PracticeAccounting FirmsLook outside for your practice’s ruler

Look outside for your practice's ruler

Firms of all shapes and sizes should consider external governance, writes Kevin Reed

HOW DOES A firm govern itself?

We know it’s not easy. As Gary White, one of four partners involved in managing Essex-based practice CBHC, puts it, the firm ends up “run by player-managers”.

The analogy works like this: As a player manager you’ve got to do the business on the pitch, and off it. For a fee-earning partner, it’s tremendously difficult to look after clients and then make sure the firm runs smoothly. And as Gary put it openly to me: “At £3.5m revenues per year we can’t justify having someone not earning their way.”

CBHC’s answer was to recently appoint a chairman. But to stretch the analogy to appointee Jeremy Allen – he’s more Fergie than Christian Gross by pedigree and impact.

Allen spent 19 years at Dresdner Kleinwort, where his work in equity markets saw him build up an understanding of how companies differentiate themselves from competitors, and grow.

Having served as a consultant at the firm for six months, Allen helped strip out £500k in costs from the practice.

Now he will spend four days a month managing and coaching the board.

My big question was how does an outsider in this situation drive practice owners to do what he tells them to?

White says that Allen’s vast experience, neutrality and already-proven record with the practice effectively makes the owners accountable to listen and act on his ideas.

“We’re four equals with a part-time CEO,” says White.

The importance of external advice is one I fully advocate for firms. Governance isn’t the preserve of the top businesses ironically, that’s what clients expect from their accountants.

Firms of different shapes and sizes will require different models to that of CBHC’s. but it’s surely worth considering.

Image credit: Shutterstock

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