As an accounting firm coach, consultant and mentor it is not unusual for me to be asked about when the right time is for a firm to hire either a Practice Manager, General Manager or CEO. Having held each of these positions inside firms myself and worked with multiple clients on this I feel well qualified to share some thoughts.
This is the least “senior” of the three positions. Many small to medium firms have a person often referred to as practice manager. My experience is that the responsibilities of this person can vary quite a bit from firm to firm, dependent on the stage the firm is at and the individual in the role. Typically, they include a bit of almost everything that is not client facing. This person might do accounting and payroll for the firm, manage the office facilities, oversee HR matters, do administrative aspects of marketing such as a newsletter or event organisation and be the go to person for technology. A classic Jack of all trades. In some firms the practice manager may also have a hand in overseeing workflow management.
This position typically reports to one or more owners and one danger is that different messages come from different owners. In many firms the practice manager may have assistance from a receptionist or other admin but is typically pretty hands on. When should you have a practice manager? As soon as you possibly can. If you have growth aspirations for your firm hiring “ahead of the curve” will help them be realised faster. For some people this could be as early as when you have only a few people in your firm.
It is not unusual for practice managers to have no or few formal qualifications and in my experience that is not an issue at all. Some have come through from reception, PA or other admin type roles and they are typically organised and good at organising others. (If they are not this is not the role for them!) The practice manager also needs skills with diplomacy and the ability to maintain strict confidentiality.
One thing that I see happening in firms sometimes is that firm having almost total reliance on the practice manager and this results in leave accumulating. Unhealthy for the person and the firm.
If you wondering if you should hire a practice manager or not then the chances are you should. If you are an owner spending a big chunk of time working in the business instead of on it then this position could be your ticket to freedom, so to speak!
I was the inaugural GM for Pitcher Partners Sydney, held the role for 5 ½ years and loved it. As GM I led the non-client teams being internal finance and accounting, administration, marketing and technology. Part way into my tenure I was also the only non-partner member of the Executive Committee. The role had enormous variety and involvement in just about every aspect of the business, which I loved, but it was a “big” role and not for the faint hearted!
The GM role will typically be for medium sized firms and above and will be less hands on than a practice manager. This role typically has more responsibility and authority than a practice manager and most people I see in this role will have formal qualifications, often in accounting or HR. If you are good with people and numbers that goes a long way! It is not always necessary to be a jack of all trades as you will start to have specialist team members in areas such as technology, marketing and HR, but having a grasp across all the areas will be advantageous. My experience is that the pool of people who are a great match for this role is relatively small in the eyes of most firms.
On the question of when to hire a GM, my experience at Pitcher Partners might be useful. As I recall the business might have had 80 people when I joined and 180 people when I left. I suspect 50+ people would be the minimum firm size but I don’t think this is a fixed rule by any means.
Some firms might refer to this role as Business Manager and it is really just an evolution of the practice manager position to be less hands on. Having said that if you are hiring a GM at the smaller end of the scale it is likely they will have to be hands on for some things. I know of one instance where a firm hired a GM who wanted to be so hands off they were not a good fit and the tenure was short.
This is where things get interesting. Typically, it will be multiple owner firms who want a specialist to lead the firm and drive implementation of plans so the owners can focus on looking after clients and a few other high value things. This is a difficult position to succeed in, if for no other reason than the apparently conflicting reporting structure that inevitably exists. A true CEO will have each active owner reporting to them on a day to day basis but then the CEO will be reporting to a board comprising the individual owners. See the challenge here?
I was the CEO of a five partner firm and this was the challenge I had to deftly negotiate to be successful. The appointment of a CEO remains relatively rare inside firms and if we look across out our legal cousins in professional services you will see a string of CEOs who have tried but arguably failed. One issue seems to have been that lawyers want their CEOs to be lawyers and those who are not seem in many cases to have short tenures. I think it is also quite likely that accountants like the CEOs to have accounting qualifications. It brings a degree of credibility and respect that is otherwise sometimes lacking.
If you are going to hire a CEO consider making them an owner too. If not immediately then after a period of settling in and confirming there is a good match. People talk about the difference “having some skin in the game” makes and I can see merit in that view.
An important consideration for any owners contemplating the hire of any of these positions is their ability to let go. Sadly, what I sometimes see is a person being hired and given responsibility for a range of things but not being given the authority to fulfill the responsibility. This is a recipe for disaster. An important part of dealing with this is to have a very clear position description signed off by all owners and the employee. In addition this then needs to be communicated to everyone inside the firm so it is clear who is doing what. This lack of communication can undermine your employee’s ability to do their job and again I have seen it lead to a short tenure.
This is about owners being able to let go of tasks they might have previously been doing and trusting someone else to do them. It sounds good in theory but in practice I see many struggling with this.