How to become an owner of a firm

By Gordon Davis

The Daily Record Newswire

"I want a piece of the rock!" Isn't that what we are raised to set as our goal and to strive for as the American dream?

People have many different reasons for wanting to be an "owner" -- control, prestige, money, a seat at the table. Whatever the reason, the question in any firm is: "How do I become one?"

That's where it gets a little fuzzy. That's where you hear: "be a rainmaker" or "be a senior manager" or "be a recognized leader in the profession or in the community."

It often comes down to someone saying, "We'll tell you when you're ready." In some cases, it feels like a secret ceremony. Someone may look at an existing group of owners and wonder how one or more of them became owners.

A typical track to ownership comes through successful management. People prove themselves able to manage projects, resources and clients, as well as effectively build relationships, bring in new work and complete work profitably. What more could be considered the standard for ownership? Isn't that what the business is all about?

Well, yes, but it's not enough. Successful companies are able to identify much more inclusive requirements for ownership that bolster the performance of the firm in both the short and long term. How?

The answer comes from two questions:

* Why do we want a broad base of ownership?

* What do we expect from people who are owners?

A broad base of ownership has several benefits:

* It retains people who are instrumental to the success of the firm

* It ensures a collective commitment to the success of the firm

* It creates a team of owners/leaders who join together to set the direction for the firm

* It helps develop a broad base of leadership in the firm

* It ultimately ensures the perpetuation of the firm

So, what do we expect from owners and what qualities do we look for when we decide to expand the ownership?

We expect owners to:

* Provide leadership to the firm at a variety of levels

* Live the firm's values

* Meet the highest standards of personal, professional and business conduct

* Excel individually

* Nurture new leadership directly and continually

* Understand and regularly review the firm's financial performance and condition

* Be a creative, constructive and engaged participant in making decisions for the firm and in setting the firm's direction

* Be focused outwardly and thinking about the welfare and future of the firm

* Be a "partner" with the other owners in the broadest sense of the word

So, what about rainmaking, profitability and being a good project manager? There is nothing in the list that precludes these considerations. But this list of characteristics takes us to a different level of owner expectations.

The list clearly includes business issues, but also speaks to the character and commitment of the individual. It raises the possibility that not all owners will necessarily be the top rainmakers or the best project managers. Rather, it suggests that all owners will share a broader, deeper set of characteristics that everyone in the firm will be able to see and understand.

So when thinking about adding owners, consider the kind of people able to lead the firm in the future. Think about what kind of leadership will ensure the firm's future. Think about the business values, the personal values and the professional values that drive the firm's work and how its people should be treated. And question the idea that it is OK for only some of the owners to share those values.

Each firm will want to compile its own list of owner expectations, but it is hard to imagine one that did not at least include the ones mentioned above.

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Gordon Davis, a partner in the Succession Consulting Group, for 40 years has provided strategic counsel to firms on ownership, leadership, management and transition. Contact him at 503-221-5306 or at gordon@gordondavis.net or gordon@successioncg.com.

Published: Wed, Apr 4, 2012

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