Which Form of Organization Suits Best for a Professional Services Firm?
March 20, 2015
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Like the majority of western professional services firms, we are advocates of limited liability partnership rather than simple limited liability company. This is the key element of firm’s management proven not only by theory of management, but also by practical experience of the biggest international consulting companies.
1. What brought such practice to life?
The thing is that employees are the main asset of the service company. The firm can become successful only if it unites a great number of strong personalities willing to lead the team and assume responsibility for the company’s future. Classic management theory supports the idea that following long years of honing their skills and having reached the desired level of expertise, an employee, especially a professional consultant, becomes interested in more general tasks. Novelty and recognition come to light for him gradually overshadowing the material aspect of the job. At this stage status of a partner becomes more encouraging factor than money. In this regard the most important difference between limited liability company and partnership becomes of issue.
Only the expert who sincerely loves what he does is able to become true professional in any sphere of consultingMaking firm’s partner not only marks the next turn in one’s career, but implies additional personal responsibility before other partners and employees for the firm’s future. Only the expert who sincerely loves what he does is able to become true professional in any sphere of consulting. Personal advancement sooner or later leads to an understanding that success of one employee is integrated with the success of the whole company. This, in turn, triggers the desire to be as much involved in the firm’s operations as possible.
2. How ready is Ukrainian business for implementation of such western standards?
In Europe limited liability partnership is a golden rule for professional services firms both small, medium or international concerns. In Ukraine situation is quite the opposite. While there is only a few professional services firms in our country, there are even less of them valuing the institute of partnership at all, with the majority sticking to regular limited liability company form of organization. However, almost every leader in each particular field of consulting has already come to understanding of partnership’s value.
3. Does this mean that they owe their success to such form of organization?
That is not exactly true. Implementing the system of a partnership and becoming a leader are interrelated factors but they do not define one another. They are more like two sides of a medal. The gist of a partnership lies in the following. An employee, who shares the company’s values and loves his occupation, becomes firm’s partner to facilitate firm’s development and encourage such attitude in other employees who in their turn, benefit from mentor’s experience and personal example. In the future they have an opportunity to make partners themselves to follow in the footsteps of their mentors. The income of each partner in particular and the company overall are also bound to grow.
Of course, one can imagine that the abovementioned scenario is put to life in the regular limited liability company, for instance. From my point of view, this is hardly possible. A successful professional in the service industry will most likely sooner or later leave the company where he has been brought up if there is no option for him to become a partner.
4. How does BritMark implement this model?
It’s safe to say that partners devote much time to personal advancement of other employees. Of course, any partner could have spent it to close his own deals and receive immediate profit. However, it’s hard to overestimate the benefit of the team’s development in the long run.
Moreover, any employee who stands by the corporate values is entitled to partnership.
It should be mentioned, though, that long-term experience of working at a company and impressive personal achievements are necessary attributes of partner but they do not guarantee an employee this promotion as they cannot substitute enthusiasm, belief in the team and sincere devotion. At the same time pro-active attitude, belief in company’s spirit and values will most definitely result in certain growth of both employee and his company.
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