Partnerships – Separating Roles and Responsibilities

One of the biggest challenges in partnerships is ‘who does what’. A valuable tool to assist in identifying, separating and prioritizing roles for the partners sort in a constructive manner is what can be called the Role Clarification Model. This exercise consists of assessing the skill sets, interest and importance associated with the key functions/responsibilities for each of the partners. Ideally this exercise should be done before the business is established to avoid problems later. In some cases, the partners may even recognize that the partnership arrangement will not work for the business.

The model is based on the premise that all functions and activities in your business must be divided among the partners and resource staff in a prioritized way that best serves the business needs. These functions and activities obviously have different levels of importance to the success of the business and have different skills associated with them. The other premise is that people get into a startup enterprise ultimately to work at something they love to do.

The first step in assessing the role division is to list all the major business functions as they relate to your enterprise. Sort the functions in descending order of Importance to business success – 10 being business critical and strategic vs. 1 being minor and tactical. While many of the functions are the same for different businesses, there will also be some that are unique to your enterprise or market segment. It is also likely that these functions will change over time as the business goes through the various growth stages.

The next step is to have the partners rank themselves between 1 and 10 relative their Desire to handle a particular function – 10 being a passion vs. 1 being something a partner does not enjoy. Since work, and especially a startup enterprise, will consume most of your awake time, it is important that you enjoy it. The important thing in life is the journey, not the destination. So, find something you love and make a business of it.

Lastly, the partners need to rank themselves between 1 and 10 on their Ability to handle a particular role – 10 being experienced or even second nature vs. 1 being a distinct weakness. Be sure to spread out the ratings between 1 and 10 as much as possible.

Once this exercise is completed by the partners, it is time to begin dividing up the responsibilities. Highlight all the items that have both a Desire and Ability rating of 8 or above. If a partner scores high in all three elements, we refer to it as Unique Strength. Ideally, all the functions that rate between 8 & 10 in Importance, relating to their impact on the business, correspond to a Unique Strength of at least one of the partners.

An example of this model for an online application business would be:

• Importance – ‘10’ being business critical and strategic vs. ‘1′ being minor and tactical.
• Desire – Desire to handle a particular function. – ‘10’ being a passion vs. ‘1’ being something a partner does not enjoy
• Ability – Skill to handle a particular function – ‘10’ being experienced or even second nature vs. ‘1’ being a distinct weakness.

Notes:

• Spread out ratings as much as possible, 8-10 is high ranking
• Unique Strength (US) – When I/D/A are all 8 or above

Ideally there should be few, if any, overlaps in Unique Strengths unless it is desirable to have more than one individual focus on a particular area. For example, two partners may wish to be involved in sales or investor presentations. However, partners having the same Unique Strength can be a potential for conflict if the partners are constantly bumping into each other (referred to as a Jam-Up) on the same functions, while other critical issues in the business are ignored (referred to as a Gap).

Another downside is that inevitably one of the partners may need to give up one or more of their Unique Strengths to another partner and focus on their weaker areas at the expense of their own enjoyment of the business venture. This division of labor is even more important in family business partnerships where emotions can run higher.

The important thing to remember is that the Desire rating is ultimately the priority in the longer term. The partners may wish to handle a function in which they score high on Ability but low on Desire in the short term but ultimately this should be delegated to someone else. An example of this is that someone may be good with numbers, but this does not mean they would enjoy doing the accounting.

If not a Unique Strength of one partner, functions can be assumed by another partner or staff member who has a high Desire score. These functions offer development opportunities and challenges for individual learning. The Desire/Ability model is dynamic and can change over time. It is therefore important to revisit the model on a regular basis to document the changes in priorities.

A plan should be developed to delegate all the functions over time to staff that fall below 8 relative to their Importance and below 8 on Desire by the partners. This may even include functions with a high Desire but lower Ability if a particular partner has more pressing priorities. This frees up the partner(s) to focus on the things they love to do, are good at and are critical to business success (i.e. Unique Strength). A partner(s) focusing too much of his/her time on areas of weakness or lower priority may not leave enough time for the important things where he/she can make a difference.

Functions that have an Importance equal to or greater than 8 but are not identified as a Unique Strength by one of the partners, can be delegated. However, they still must fall under the direct responsibility of one of the partners and be managed closely. The functions that are less important should be delegated over time as the resources build in a company. Knowing what you need to delegate helps to fine tune the hiring process since you will know what skillset you are looking for.

If the model has been used properly, a great deal of resolution can take place on who does what and why a particular individual should be handling a particular function. Therefore, it is important that the partners have different skills and interests so that all the important roles are filled, and conflict is minimized.

In the extreme case, the exercise may surface the reality that the ownership is likely to fail because the partners wish to do the same thing in their enterprise.

Another important consideration, that we have not yet covered, is that of value systems, beliefs and expectations. These can cover a wide range of issues. For example, one partner may be prepared to work 70-hour weeks while the other is more into work/Life balance. One partner may expect to take several weeks off a year while the other does not. This can cause major tension if not clearly understood up front. One way to equalize a situation like this is to base the salaries on a 50-week year (2-week vacation). If one partner takes more time off, the annual salary is reduced proportionally. Similarly, the workweek can be based on 48 hrs. A partner that must temporarily work long hours on a regular basis to accomplish a specific project could receive some form of additional compensation.

There is not likely to be a perfect match-up of individual values nor is it necessary to have a successful venture. However, the better each of the partners understand the driving forces of the other, the more energy can be applied to business success.

In building an organization we naturally are attracted to people with similar interests and skills but that is not necessarily what the organization requires.

Bob Alsip

Over his long career Bob has held senior business development roles in both large corporations and SME in multiple industries including: medical devices and services, software development, environmental products & services and industrial & commercial products. After retirement he helped many organizations as both a consultant for his firm SoftAdvantage and
as a volunteer mentor. Bob is a graduate engineer.