Managerial chaos – Practice management philosophy

Jack Welch, in a regular column in BusinessWeek talks about the “Dangerous Division of Labor” at Hewlett-Packard caused by the separation of authority between Chairman of the Board and CEO. Welch (and his wife Suzy) contend that governance “experts” are mistaken when they promote placing these two positions in separate hands. There can be only one leader, not two, in a company to be successful.

Welch maintains that all companies (including law firms) operate best with managerial clarity, when everyone knows which way the company is going (it’s vision), and when there is no doubt as to who is the company leader (CEO). The Board’s functions are to use its collective wisdom to select the best CEO possible and to monitor the progress of the CEO to ensure that the goals of the company are being met; if not, then the Board must replace the CEO. But, aside from this, the Board must support the CEO. Failure to do so creates schisms in the company that lead to poor performance. Enter HP!

In larger law firms today, management efforts are being split. There may be a COO (usually a non-lawyer), a CEO-Managing Partner (and Chair of the Management Committee), and then sometimes a Chairman of the Board (usually a former CEO-Managing Partner).

If the Chairman of the Board is an “emeritus” position or a position with specifically designated responsibilities, this division can work well. However, if there is the expectation that the CEO is the primary leader while there is another ego-bound lawyer acting in a leadership role as Chairman who conflicts with the CEO, the firm can only have chaos and difficulty.

The organization structure of a law firm should be considered carefully and changed to meet today’s sophisticated patterns of skills and needs to sustain a larger law firm. No longer can the law firm, spread out across the country, and now the world, operate in the same consensus, collegial fashion it did years ago. Today, the larger law firm is a corporate entity that must have clearly defined roles of leadership — failure to operate in this way merely causes poor economic results and unhappy lawyers without direction (or worse, with conflicting direction).

Categorized in: Management