Non-accountants take helm in practice
Intense competition is forcing accountancy practices to look to non-accountants to help differentiate, bringing into question the value of a traditional partnership model.
“There’s a shift in accountancy practices, the way they operate, how they go to market, their sector focus etc. I think over the next decade the makeup of the senior employees in an accountancy practice is going to have a bit of a tilt,” Bhimal Hira, business development partner at Jeffreys Henry says.
Jeffreys Henry is one such firm which has undergone a structural transformation in recent years. In 2016, Justin Randall was promoted to managing partner, a move which signalled a shift away from the traditional “flat” partnership structure – where partners in firms often existed in silos with no clear figurehead.
Then in January 2020, Bhimal Hira was appointed as business development partner – the first non-accountant to be made partner in the firm’s 100-year history. Hira believes this is reflective of a broader change in the way accountancy practices are structured.
Hira says one of the reasons firms like Jeffreys Henry are beginning to move away from the traditional partnership model is that it can prevent partners from working well as a team.
“Because they [the partners] would be of a variety of ages, they had different goals, different ambitions and different targets.
“So, when it came to things like investment in innovation and technology, investment in growth and acquisitions, you’d always have a bit of a power struggle within the management team.
“You wouldn’t move away from the partnership model entirely, but I think it is the adaptation of how that works. I think firms of our size are being a little bit more commercial around what makes up the management team,” Hira adds.
Amanda Digne-Malcom, director of practice at the ICAEW says that firms are simply adapting to the needs of the modern client.
“Taking on partners with different skills for a multi-skillset leadership team, that’s really a function of the wider environment. Clients are looking for a broader range of services, and in order to deliver those services, you need other skill sets in in there.
“Once upon a time, you would’ve only had accounts as partners. Now, that’s very much not the case. In one case there’s a firm where the managing partner has a marketing background,” she says.
At top 25 accountancy firm HW Fisher, there are similar acknowledgements that accountancy practices must adapt to the modern world. There are a number of partners who are part of the leadership team, led by managing partner, Andrew Rich, while Simon Michaels is CEO of business solutions.
Rich is happy to define the firm as “unusual” in its approach. Rich is happy to accept the need for help from non-accountants.
“Accountants don’t know everything and we’re trying to get talented, gifted people from outside of the profession into our business because it helps us to achieve something that’s greater than the sum of its parts,” he says.
In his role as business development partner, Hira is not client-facing – rather he is responsible for the marketing and strategic aims of Jeffreys Henry.
Hira believes the importance of marketing and business development is reflected in his promotion to partner despite not being an accountant, particularly as the rise of accounting software products like those offered by Xero and QuickBooks drive costs down.
“It is now becoming more and more important for a marketing or a business development professional to become part of the strategic team. So that accountancy firms are going down the right path, so they are feeding back and listening to what clients require and what they want.” he says.
Russell Nathan, senior partner at HW Fisher agrees.
“Where you’ve got professional business developers who connect in the modern way, I think that’s very important for accountancy practices,” he says.
Where Jeffreys Henry have chosen to bring in marketing and business development professionals, HW Fisher have chosen to outsource.
“We now outsource all our PR and marketing to a specialist agency, because we recognize that having an in-house resource is limiting,” Nathan says.
While HW Fisher and Jeffreys Henry have gone down two different routes to differentiate themselves from the competition and grow their practices, with HW Fisher yet to appoint an internal non-accountant partner, they were not opposed to the notion.
“I think you’ve got to understand what the role of a partner is, and the role of a partner ultimately is to be a leader,” Nathan says. “So, if you’ve got somebody who’s leading business development, they don’t have to be a chartered accountant to be a partner.”
Crucially for Rich, it wasn’t so much about whether or not these employees became partners as it was whether or not they were leaders.
“You don’t necessarily have to be a partner to be a leader in the business,” he says.
Hira does acknowledge the potential for tensions to rise among colleagues when non-accountants are promoted to partner.
“There is a scepticism around this from accountants,” Hira says. “Whether they go through the graduate training or they are managers or seniors, there is a general perception that by becoming qualified and then doing your work, you will automatically become a partner, whereas this has jumped all of that – you’re not qualified, you’re not an accountant and you become a partner.
“There is going to be a little resistance around that especially from your older partnership makeup, but also amongst peers and managers and directors but I think the opportunities outweigh the negatives,” Hira adds.