Partners in advisory firms often find themselves struggling to find consensus and make decisions about everything from how they pay themselves and their employees to how they will grow their firms. As a consultant, I often hear from owners looking for external guidance to help them through these decisions. After one or two conversations, it becomes clear that the first thing that needs attention is alignment among partners, not a compensation plan or business development strategy.
Leo Tolstoy observed that “All happy families are alike; each unhappy family is unhappy in its own way.” I’ve found the same is true of many advisory firms. The ones that are thriving tend to be characterized by partners who understand and value how they complement each other, who work together to build consensus, who can have difficult conversations, and who share a clear picture of what it is they are trying to build.
In contrast, firms that are struggling exhibit all manner of dysfunction and underlying causes. But if I had to pick two of the most common themes, they would be a lack of alignment around a common vision for the firm and an inadequate appreciation of what each owner brings to the table and respect for the abilities of other partners.
Let’s take the first problem. It’s not uncommon for partners in advisory firms to resemble the members of the fictional band in the classic mockumentary This Is Spinal Tap. In Rob Reiner’s sendup of rock band pretensions, the band’s members have diverging visions that range from wanting to make serious and sophisticated music to valuing spectacle and on-stage theatrics. The chaos results in unsold albums, epic stage set failures, and a revolving door of managers who take the blame for the band’s failings.
Avoiding the fate of Spinal Tap takes some work on clarifying the vision for the firm, but this often gets overlooked. After all, the firm in question is usually a good size, has been in operation for years, and has a client base and presence in its community. Vision seems like something for firms just starting out. Many firms fall into this vision trap. But deliberately carving out time to work together to build a clear picture of what they want to build often reveals the limits of the vision and often diverging views on what the firm should be or become.
Gaining consensus on vision is the first and most fundamental step to righting the ship and creating a sound foundation for other decisions that must be made. For example, it’s hard to know if we should pay at the top end of the market if we don’t have a clear vision for wanting to attract the very best talent so we can be a firm that is innovating and performing at the highest level.
A good vision, one that can truly unify the partners, is specific and detailed. It will not just state, for example, that the business will be a leading financial planning firm, but will specify where the firm will be known and by what types of potential clients.
What about the second problem? Some firms resemble the dueling Gallagher brothers of the mid-90s British band sensation Oasis. Like the Gallaghers, they usually have very different talents, just as brash, exciting front man Liam was a strong contrast with hard- working songwriter Noel.
Oasis’ internal tensions resulted in memorable, very public meltdowns, including Liam heckling his brother from the audience during an MTV Unplugged taping. Advisory firms don’t often have the same spectacle in their disfunction, but I have watched partners tell a peer they aren’t invited to a meeting they show up to, mutter under their breath that they shouldn’t let the door hit them on the way out, and then proceed to spend the entire meeting complaining about that partner.
Firms tend to get into trouble when, much like Liam and Noel, one or more partners do not understand, or do not respect, the complementary strengths they bring to the table. For example, a partner with great strength in investment management may not respect a peer who excels in business development, feeling it is the strength of the firm’s investment strategy that really brings in clients. This is a failure to understand that a firm needs more than one skill set to survive and thrive.
Along with discussing the vision for their firm, partners should discuss the skills the firm needs to enable that vision, taking an inventory of them. This not only reinforces the value each brings to the table but also helps the firm spot any skill gaps that need to be filled through hiring, internal talent development, or a merger or acquisition. And it brings clarity to internal succession planning, helping the partners identify skills they need to be prepared to replace.
In any business, there is a risk that we will try to solve a problem that is a symptom of another, bigger problem. Or that we will try to force consensus on a decision about which we have misgivings or do not really agree with in the interest of “getting it done.” If there is a struggle to find that consensus, it’s good to revisit fundamental questions around vision, alignment and partner dynamics to create a stronger foundation not only for the question at hand, but the future of the firm. And with some hard work, even a firm experiencing real struggles with alignment can come to resemble Tolstoy’s happy families rather than the Gallagher brothers.