MANAGEMENT VS. ADMINISTRATION FROM ROSENBERG

Monday, August 30th, 2010

My good friend, Marc Rosenberg (long-time consultant to CPA firm leaders), shares a very clear-cut opinion about CPA firm administration versus management.

I’ve long been intrigued by the CPA profession’s tendency to consider two words as synonymous. I’ll share an example here:

Management vs. administration. Both important to the successful operation of a firm. But their meaning is quite different. Admin work can be done by people earning $50K-$150K annually, depending on the size of the firm and the skill level of the administrator. Average partner income in the U.S. is in the $300K range. You shouldn’t pay a partner to do administrative work. Management is being the leader of the firm, someone who manages partner behavior and performance, holds partners accountable, is the visionary, drives profitability. Administration focuses on the day to day, monitoring and reporting, operating systems, interpreting policy and supporting client service personnel. It’s my strong belief that partners should be staying the heck away from administration and leaving it to administrative professionals, thus freeing up partners to do the things that generate income in the $300K range. Two terms – similar but different.

My personal view is slightly different because I believe that the line between administration and management in real-life is very hazy, foggy and often blends together. However, the line between admin/mgt. of a firm and firm LEADERSHIP is bold (and should be very clear).

Not enough owners, people with money, blood, sweat and tears invested in a firm, demonstrate leadership characteristics on a consistent basis, if at all. Many CPA firm owners only have time invested….. really not much money nor BS&T. They have lost the passion (or never had it to begin with).

Rosenberg is right, partners should be staying the heck away from administration and leaving it to administrative professionals. And, it’s true that this can be done on a very professional, high-level for under $150K. Client service partners should be WOWing clients, INSPIRING future leaders and EARNING the over $300 they get paid each year.

Rosenberg’s annual MAP survey is being released in September.