[IMGCAP(1)]Partnerships have the potential to offer excellent business advantages when compared to a solo practice.
First of all, having partners provides everyone, including staff and clients, with access to a wide range of intellectual abilities at the top. Secondly, partnerships are able to leverage the power of the collective strengths of the firm’s leaders. These are two critical reasons that support a compelling argument regarding the importance of a partnership as an effective and profitable platform for conducting business.
The downside occurs when a partnership becomes dysfunctional. In this situation, business can languish in mediocrity for a long period or deteriorate very quickly if the firm cannot resolve its conflicts. While this is a rare occurrence, it can be very sensitive and complex to navigate, and everyone in the firm suffers the consequences.
So if you believe that the advantages of a partnership structure would work best for your organization, here are some things you need to do to ensure success for your partnership.
Create a Clear Definition of Your Goals and Mission
Agreement as to the mission and goals of the partnership is paramount. Having a clear mission establishes a roadmap for your organization to keep you focused on what is important.
Make sure there is alignment amongst the partner group and that you have procedures in place so that your goals and mission remain aligned during the lifecycle of the business. When you are ready to establish your goals and review your mission, experience has shown that this is most easily accomplished in a relaxed atmosphere, like an offsite meeting.
Work on Mutual Respect
This is a foundation issue. The nature of a partnership requires mutual respect and trust. Firms are not efficient when there are too many cooks in the kitchen. Instead, leadership roles have to be identified, taking advantage of each partner’s unique qualities and strengths.
Partners need to trust one another and refrain from interfering in each other’s responsibilities regarding the daily operation of the business.
Define Principles and Protocol
Partners need to agree on the principles under which the business will operate. Over the lifecycle of a business, difficult issues are going to arise, especially among the partners.
Plan the protocol you will use to handle difficult issues in advance so you don’t have to start from the beginning at a challenging time when the partnership is under pressure to deal with a problem.
Create an Atmosphere of Fairness
This can be especially complicated since people often find it more instinctive to take care of themselves first and their partners afterward. If a partnership wants to function at a five-star level, partners need to reverse that self-serving instinct.
Partners need to look at both the short-term and long-term effects of their decisions, so they make choices that are best for the partnership. For example, decisions involving investments that benefit the firm’s future but reduce current profitability should align with the firm’s goals, not the partner’s needs. If the partners are always guided by the firm’s goals, mutual respect and trust, as well as principles, achieving fairness becomes much easier.
Accept the Concept of Accountability
Partners must commit to a serious evaluation process of one another’s performance. In order to do that, the partners must agree to the circumstances under which they will be held accountable and the criteria for judgment. This is much easier to do at the outset of a partnership than when it’s been operating for a number of years.
Often, for a seasoned partnership, an outside consultant can be very helpful in building consensus to move toward accepting accountability.
One of the biggest obstacles to attaining consensus around partnership issues is differing age groups. In many firms the older partners maintain significant control and their younger partners tend to have little influence. While experience is a valuable asset, someday the younger partners will be your lifeline. Listen to them and be fair.
Over the long term following the steps outlined above will work to the advantage of the partnership and make it powerful.
Burt Bierman, CPA, is a senior consultant with the Rainmaker Academy. He is a former partner at JH Cohn and the Videre Group.
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