When new partners buy out old ones, you have to outline specific duties before assigning leadership roles, among other considerations.
Our company’s journey likely shares a similar story with most AEC firms. A group of young and eager “visionaries” believed they had finally gained the necessary experience to launch their own firm. The early years were filled with varying doses of promise and uncertainty, but with luck and a few successful projects headlining the firm’s résumé, the fledgling company established a foothold. Eventually, the client list greatly expanded, and those two to three early sustaining clients now comprised only a small percentage of annual revenues.
While the company matured into a sustainable enterprise, management roles along the way were mostly borne out of necessity. The “names on the door” served as the primary leaders, and even though their duties were different, the lines defining those duties were often blurry to the staff. The confusion grew as partners were added, dividing management roles even further. As growth continued, new duties were generally assigned to meet a pressing need or by matching a partner’s personality with responsibilities more so than skill set.
Fast forward 22 years, and Morrison-Shipley’s now not-so-young visionaries found an ownership transition imminent with the buyout of a founding partner and the addition of a new partner. While plans were in place to address the financial aspects of the transition, the company was not as prepared for the string of leadership and management changes that needed to follow. The reasonable assumption was that we would move forward with management roles as they were, which we did, without one founder plus a new face. In hindsight, we should have used this opportunity to establish a more permanent management structure that could consistently be scaled for future transitions, knowing these would be more frequent in the coming years. Far more consideration should have been given to properly outlining specific duties rather than assigning general leadership roles.
AEC firms are often reminded to plan for ownership transition early and update those plans routinely. If I could rewind the clock 10 years, I would certainly give more consideration to the following:
- Define tasks before defining roles. Brainstorm a very specific list of management tasks for the firm’s entire operation (administration, marketing, production, etc.). Make sure to fill the gaps – very important. Group similar tasks and then determine specific management assignments.
- Choose management by skills, not by personality. The most outgoing person in the company may be viewed as a strong candidate to be the business development leader. But, what if their organizational skills are poor? A positive multiplied by a negative is always a negative.
- Not all partners are managers. Purchasing company stock should not provide an automatic promotion to management. There are times when emotions tied to investments can get in the way of making objective decisions. Know where to draw the line.
- Not all managers are partners. While perhaps an inside track to becoming a partner, not all managers are partner material. Most firms define specific criteria for partners (my top two are over the top dedication to the best interest of the company, and the ability to attract new business). Hold true to your partner selection criteria and apply it consistently.
- Show the next generation that opportunities exist. The key to the future success of AEC firms is attracting and retaining top talent – also known as future buyers of company stock. If these candidates cannot clearly see their future position within your firm today, they are certain not to stay.
Greg Shipley, P.E., is president of Morrison-Shipley Engineers, Inc., a civil engineering and land surveying firm with offices located in Arkansas, Texas, and Missouri. He can be contacted at email@example.com.