Professional Practices and Partnerships

“Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen.” Winston Churchill

Professional Practices and Partnerships – Overview

Many partnerships are great businesses, and while there are many old ones, and many bold ones, there are no old and bold ones.  Long term success can look effortless, but search deeper and you’ll always find that it’s the result of a lot of hard work on the business, not just in the business.

We facilitate the high level strategic activities you should undertake to ensure long term success, that are so often neglected or deferred until it’s too late.

Professional practices have special needs, with those that aren’t fully “corporatised” often bearing some family business characteristics:  dynamic, person-oriented (egocentric?) cultures; charismatic (and sometimes domineering) leaders; relatively informal management systems and meetings; inconsistent decision making processes; informal policies; unspecified and unbalanced roles and responsibilities; poorly defined succession plans, and so on.

These characteristics create strengths and weaknesses in equal measure, and if allowed to get out of control can cause anything from de-motivation to outright destruction.

From a dynamic perspective a failing partnership looks and feels like a failing marriage: plummeting trust, nervous staff and clients, anger, blame, dysfunction, inefficiency, falling revenues and spiralling costs.  They all lead one way: to a talent exodus and the eventual collapse of what may once have been a great business.

Partnership disputes can be every bit as ugly, and as expensive, as matrimonial breakdowns – especially when they get channelled into the legal system for “resolution”.  We can help to avoid this, both by the preventative measures outlined below, and by facilitating, mediating, or adjudicating partnership disputes before they cause a complete meltdown.

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Partner Alignment

We consider partner “Alignment” to be absolutely key to achieving optimal results in any practice.  Like a racing eight, unless the practice leaders are in sync about what they’re doing and why they’re doing it, the practice will veer off course and lose its race.  The funny thing is that although it’s entirely possible to achieve great results without vast trouble and expense, many partners don’t take the time and make the effort to do so.  They just keep on working in their business, rather than stopping to do some work on the business.

One of our most powerful learnings is that many issues don’t need to be “resolved” – they just need to be taken apart;  examined in bite-sized chunks;  considered from a problem solving / solution design perspective, and then put back together again in a better and more workable format.

True leaders understand that the buck stops with them.  They have nowhere to hide and nobody to blame if they aren’t getting the results they want.  If it’s happening on their watch it’s their fault, their problem.  So we’ll work with you to restore harmony to your  leadership team.

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Practice Professionalisation

The professionalisation process is designed to make practices more efficient and profitable, without compromising their core values.

We contrast this with corporatising the practice, which converts large practices into corporations, and may even lead to a public listing.  In the process the professional practice becomes a business making money by delivering professional services and it becomes increasingly hard to reconcile client-centric professional service standards with corporate performance and profit targets.  Despite their best efforts to retain or manufacture a unique professional culture, most seem to lose their souls.

You may be contemplating professionalising your business for any number of reasons, including:  to achieve best practice status and benefits;  to obtain additional finance;  to increase its value in readiness for a sale or major restructure;  as part of a succession process; or to increase competitiveness – for survival and/or profit.

Whatever the motivation, when any leadership team worthy of the name increases its commercial aspirations, it’s usually clear that the only way to increase profits and sustainable business value is through organisational and productivity improvements.

We help to plan the Professionalisation Process, and then facilitate its implementation through collaborative and empowering team building, by strengthening your professional practice culture.

There’s usually a fair amount of personal skills development required, mainly in human, rather than technical areas.  These include leadership and management training and the practical and cultural requirements for building trust and high performance teams.

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Practice Culture and Performance

Culture describes how things are actually done.

Forget the rhetoric and high flying statements of intent – if your practice doesn’t operate as it says it operates; if your staff see that the way you treat your clients and staff is out of whack with how you claim to deal with them – then the practice, and its leaders, will be perceived to lack integrity and credibility – and you’ll have an increasingly toxic culture that virtually guarantees high risk and low performance.

