Blog3

Changing the model of professional services networks - one firm, one vote

In my last blog, I wrote: ‘Partnership is not a great management approach at a single office level. And when you translate that into the international arena, it is a disaster. Democracy within the typical network business model is all very well in theory, but in practice …’ That comment certainly struck a chord, and so for the next few blogs, I plan to focus on various aspects of network governance where democracy sometimes emerges … but not always with the desired results.

With many networks set up as membership organisations, the concept of member participation in the governance process is often embodied in the constitution. Indeed, I know of one network where each member firm, whatever their size, gets one vote on each important decision. And, if the network wishes to appoint a new member firm, then 75% of the membership has to vote in favour. Very democratic, perhaps, but a complete nightmare. Not just because of the administrative problem of trying to get that number of firms to actually vote, but it totally undermines the position of the team whose task it is to appoint new members. What do people from the other side of the world know about a particular firm that someone who has visited and reviewed that firm does not?

But talking to firms wishing to join an international network, there is a naive expectation that they will somehow be involved in such decisions. This is ridiculous – and not only represents a disproportionate waste of central resources, but also creates an environment that can foster political wrangling.

It is perfectly clear to me that the primary business interest of most thinking partners in firms that are part of an international network is not the network itself, but the firms in which they are partners. And so it should be. They simply don’t want to waste their time having to think about voting on issues about which they have no real knowledge or interest.

Of course, the central management of a network needs to be considered and fair, but never confuse this ‘fairness’ with the ‘democracy’ that those that have not really thought through the concept expect.

I once discussed this belief with a network, whose development was being stifled by the need to adhere to the excessively democratic and inclusive nature of their membership agreement. They acknowledged the problem, but said: “We couldn’t possibly change – the members would never accept it”.

In my experience, strong members will always accept change if it strengthens the network as a whole. It is the weak members who will fight against it. And who wants weak members?