Certified with Gazelles International Rick has generated results in the millions of dollars for his clients using Four Decisions TM tools like the One Page Strategic Plan , the Rockefeller Habits checklist , the Power of One and many others .
Rick provides Strategic Planning and executive coaching services for executives who are ready to drive positive organizational change . Rick serves his clients from Calgary and coaches across Western Canada .
equal ownership shares to pay themselves the same amount of salary . Although perhaps a well-intentioned attempt to be fair , it ’ s never fair to all partners as invariably , one has a greater impact on the business than the others . The fair thing to do is to treat partners as employees and benchmark each partner ’ s salary to those performing a comparable role in an external company . You can adjust the salaries annually according to the partner ’ s performance in the role , just like you would with any employee .
The principle is that when you are in a management or leadership role , you get paid a salary for the results you produce . When you ’ re an owner , you ’ ll receive a dividend based on what you own . The two shouldn ’ t be confused but often are . Also , paying market-level salaries has the additional benefit of removing an all-toocommon financial distortion from your results . Many owners pay themselves a below-market salary which only distorts the reality of their business . With a market-level salary , you ’ ll be better able to interpret and use your financials for good decision making .
ISSUE : CONFUSING ORGANISATIONAL STRUCTURE . Often the partners share roles or , even worse , reverse roles on an ad hoc basis . This leads to employee confusion over who the boss is and whether a partner who is not officially the boss must be consulted or listened to when the partner voices an opinion . It ’ s hard to be an effective employee when your boss has trained you to do things a specific way and a minority partner who is normally not involved in your work weighs in with a differing opinion . If this is the issue , the solution is to have clear functional accountability , understood by both partners and employees , that clarifies who is in charge of what function . Each partner must accept that ownership doesn ’ t entitle the partner to a vote on every management decision . Partners need to wear their ownership hat the same way shareholders of public companies do . Their job is to measure management ’ s effectiveness and work to support and enhance it or , if necessary , have management removed following proper governance procedures .
ISSUE : POOR DECISION MAKING . Frequently the partners haven ’ t mapped out how decisions will be made amongst
“ Partners need to wear their ownership hat the same way shareholders of public companies do .”
themselves . This is often a source of frustration for employees , particularly when there is no managing partner who is empowered to lead the firm dayto-day on behalf of the partners . An unclear decision-making process slows things to a crawl and looks like gridlock at the operational level as everyone stands around waiting for a decision . It disempowers employees . Top performers won ’ t accept it for long .
The solution is to clarify functional leaders ’ decision-making authority with the goal of developing them and delegating increasingly important decisions to them .
Doing this will leave only partnership decisions at issue ; these can be dealt with at regular directors ’ meetings .
ISSUE : ATTITUDE OF ENTITLEMENT This arises from a partner ’ s attitude of “ I ’ m an owner , therefore , I no longer have to work hard and I can ’ t be fired .” I ’ ve found this attitude to be very prevalent , and it ’ s certainly very damaging . It hurts the credibility of the leadership team and undermines those who are working hard at trying to build the success of the company . It leads to lower personal effort and more inequality between owners and non-owners . I believe minority owners must hold themselves to a higher standard than others . They must model the culture and the work ethic of the company . To avoid experiencing this issue , the partners need to agree on the culture they want and agree to be held accountable for being a role model to such a culture .
ISSUE : DIVERGING GOALS At a certain point in time , owners ’ interests always seem to diverge . Sometimes some have enough money and become risk averse while others want to keep growing the business . Sometimes there ’ s an age gap and those close to retirement are opposed to reinvesting in the growth of the business that younger partners want to pursue . The theory of loss aversion is alive and well in companies , and success seems to create more caution . Clearly the solution to diverging goals is to plan for it as a certainty . Professional advisors like lawyers and accountants recommend entering a partnership only when there ’ s a clear method of dissolving it or allowing for the fair exit of each partner . A good shareholder ’ s agreement will contain this method and is an extremely important document for all partners . u
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