Roundtable Review: Expanding Business Ownership
As a business grows, it becomes increasingly critical to retain senior team members with deep, institutional knowledge, valuable client and collaborator relationships, and tailored experience in core business activities.
One of the best tools for retention is a structured business ownership program, which gives senior leaders a stake in business outcomes.
Push and pull dynamics apply – gaining the rewards that come with the business’s success, whilst also being on the hook when the business isn’t operating successfully – two powerful motivators that can keep senior staff on board for years to come.
While this practice is common in law and medical firms, it’s not as prevalent in other SMEs. Nevertheless, the same risks and dynamics apply.
In this Roundtable, Brick & Wonder members heard from two expert consultants in this space and discussed the notion of expanding business ownership by extending Profits Interests or Shares to senior team members.
Brick & Wonder members can access the full recording and session recap here.
Meet the Co-Leaders
Ralph is the principal consultant and founder of Teambuilders, Inc., where he has used his hands-on experience in the management of design organizations to assist firms in effectively managing change, and in developing more collaborative and productive working relationships, internally and externally. Ralph is a graduate of The Cooper Union School of Art and Architecture in 1962, of Harvard’s Graduate School of Design in 1964, and of The William Alanson White Institute’s Program on Organizational Development in 1997.
Bob is a Brick & Wonder member, and is the Chair of New York law firm Offit | Kurman‘s Construction Law Practice. He represents design professionals, and other construction-related firms, privately held businesses, and New York City housing cooperatives and condominiums. He acts as general counsel to a number of architects, landscape architects, interior designers, lighting designers, engineers, owners, developers, and contractors, advising them on general business matters and representing them in litigation, arbitration, and mediation. Bob is an Adjunct Professor at the Columbia University School of Architecture, Planning, and Preservation where he teaches Advanced Professional Practice to third-year Master students.
A lot of people in design professions really don’t want to be managers of a firm. And yet they can do parts of that process. If they can work together they can develop a shared leadership model – then they can succeed.
Ralph Steinglass, 9:43
What it’s dependent on, is the owner’s ability to let go of the control that they have over their firm. And by letting go I don’t mean giving it up, I mean sharing it. It’s harder than it sounds, especially for founding principles that have run their firms for 20 years or more.
Ralph Steinglass, 10:22
There are some people we’ve encountered who say, you know, when I’m no longer here, then the firm will no longer be here. And that’s a legitimate decision, if that’s what you want. But it’s important to let people know that if that’s your intention, so they can make their own plans about what they want to do.
Bob Herrmann, 14:49
[With one client] there was a management committee and these partners had a major say, in the work of the firm – what work should be done, what projects should be taken on, and they also made an effort to get these folks out there with clients. So there wasn’t always the need for the principle to be the person at meetings, presenting proposals, pitching business. So, I think there was a real recognition that this was the way to expand the firm ownership, get people involved in all aspects of the firm and management. It’s not just becoming a 5% or 10% owner, but it’s also becoming involved in decision making. And I think it’s been very successful.
Bob Herrmann 16:27