Pulling Back the Curtain on Making Partner in a Big 4 Firm

Ed. note: Sam Flynn is a Big 4 Senior Manager lingering around waiting to decide if he wants to be a partner. This is his story.

Recently, I watched a new firm video discussing the partner admission process. The presentation included perspectives from several parties including the CEO and newly minted partners. This was a new development for our firm. I’m not sure if they read accounting tabloids and wanted to dispel some “myths” (highly unlikely) or if they just realized that experienced folks are running for the hills more often because they don’t know anything about the process, or when it will apply to them, and they wanted to plug that flow a bit (much more likely). Whatever the reason, it provided me with a chance to convey what my firm is describing as the “process” and the key attributes required to make partner. After watching it, I was pleased to see that many of the aspects of making partner I've seen discussed on Going Concern, while not exactly “written” in this presentation, were at least addressed and confirmed. 

 

Gimme the Stats

The presentation started with some stats.  The first was to levelset how few partners are actually made each year. There are less than 10,000 partners in the Big 4 combined (all practices) with roughly 75% of those being audit partners.  Our firm is in the neighborhood of 2,000 partners with 50-70 new partners each year with the audit numbers being consistent around 75%. This means roughly 4% turnover in the partner class assuming a consistent level of partners leaving for retirement or other pastures. On average let’s say about 40 new audit partners are made in a year. Given the size of a Big 4 firm, you’re not talking about a lot of partner opportunity each year since the senior manager pool is pretty large. 

 

The Sweet Sixteen

The second stat thrown out there was the number of years to partner, which is on average 16. This marks a bit of an increase from when I first joined the firm. In those days (a scant 12 years ago) the mantra was that the path to partnership was a 12-15 year road on average.  Certainly a lot has changed since then (the biggest of course being audit fees not continuing to skyrocket) and this is the first time I had heard the number of years formalized.  They also made the point that all of the partners they directly hire from outside the firm don’t impact the number of spaces for the homegrown partners. There was a lot of talk about how these partners actually make more opportunities for the firm because they bring with them a book of business, etc etc but at that point it sounded mostly like lip service to defend why it takes so long to make partner. This was especially true when coupled with talk about how it’s not the length of time it takes to make partner, but the time you get to be in that role that’s more important.

The other major item covered in terms of “pulling the curtain” back was the process. While I knew most of the steps, I did actually learn a little more about the depth of the interview cycle as well as the specific timeline for making these decisions (it’s basically a year-long cycle). The major steps look like this:

1) Decide the pipeline.  The firm leadership figures out which of the senior managers are in the pipeline to become partner. The big point here was to make sure as a senior manager you had a “sponsor”. This might be your “mentor” or just someone you know will speak up for you when other partners get together. The best way to be in the pipeline is to have another partner talk enough about you so that there is no choice for you but to be in the pipeline. Score a point for “it’s not what you know but who you know.”

2) Functional panel interviews.  You get a chance to be grilled by people within your function (e.g., audit) to make sure you are partner worthy. Here they are interviewing more people than they have partner slots for and it’s quite possible that you don’t make the cut. If you miss it, then you work on a development plan so you can try again the next year. It didn’t sound like there was much of a chance for you though if you miss year 2.

3) Cross functional panel interviews.  Similar to the functional panel interviews but done with individuals outside of your practice and generally with folks you’ve never met before. This allows you to demonstrate your knowledge of the firm and gives strangers a chance to see how well you carry yourself as a potential partner. Concurrently, the firm does their background checks on you (perhaps looking for friends who need a few bucks and are willing to make illegal insider trades).

4) Board of Directors interview.  This is the one on one interview that makes or breaks your partner candidacy. It will be with a Board member you don’t know, in a service line that you are not primarily in. The interviews become tailored to your own experience and are the final determination of whether you have what it takes to hold yourself as a partner in the firm. It’s billed as a “two-way” interview so the firm is also looking for you to come to the table with insightful questions that demonstrate you know about (and care about) the operations of the firm. In the end, this becomes the determination of whether you belong in the “club.”

5) If you make it through the above the firm announces you as a partner and you get showered in the financial gains that come along with it (after you take out a loan to cover the initial capital contribution of course). The partners made it very clear that some aspects about being a partner aren’t the hottest like paying full amount of health care costs, subject to dealing with liability, having to keep a capital account. However, they were also quick to point out that other aspects are pretty sweet, such as large financial gain, multiple partner retirement plans and tax services to keep the IRS happy, and that these more than trump the potential cons of partnership.

 

Your Part of the Deal

The rest of the presentation covered all of the “skills and behaviors” needed to become a partner. There was nothing overly surprising in this portion. They focused a lot on ethics and integrity, which wasn’t surprising considering the events of the past year. This included the need to make sure you were on top of all of the little compliance things thrown your way during the year. They also mentioned it helps to bring with you a portfolio of which companies you are thinking about pursuing, which you are already pursuing and which you have helped to previously win. Finally, they reiterated that it wouldn’t be bad if you were willing to take on new industries and new geographies to help fill the gaps at the firm.

The unintentional highlight of the presentation was the topic of diversity.  Three times diversity was mentioned by one individual including a discussion of the diversity advisory board, which I wasn’t aware existed, without ever saying what exactly was considered “diverse”.  Then someone else jumped in and stated that it didn’t mean you had to be diverse, it could also cover what you did to make sure your teams were diverse. It was so generic and felt so different than the rest of the presentation that it was clear it was just a check the box activity to make sure they covered that the partnership wasn’t entirely a white man’s club. 

Overall, I don’t think there was much that was groundbreaking in this presentation but it was nice to see a somewhat open discussion of the process for us potentially in the pipeline.

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