Alternatively, partners that exemplify their stated values, and drive these relentlessly through every aspect of their practice,  will be respected as admirable, and worthy of trust.  Their reward, apart from having a professional practice they’re proud of, is that staff will work hard to protect both the partners and the practice, which will minimise risk and maximise performance.

We conduct culture surveys as part of background fact finding.  It’s remarkably, and rather sadly common, to discover how out of touch many partners are with the underlying culture in their practices.

Without a real appreciation of your underlying culture it’s dangerous to attempt to drive serious change through any organisation.  You can’t appreciate the context, or likely consequences, of so doing – the very opposite of professionalisation objectives.

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Partnership Agreements

It’s remarkable how many professionals enter into partnerships without sighting, or critically reviewing, the partnership agreement.  It’s even more surprising how many practices don’t actually have formal, or at least up to date, partnership agreements at all.  I guess it’s a case of:  “the cobbler’s children’s shoes” syndrome, as most of the professionals involved would never advise their clients to do the same thing.

Then there are those practices that have “off the shelf” agreements, for which they’ve often paid large amounts of money, that don’t actually reflect much of how the practice actually operates.  They may just contain standard entry, exit and risk management clauses, without providing any useful inputs into partner performance expectations and measurement, executive decision making processes, succession parameters, and so on.

They were probably of limited value when originally drafted many years ago; they’re certainly not up to the needs of a modern professional practice as they don’t reflect the commercial and professional aspirations, or intentions, of current partners.

We facilitate a series of meetings with partners to develop consensus around how they intend to operate together in partnership.   Our agenda is a full set of agreement headings used to guide discussions and capture collective decisions.  These then form the backbone of an agreement that can be sent to legal advisers for review and final formalisation.  The ultimate outcomes are:  high levels of clarity, consensus and trust between partners; an authoritative document that helps to drive the practice (rather than sit in a bottom drawer until something goes wrong); and an appropriate partnership agreement that should serve the practice well for many years.

This process is usually seen as an investment, rather than as a cost.

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Shareholder Agreements

If a practice is operated through a company, a Shareholder Agreement should replace the Partnership Agreement.  It should cover everything that would normally be contained in a Partnership Agreement (see above).

In addition to their ordinary professional activities, many partners in practices are involved in other business ventures together.  Shareholder, or Buy/Sell Agreements, can be used to help ensure that everyone is clear about how certain things will happen, in prescribed situations, with those business investments.  This can help to prevent conflicts from arising that could threaten the viability of the professional practice behind their investments.

Depending on circumstances and other agreements already in place, Shareholder Agreements usually cover:

  • Ownership, dividend distribution and voting rights attached to shares.
  • Control and management of companies.
  • Information entitlements.
  • Dispute resolution procedures.
  • Contribution requirements and conditions.
  • Ethical and other required practices and behaviours.
  • Defined roles and responsibilities, authorities and accountabilities.

We facilitate a series of meetings with business partners to develop consensus around how they intend to deal with relevant ownership issues for entities outside the main partnership.   Our agenda is a full set of agreement headings used to guide discussions and capture collective decisions.  These then form the backbone of an agreement that can be sent to legal advisers for review and final formalisation.

The ultimate outcomes are clarity and consensus over current and future ownership issues.

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Admissions and Exits

The rules and requirements for admissions and exits to practices, both voluntary and forced, including goodwill calculations and collateral obligations, should all be clearly enshrined in a Partnership or Shareholder Agreement.

If not, and there’s an urgent need to deal with an entry or exit issue, or a conflict that’s getting out of hand within the practice, we can facilitate peacemaking conversations, mediate conflicted situations, or arbitrate a determination when things have moved past any apparent chance of redemption (even then our process often brings the parties back to the negotiating table).  See Conflict Resolution for more details.

Everybody’s at liberty to use lawyers and other advisers through any of these processes, and part of our charter is to manage the entire process so as to keep it as constructive, private, quick and inexpensive as possible.

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Partner Meetings

Are you happy with the way your partner meetings are conducted or, if you were honest, would you be embarrassed to have your clients see a video of you all in action, in your own boardroom?

