From observation over many years I have found that the firms that have strong, charismatic, visionary, committed, ethical, fair and hardworking managing partners/directors tend to drive the firm to achieve stronger outcomes. The benevolent dictator if you will.
Why do dictators work? They can make decisions. They can tell people what to do. They don’t need to worry about compromise. They can marshall all the resources to their goals. If they make good decisions it can be very effective. Of course, the reverse is also true - they can make bad decisions, marshall resources to the wrong projects and create disasters (eg the Soviet Union).
Benevolence is also hard to find. Power goes to the head. The 20th and 21st centuries are full of dictators that have had catastrophic impacts. So we fall back to democracy since, as bad as it is, the risks of the alternatives are much worse.
So while I like the idea of the insightful benevolent dictator running the firm, the risks are too high for most firms to contemplate. However, I do not shy away from the concept of an empowered managing partner/director with appropriate oversight from a board which, depending on size, might be the other partners or a subset of the partnership group.
One thing is for sure I have little time for committees. It is almost impossible to make a committee accountable. When a committee doesn’t achieve some goal, watch the committee members point to each other as to who is to blame. Many firms create committees for all sorts of things - training, IT, process improvement, QA etc. It is good that these things are being addressed but in my mind, a committee is not the way to do it. I would appoint a single person who has responsibility for the particular topic. They then co-opt people as needed to get things done. It might be one group for one particular project and another group for a different project. All the while, however, it is the individual that has the responsibility and who is responsible for the outcomes. They are responsible for managing the people co-opted to ensure the outcomes are achieved.
Overall I see the ideal governance structure along the following lines:
The body of partners set the strategy, appoint the board and the managing partner. They make decisions about equity.
The board holds the managing partner accountable, agrees the budget and the business plan. It appoints people to head up particular areas of responsibility (QA, Training etc). It meets regularly to review performance and address issues as they arise.
The managing partner runs the business with the operations team. The managing partner is the key driver of strategy and ensures that the business is running like a well-oiled machine. The managing partner keeps partners and teams accountable for their individual performance.
In smaller forms the whole partnership group would generally perform 1. and 2.
None of this takes into account personality. While one can have in mind the right pure model if you don’t have the right personalities it all becomes a bit academic. If you don’t have a person with the right leadership skills many firms would revert to the board taking over the role of the managing partner/director with an operations managing reporting to that board.
Sometimes, no-one wants to shed clients to take on the role of the managing partner/director since, when their term is complete, they’re concerned that they wouldn’t have a full client load and would have to build it again. Of course, the benevolent dictator doesn’t worry about this since they are thinking they are a managing partner for life.
It is clear to me that except in exceptional circumstances the Managing Partner/Director needs to be an equity holder. They need to be very special people to attain and retain the respect of the partners if they’re not. All too often partners ignore the attempt of non-equity holders to manage and keep people accountable. Many external appointments fail to gain an effective appreciation of the firm culture. Once respect is lost it’s almost impossible to win back. There is more confidence in one’s fellow partners in the role - “we’re in this together”, the person is part of the firm’s DNA and has a greater innate understanding of the firm.
I often help firms sort through these challenges. Often it is difficult to get partners to say what they’re really thinking. A third party can be a good way to seek out individual views to determine the best governance and operational structure and the roles of particular individuals that have the support of the partnership group and the best chance of success.
So perhaps it’s not the benevolent dictator for you but creating the best possible governance and operation structure for your firm with the right people is a critical success factor.