be wise to have a set term of service rather than one that is open-ended. In any event, it is important to start arrangements for succession as early as possible – probably three years lead time is about right.

BOOK RECOMMENDATION: Succession Transition. A Roadmap for Seamless Transitions is authored by former managing partner Bill Hermann, CPA, and Plante Moran Managing Partner and Gordon Krater, CPA, with Pulitzer Prize winning journalist, Hermann served as the firm’s managing partner from 2001 to 2009, and was followed by Krater.

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