Many professionals perform much better in front of their clients than with their peers.  There’s often a potent brew of egos, role fulfilment, testosterone, intellectual superiority (and inferiority), outmoded hierarchical expectations, personal defensiveness, and other things going on under the surface of the partnership.

Whatever, it all adds up to inefficient use of the mental horsepower in the room.  It’s also seriously threatening to practice continuity as it alienates your best young talents, especially Gen Y’ers, who (quite rightly) demand better processes and faster outcomes than these behaviours can produce, and generally believe they could do a lot better themselves if the old codgers got out of their way.

We facilitate excellent meetings, often starting with a workshop covering:  meeting processes, individual roles and expectations, Codes of Conduct and decision making.  Everybody then has the same understanding of what is expected of them in meetings, and universally applicable ground rules can be devised and adopted.  The difference is immediate, powerful and long lasting.

After a couple of meetings some firms take back the running of their operational sessions, while retaining a professional facilitator to manage major strategic and more sensitive (ie: partner performance and remuneration) sessions.  Others just prefer to keep on using a neutral facilitator for all formal meetings, so all partners can participate fully, as equals.

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Partner Performance & Remuneration

Few things stress a professional practice as much as concerns over individual, and comparative, partner performance.

Our partner performance process includes injecting real precision into:

  • Personal roles, responsibilities and accountabilities.
  • Priorities and time allocation over specified activities.
  • KPIs and their measurement.
  • Remuneration and other rewards, including bonus schemes.

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Partnership Disputes

All partnership disputes are ugly, expensive and damaging.  They produce few, if any winners, excepting the lawyers who bravely fight to the last drop of your blood (or cash).  We’ve seen partnership litigation cost more than 10 times the amount in dispute – leaving the survivors gutted, even after the dust had settled.

Preventing, managing and resolving problems requires a multi-level approach:

  • Prevention depends on having: Clarity (shared intentions);  Certainty (measureable performance expectations);  Commitment (perform as agreed).
  • Management depends on having: Strategies (practice plans); Structures (targets, budgets and agreements); Systems (measurement and review processes) and Skills (the actual capacity to do what needs to be done).
  • Resolution requires an agreed process for dealing promptly and constructively with any issues that arise, using all of the above 7 elements as objective and qualitative criteria for benchmarking partner performance. This avoids things getting personal, or legal, and is best handled by an independent and external facilitator, or mediator.

We can resolve most partnership disputes quickly, privately and very cost-effectively, using a range of Alternative Dispute Resolution (“ADR”) processes:  from facilitated discussions, through mediation and expert determination, up to (legally binding) arbitration.  We manage the entire process in a sensible, business-like and comprehensible fashion, so you understand what’s going on.  We’re also happy to liaise with and control legal and other advisers, should you choose to use them.

If you’re serious about getting a partnership or practice dispute resolved as constructively as possible, talk to us (without obligation) before committing to any other process.

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Leadership Development

There are few things more important to, and more indicative of the strength and culture of a practice, than its attitude towards developing its next generation of leaders and managers.  We regard leadership development and succession planning as critically paired elements in developing practice sustainability and continuity.

Because we’ve been there ourselves in two of the “Big 4” accounting firms, and in other professional practices and businesses – both as members and as advisers – we can provide experienced and sensitive training, coaching and mentoring support, to your next generation of leaders.

We also partner with Ross Anderson’s Coaching & Leadership International operation to provide long term executive coaching and leadership development programs.

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Meetings & Decision Making

A recurring finding in our work is that many practices, even the largest ones, don’t do meetings well;  rarely seem to make wise decisions;  and don’t stick to the decisions they do make.

Then culture and motivation suffer;  competent staff withdraw, or leave through frustration;  productivity and profitability decline, and the practice becomes uncomfortable,  uncompetitive and, ultimately, non-viable.

When that’s the case, there’s little point in holding meetings to make important decisions about improving things (professionalisation), until the practice has acquired better systems and skills for holding meetings and making decisions.

