make sure the firm isn’t part of the problem.
by august j. aquila
what makes a great partnership
i’ve been dealing with underperforming or dysfunctional partners for a quarter of a century. while the underperformers and dysfunctional ones haven’t changed much in that time, the way firms are dealing with them certainly has.
more: when ‘quiet quitting’ hits the partner ranks | nine ways to handle partners with strong views | rate managing partners in six areas | five ways to keep your edge as a leader | managing partner: the toughest job in the world | why partners need written goals
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the so-called white gloves in the accounting profession came off many years ago when dealing with competitors. they are now off when dealing with these two types of partners. in addition, modern technology of time and billing software can and does generate every conceivable productivity report. partners are ranked from top to bottom in terms of billable hours, dollars collected, new business developed, collections, etc. there is no place for these partners to hide.
once a firm sets a standard or benchmark, there will be partners who are way above, above, average, below and well below the firm’s standard. when a firm raises the bar, those who were average before, now become below average even though they aren’t doing anything differently.
the problem is not identifying underperforming partners. the real issue is how you deal with them.
traditionally, firms tended just to ignore them. many times these partners were the key rainmakers or a senior partner. if you ignore these partners today, you cause significant damage to your firm. staff leaves. profitability suffers. you waste time solving problems created by the individual.
what then are your real choices?
- you can accept them as they are.
- you can try to rehabilitate them.
- you can outright fire them.
- you can help find them employment somewhere else.
- you can avoid creating new unproductive partners.
accepting them as they are is not a viable option. teaching an old dog new tricks is hard. most partners won’t change, but at a minimum you should try this before you take more drastic measures. so that leaves us with only two viable options for partners already at the firm – fire them or find employment for them somewhere else.
however, there is an option that can help you in the future and that’s learning how to avoid creating new unproductive partners or promoting and hiring dysfunctional ones.
existing partners – conscious or unconscious decision to slow down
at some point in time most partners will decide to slow down. this may be because of age, health or a change in lifestyle. it’s fairly straightforward to identify those partners who are on the slowdown track. you merely need to review monthly production reports. when you identify a downward trend in production, you have the first red flag waving.
the first thing you need to determine is if the slowdown is a conscious or unconscious decision. dealing with the partner who consciously decides to cut his or her hours is usually pretty straightforward. if this happens to be the case at your firm, here are some concrete steps you can take. i have seen many firms employ them with great success.
- do your homework. get productivity reports for the last two years. you want to have information on both billable and non-billable time.
- have a one-on-one meeting with the partner to discuss his/her future plans and gain an understanding of the partner’s goals and needs.
- being a part-time partner is no longer a no-no. develop an agreement with the partner whereby the firm and the partner both win. the partner’s compensation and responsibilities may be reduced along with the partner’s compensation and share in any profits.
- you can consider changing the partner’s status from equity to non-equity.
- make sure the agreement is specific. does part-time or reduced status affect the partner’s voting rights, retirement benefits and current medical benefits? how long will the agreement last?
- set the agreement to writing and make sure that all parties execute it. without a written agreement it will be difficult to determine in the future what was agreed upon.
you need to take a completely different tack for partners who make an unconscious decision. these are the partners who have cut back but forgot to tell anyone about it and in their minds they believe they are still contributing as much to the firm as before.
many times the unconscious decision happens over a period of years before management realizes what has happened.
management needs to spot such trends as soon as possible and bring them to the partner’s attention. unlike the partner who makes a conscious decision to slow down, this partner believes he or she is still carrying their weight. this is a much more difficult situation to handle. here are some steps to follow.
- again, you want to start off by doing your homework. get productivity reports for the last two years. you want to have information on both billable and non-billable time.
- get several other partners involved in the process to gain their insights and thoughts.
- determine who (an individual or group) would be best to meet with the partner.
- determine what is happening in the partner’s life – health, divorce, etc.
- determine how the future goals of the firm and of the partner mesh or don’t.
- develop an agreement with the partner whereby the firm and the partner both win. the partner’s compensation and responsibilities may be reduced along with the partner’s compensation and share in any profits.
- if the partner is unwilling to accept the new working agreement, then firm management must decide if rehabilitation is the answer or if the firm needs to terminate the underproductive partner.
- whatever the firm decides, make sure that everything is documented in order to avoid litigation.
sometimes partners just need a change of duties or to focus more time on non-production activities and more on capacity-building ones. for example,
- have the partner spend more time developing new business and less time on production.
- let the partner develop new service lines.
- use the partner as a trainer and mentor of future partners.
the dysfunctional partner
a dysfunctional partner may be very productive and some unproductive partners also become dysfunctional ones. a dysfunctional partner is one who never follows firm policies, is not a team player or is the one staff run away from when they see him coming down the hallway.
the unproductive partner generally has a financial impact on the firm; the dysfunctional partner hurts the firm in additional ways. the unproductive partner usually remains an internal problem. the dysfunctional partner can create internal and external problems for the firm.
the dysfunctional partner is probably the worse of the two types. he or she weakens the partnership by adversely affecting the interpersonal relationship between the partners and even among the staff. this in turn affects the economic output of the partnership by reducing efficiency.
depending on the type of dysfunctional behavior, these partners can also create external problems that adversely affect the firm’s image, marketing ability, reputation, client satisfaction and loyalty.
usually when there are interpersonal problems among partners, they find their way onto the street – they become external problems.
dysfunctional partners usually need professional help and the best thing you can do is help the partner find that help.
don’t create a new batch of unproductive partners
i’ve noticed that it is often the firm that is to blame for creating unproductive partners or for hiring or promoting dysfunctional ones. if you want to lessen the number of unproductive and dysfunctional partners in the future, follow these steps.
first, identify and define the values and behaviors that are acceptable in your firm and evaluate annually how well everyone – partners included – is living these values.
second, develop clear and specific minimum objective and subjective standards for partner performance. the minute that any partner tends below these standards a red flag goes up.
third, don’t make marginal employees partners. they are not going to get any better. the employee who could not bring in business as a manager isn’t going to be a rainmaker when he becomes a partner. most problem partners today were mediocre employees.
fourth, as much as you would like, you cannot ignore them nor can you accept them as they are. doing that would be unfaithful to your core principles and ultimately cause more harm to the firm than any one of them is worth.
management cannot permit partners to get into this type of situation. partner unproductivity does not happen overnight. firms need to start working with partners the minute a red flag goes up.
fifth, get your partners doing and learning new things. you do this by requiring all partners to practice what i call the “push down theory of accounting.” partners are required to push a certain percentage of their work down to either younger partners or managers. this provides them with available time to learn and do new things.
how to identify the unproductive or dysfunctional partners
here are some key behavioral examples:
- works too few hours to produce adequate revenue
- hoards work and is unwilling to delegate
- fails to follow up
- threatens to leave the firm
- often takes on the wrong types of clients
- unable to retain clients
- doesn’t communicate well with other partners
- doesn’t trust other partners to help with his/her clients
- things can only be done his way
- lacks emotional intelligence
- does not perform at the partner level
- is insecure and does not take criticism well
- commits office to unrealistic timetables
- manipulates various internal systems, especially when it comes to compensation
- refuses to cross-sell services
- fails to see his/her own shortcomings
- becomes overly aggressive
- has an alcohol or drug problem
- is not a team player
- does not participate in office events
- drives staff away
concluding remarks
whatever the firm decides to do, it must be done fairly. i believe it is easier to work with unproductive or dysfunctional partners if you set high standards. don’t make it easy for someone to become an equity partner. and once an individual enters into the partnership ranks, make sure that they are held accountable.