12 Factors That Influence Firm Governance

Source: CPA Practice Management Forum

Consultant Allan Koltin outlines the 12 factors that influence governance over the life of a CPA firm:

1. Firm size. Once a firm reaches 10 to 20 partners, management shifts from a “hands-on” approach to a corporate model.
2. Trust and respect. Firms with great trust and respect for leadership outperform their peers.
3. Partner group business savvy. Partners need to recognize great leadership even when the firm is struggling financially.
4. Firm history. A firm should use past failures to gain new perspectives on its opportunities rather than allow those failures to determine its future.
5. Leadership talent. Talent alone isn't enough. Others must allow the leader to lead.
6. Time available to lead. Leaders should treat the firm as their number-one client, not as a part-time job.
7. Decision speed/quality. Too many firms make decisions slowly and inefficiently and reach decisions that are too “watered down” to be effective.
8. Firm culture. The best firms have a culture of making decisions, even if some partners are unhappy with the changes.
9. Single or multiple offices. Multiple-office firms require multiple leaders.
10. First- vs. second- (or later) generation firm. Second-generation firm leaders who previously were part of a peer group often struggle with being the “boss.”
11. Compensation/value placed on leadership position. CEO doesn't necessarily have to be the highest paid position, but it should be close.
12. Firm's life cycle (and gas in the tank). “Bottom line – be sure your leader matches the acceleration level of your partners' gas pedal.”

For the complete article, read “Best Practices on Firm Governance.”

From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, Vol. 8, No. 7, July 2012, p. 20.