We have short training programs and workshops to produce the XXX Partnership’s Meeting Procedures and Decision Making Rules.  They invariably create immediate improvements in processes and relationships, and provide a solid foundation from which the practice can then address almost any issue it needs to deal with.

It’s usually a good idea to include another program on Time Management and Prioritising to avoid too much enthusiasm for your new-found ability to hold constructive meetings becoming an excessive distraction from getting on with running the practice.

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Workshops & Retreats

Retreats provide opportunities for team building and deep thinking about important issues.  Until you’ve managed a lot of them they can appear logistically daunting, and personally challenging.  We make it easy by creating a special environment, providing the ground rules for the event;  helping you to develop a carefully crafted agenda;  facilitating some or all of the sessions, and capturing the outcomes.

When they work well, retreats can throw up profound surprises, like the time the 17 year old, newly employed receptionist emerged as the most strategic thinker in a 30 person accounting firm!  All credit to that firm for having the smarts (and the courage) to include everyone in their firm in their retreat, so they could harness the total brain power (and life experiences) available.

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Values, Visions and Goal Setting

Values are the underlying drivers that make us want to do, what we do, the way we do it.  Admirable practices have their values (intentions) and cultures (how they do things) closely aligned.

Goals define what we want to achieve in the future.  They can be personal, professional, financial, or many other things.

Visioning is the process of identifying individual and collective values and goals, and using them to help people and practices to create “a vision” of where they want to be, and what they want to have achieved, at some time in the future.  This creative and often emotional journey of the mind and spirit is ultimately used to provide a solid foundation for very practical strategy and business plans.

Values, Visions and Goals are essential elements in building personal and practice Clarity.

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Strategy Plans

Strategy Plans take agreed Values, Visions & Goals and turn them into written documents containing recognisable directions of travel for your practice, including associated milestones and quantifiable targets, such as gross revenue, net profit etc.

We use Strategies to help make the best possible plans for the future by engaging with everybody who: (a) can make a meaningful contribution to a plan and (b) who need to know, understand and support the plan to maximise its prospects for success.

The Strategy Planning process should be a powerful motivator in the practice.  It provides an effective means for measuring and recognising performance and success.  It’s also an essential risk management tool.

No practice that takes itself seriously should be without a live, up to date, written and fully communicated Strategy Plan.  It links Clarity (knowing what you’re going to do);  with Certainty (knowing how you’re going to do it) and Commitment (agreeing to get on with the job).

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Business Plans

If Vision and Strategy define the head and soul of a business, Business Plans comprise its beating heart, bones, blood, muscles and sinews.  They include the detailed budgets, cashflows, productivity, marketing and task allocation plans that assign specific responsibilities, authorities and accountabilities to specific people.  Nobody has anywhere to hide when these plans are done properly, since everyone that should be involved is involved in developing them.  This creates a sense of ownership and commitment.

Business Plans take the partners’ collective Visions and Goals, refine them through the Strategy Plan, and turn them into the detailed Action Plans your managers need to run the practice efficiently and profitably.

Business Plans translate Clarity into Certainty.  Once published, distributed and acknowledged, everyone can see what’s to be done, how it’s to be done, when it’s to be done, and who’s to do it.

They also have a major role to play in locking in Commitment, not least for the partner group itself.  When individual tasks, performance expectations, authority, responsibility and accountability have all been agreed and locked in, it’s reasonable to expect that both personal and peer pressure will help to ensure performance.

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Succession Plans

Succession, or Transition Planning, is the process of replacing the existing leader(s) of the practice with a new individual, or group.  When the practice is closely associated with one or more charismatic individuals, and they associate themselves with the practice, the process can place enormous strains on everyone and everything.  Many professional practices handle the challenge poorly, and address it far too late, by failing to incorporate succession thinking into their culture, as a driver of continuous development and renewal.

We offer a complete succession planning process, which helps to embed succession in the practice’s strategy plans and culture, and smooth the entire implementation process, for both successors and successees.  See our article Successful Successions to learn more about the issues, and our approach to dealing with them.

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