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Re-Defining a Firm’s Governance and Management Structure

A renowned practice asked us to help shape the firm's strategy as it prepared to move forward. In the course of interviewing the principals and others to gain a solid understanding of the firm's opportunities and concerns, it became clear that the firm's governance seemed cumbersome and less effective than the principals generally wanted it to be.

One of the principals had been designated as the Managing Principal, and that role was expected to require the majority of his time. However, because design was the hallmark of the firm, he aspired to more involvement in client relationships and project design, the latter of which were, in the eyes of the other principals, not his strength. His involvement in client service and design reduced his time commitment to the Managing Principal role, and governance and firm management received attention mostly when the wheels squeaked loudly enough to get the attention of the other principals.

With the principals we explored various governance structures that might have applicability in the firm and concluded that the concept of a Managing Principal, albeit with an expanded set of responsibilities, made the most sense. We developed the position description and helped the principals decide among the options of who would best fill the role. The solution was to designate one of the other principals as Managing Principal and to structure the role's responsibilities to consume not more than half time, thereby allowing that principal ample client and project time. The success of the role required elevating the voice and role of the office manager and financial manager.

We provide regular counsel, in declining frequency as skills and knowledge increase, to the Governance Group (that is, the principals) and the Managing Principal, to help accelerate all principals' growth into the mode and roles to assure success of the concept.

Some observations:

  • The firm is primarily about design, and the governance and management solution had to minimize the distraction of design principals and staff, while still assuring the business viability of the practice.
  • The success of the structure requires high support of all principals and minimal second guessing of management decisions.
  • Principals are generally most effective when they spend the majority of their time doing what they do best and enjoy most. Forcing a square peg into a round hole is unlikely to work well, particularly if the square peg doesn't want to be in a round hole.