Firm of cards: The politics of partnerships

by Richard Crump

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04 Sep 2014

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House of Cards

"POWER is a lot like real estate. It's all about location. The closer you are to the source, the higher your property value." We can perhaps forgive Frank Underwood his words. He is, after all, a fictional character from Netflix's Emmy Award-winning hit House of Cards - a Niccolò Machiavelli for the modern age who shares a surprising number of traits with successful managing partners.

Accountants are not the cold, calculating and power hungry politician portrayed by Kevin Spacey in the show. Nevertheless, politics runs as the lifeblood throughout professional service firms and, for those that wish to make it to the top job, becoming a political animal is a pre-requisite for success.

The inevitability and prevalence of politics in accountancy firms is not something that is normally acknowledged or understood by the professionals that work within them. Indeed, the words ‘power' and ‘politics' are generally avoided as anathema to the sense of collegiality within the partnership, yet they are ultimately rife with politics and can only survive as a result of careful calculations about power dynamics.

This point, so eloquently put, was made by Laura Empson, a professor in the management of professional service firms at Cass Business School. In her report, Reluctant leaders and autonomous followers: Leadership tactics in professional service firms, Empson examines how firms actually ‘do' leadership and, in particular, how individuals establish their claim to be considered a leader.

The study identifies three distinctive leadership tactics which are characteristic of professional service firms - whether in accountancy, law or consulting; namely retaining legitimacy to lead through market success, enabling autonomy while maintaining control and interacting politically while appearing apolitical.

"Ultimately it comes down to the nature of the power structure," explains Empson. "Power belongs to people who control access to key resources, such as valuable client relationships. This means that power is diffuse in these firms. So how do you build consensus among powerful individuals? Politics are a central part of this process."

Power trip

In corporate structures it is obvious that ultimate power lies among the executive management team, with a board of directors exercising a check on that power. In accounting firms the distinction between leaders and followers is more problematic because power is more widely distributed.

As Empson points out, in this type of firm "everyone thinks they are an expert and no one wants to believe that anyone has power over them". Traditional hierarchies are replaced by more ambiguous relationships, which are perpetuated because the most influential individuals are those that have access to key resources - such as heads of major businesses, business units or control of key clients.

"Some partners want to be led," says Jeremy Newman, the former managing partner of BDO who now chairs the Audit Commission. "Longer standing partners say ‘it's as much my business as your business'. You have to work out what leadership tactic will work."

The first ‘tactic' in order to be viewed as a potential leader - and thus with a greater chance of succeeding in a contested election - is to win the respect of colleagues through winning work. Market success is a proxy for how fit someone is to lead the firm. Technical expertise, while respected, is valued most when it is turned into commercial success.

As one interviewee in Empson's research explains: "You always generate respect if you are a ‘heavy hitter'. If you bring in lots of business you generate respect."

This much was true for former Price Bailey executive chairman Peter Gillman. According to Gillman, when he was awarded the job he was "one of the best business developers with the biggest portfolio". But why does flogging work to client make for a good leader? According to Empson's research, it demonstrates that they are more than just technicians; they have the commercial acumen necessary to lead their partners.

Partners value this as it will ultimately generate income for themselves, explains Empson. "A successful business generator creates a halo effect for his or her colleagues. Those who prove they can "feed" their partners are also deemed to be qualified to lead their partners," she writes.

Here comes the tricky bit. Commercial success must be maintained even after being accepted as a leader. "I did need to remind partners new to business of what I achieved," remembers Gillman. The difficulty is because, all too often, managing partners end having to give up the old day job in order to run the firm.

"I made a decision two years in that I couldn't do both roles," Gillman says. Like having a local MP who makes it into the Cabinet, Gillman's clients were originally flattered he was leading the firm, "but they soon came to realise how much more difficult I was to get hold of".

"I couldn't give them enough attention," he says. "It had a shelf life"."

The greater good

For the likes of Gillman and Newman, giving up fee-earning can be a wrench. It is after all the reason many people become partners. Yet it is out of this conflict that the idea of the ‘reluctant leader' emerges.

In the theatre of politics the Speaker of the House of Commons is ritually dragged to the woolsack. Prospective managing partners are dragged, or at least appear to be dragged, to the top job. For all the talk of giving up the much vaunted client work for the greater good of the firm, the reality is the partner in question is likely to be highly motivated.

As one participant in the study says: "I decided to put myself forward to be elected as head of practice when I realised I was fed up with lying awake at night feeling angry with the guy who was running the practice. When he put himself up for re-election I realised I had to stand against him."

It is now that the politicking really begins. According to Gillman, characters in the firm that are known to "speak their mind" often lack influence. As a result the firm may end up with the compromise candidate. "The nucleus of partners goes for someone in the middle and you get your reluctant leader. It doesn't lead to effective leadership," Gillman says.

Newman at BDO says he "was sort of" a reluctant leader in that he originally chose against standing as managing partner, despite having some forthright views about the firm. "A few partners came to me and said ‘you've got to put up or shut up,'" Newman says.

He duly did. Hustings meetings were set up so partners could ask questions of the candidates in a public forum. However, what goes on behind closed doors is arguably even more important. "Some partners, if I hadn't had private one-on-one meetings with, I would not have had their support," says Newman. 

Gillman, who fought his first election against two other candidates, agrees that if too many discussions take place behind closed doors "the election could become a fait accompli". However, private discussions allow you to "get the views of what the partners are and build up a picture of whether I am likely to get fair degree of support".

A subtle art

In order to be accepted as a leader in this fashion requires the most subtle of leadership tactics. Leaders must appear to be apolitical, while at the same time adopting political language and tactics to garner support.

Political behaviour is associated with scheming and deviousness but it is not inherently bad. In these kinds of firms it is simply an organisational fact of life, Empson says.

Nevertheless, an aversion to politics remains. As one respondent to Empson's research says: "To me politics smacks of alliance-building in the corridors, in offices behind the scenes. It smacks of people engineering agendas. I would like to think we don't have those behaviours."

And politics can mean different things to different people. In professional service firms, authority is collegial and fragile, it rests with the group rather than the individual. As such it is important to handle people in the right way. If you know you're in an organisation that is overtly political you have to ‘chummy up', explains Gillman.

"Politics is where people say something they don't really mean to achieve what they want or because they don't want to upset power brokers within the practice. You say ‘I like your idea but I would like to add a few things'. What you mean is ‘it's a daft idea'. Being economic with the truth in that way is likely to lead to all sorts of future problems, at worse being elected under a false premise."

The nature of politics within accountancy firms reflects the diffuse nature of where and how power is held. Because of their collegiate approach to business, running a firm requires a greater level of politics than at a corporate. To be accepted, leaders must appear to be apolitical but, as Empson's study emphasises, "successful leaders in professional service firms are in fact constantly engaged in highly political behaviour - the more so because it is not apparent".

Accountants may deny any sense of engaging in the what is considered by some to be the 'dirty art' of politics, but are highly politicised animals.

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