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Long Live the King

Dear Dave
I am one of five original principals in our 55-member engineering firm. By any measure, our fifteen years in business together have been successful and rewarding far beyond any of our initial expectations. “Carl” has served as company president since day one. Based on Carl’s somewhat strong personality and the fact that we’ve been so continuously successful, the other four principals have mostly deferred leadership to Carl (probably to a fault) on all issues of company management, administration and finances. Carl does keep us broadly informed and asks for our input from time to time but, at the end of the day, it is clear Carl is making the business and management decisions for the group.

A couple of months ago, Carl announced his intention to step down and retire at the end of next year and has challenged us to come up with a plan for how we will function after he is gone. To his credit, Carl’s point is that it is not his decision to make as it will be the four of us who’ll need to live with whatever provisions are made. No one individual principal stands out as an obvious choice to succeed him in the role of president as we have come to know and accept it. What can you suggest?

Dear HR
Carl fits the classic description of a Benevolent Dictator. In exchange for tranquility, security and success, the subjects willingly or otherwise forego some of their individual rights and privileges. If, as you say, you are unable or unwilling to anoint a new king, you’ll need to move toward a more representative form of governance.

One approach would be to inventory and then distribute each of the management and administrative functions now done by Carl between the four principals. In the year remaining before he retires, Carl can work with each principal to help them learn what they don’t already know in order to accomplish each task assigned.

With a distributed system, it is still necessary to have one person who is responsible to coordinate overall activities and to make sure each task is being done in a timely and effective manner. Communication is crucial to work successfully in a system of distributed management responsibilities. Due to the need for a high level of communication, distributed systems have a tendency to be very time intensive and therefore expensive in terms of the amount man hours invested to accomplish management processes and activities.

If the committee-like nature of the distributed system does not feel comfortable, you might consider a revolving presidency-managing principal approach. This has similarities to your current system with a couple of important differences.

First, unlike Carl’s open-ended designation as president, the managing principal is elected for a specific term of office, usually at least two years. Two years allows enough time for the managing principal to learn the job and settle in. At the end of the term, an election is held and a new managing principal is elected, or the existing managing principal may be returned to office.

Second, the authority of the president-managing principal to act unilaterally is well defined and limits are established. Decisions or commitments beyond the scope of the position are brought to the principals as a group for their review and approval.

It’s possible to combine elements of a distributed system with those of the revolving presidency-managing principal approach. The permutations are endless and you should experiment until you find a system offering the best combination of comfort and efficiency. I would suggest the important thing is for each of the principals to be more involved in the management and operation of your firm in the future than you have in the past. As you’re probably now coming to appreciate as you prepare for his retirement, your historical dependency on Carl could have lead to a potential disaster had something unexpectedly happened to him along the way.

Wahby and Associates