It has long seemed to me that the corporate-land debate over whether
the CEO and the Chairman should be one person or two mirrors the law-land
debate over the relationship between the Executive Director (or equivalent)
and the Managing Partner. On the premise that we might learn
something from the corporate experience, here is another top-drawer
McKinsey piece on the promises and perils of same.
The conceptual goal should be to simultaneously separate and fortify the roles of: (a) keeping the trains running on time, and overseeing finance, IT, HR, and facilities (the Executive Director/CEO); and (b) deciding on strategic direction, practice group investment/scale-back, office opening/closing, etc. (the Managing Partner/Chairman, or managing committee/board of directors). Corporate-land has learned over a period of many decades that strategy and management are two different skills. Why should law-land presume to be removed from, or above, this insight?
Guess what the challenge primarily comes down to? People! Specifically:
- relying upon a commitment from and leadership by the executive
committee; - defining the proper roles ("sphere of influence") for each;
- getting the timing right;
- appointing a suitable person to each post; and
- making sure they co-operate productively thereafter.
None of this is revelatory stuff, but according to McKinsey it’s too
often honored in the breach. The difficulty stems precisely from
the radical behavioral changes required. Consider:
Intel chairman Andy Grove said that dropping the role of CEO was one of the most difficult transitions in his life but that he learned in this way to control a tendency to dig into details and dominate decision making. Another US chairman who previously wore both hats says that when employees turn to him for management guidance, he routinely refers them to the new CEO, even if he himself has the answer.
A solid approach to finessing the radioactive issue of “taking away responsibility” is
simply to incorporate the bifurcation as part of succession planning,
so everyone’s expectations are realistic upfront.
Once the split is in place, the devil is in the details, in making
it work. At the end of the day, a CEO (or Chairman) who doesn’t
realize in his heart that his only ultimate power is moral suasion
is doomed to failure. The Type A people at the top of an AmLaw
200 partnership are not shrinking violets and not amenable
to a command-and-control approach. As McKinsey says, it’s all
about the people. [Side note: As President of our Upper
West Side co-op for nine years, with a board made up of overachievers,
I have internalized this learning in spades. Not only are my
fellow directors whip-smart, they’re my neighbors and all of us are
unpaid. Repeat: Moral suasion.]
Now, the analogy between a sophisticated law firm and a public corporation
can be overstated, and in lieu of Delaware corporate law supplemented
by by-laws, the constituting document is fundamentally the partnership
agreement. The McKinsey piece is worth a read, though, if not
for one-to-one mapping onto law-land, simply for its dead-on insight
into the human challenges involved.
