A multi-stage model of governance in ... - Cass Knowledge
A multi-stage model of governance in ... - Cass Knowledge
A multi-stage model of governance in ... - Cass Knowledge
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<strong>Cass</strong> Centre for Pr<strong>of</strong>essional Service Firms – Work<strong>in</strong>g Paper 004 - 2010<br />
bus<strong>in</strong>ess concept proved successful and with<strong>in</strong> three years the <strong>in</strong>itial founders<br />
(Margaret, Stephen, and David) had recruited a total <strong>of</strong> 27 staff on the back <strong>of</strong> rapid<br />
growth <strong>in</strong> client demand.<br />
From the beg<strong>in</strong>n<strong>in</strong>g, the founders acknowledged that they would want to realize their<br />
<strong>in</strong>vestment at some po<strong>in</strong>t. Recognis<strong>in</strong>g this, they established the firm as a<br />
corporation rather than the partnership, because it would be easier to dispose <strong>of</strong><br />
equity at a later <strong>stage</strong>. They also believed strongly <strong>in</strong> encourag<strong>in</strong>g staff to have a<br />
sense <strong>of</strong> ‘ownership’ <strong>in</strong> the bus<strong>in</strong>ess, both literally <strong>in</strong> terms <strong>of</strong> shares, and figuratively<br />
<strong>in</strong> terms <strong>of</strong> a sense <strong>of</strong> <strong>in</strong>volvement <strong>in</strong> decision-mak<strong>in</strong>g. So, with<strong>in</strong> five years <strong>of</strong><br />
establish<strong>in</strong>g BoutiqueCo, the founders had sold 10% <strong>of</strong> their shares to 10 <strong>of</strong> their<br />
staff (each founder reta<strong>in</strong>ed a 30% stake). To facilitate a wider sense <strong>of</strong> <strong>in</strong>volvement<br />
for all staff, both pr<strong>of</strong>essional and support, regular <strong>of</strong>fice meet<strong>in</strong>gs were held at which<br />
all employees discussed key management issues and agreed decisions together with<br />
the founders. Support staff as well as pr<strong>of</strong>essional staff participated <strong>in</strong> these<br />
meet<strong>in</strong>gs. In this way, the founders were attempt<strong>in</strong>g to mimic aspects <strong>of</strong> the<br />
Collegial phase, whilst nevertheless reta<strong>in</strong><strong>in</strong>g control.<br />
As the founders began to reduce their sharehold<strong>in</strong>gs, they also began to formalize<br />
staff <strong>in</strong>volvement <strong>in</strong> the management <strong>of</strong> the bus<strong>in</strong>ess by creat<strong>in</strong>g a management<br />
structure which they termed the Executive. This body <strong>in</strong>cluded five staff members<br />
and founder Margaret, who was CEO/Chair (see Table 2a for details <strong>of</strong> roles and<br />
membership). Founders Stephen and David had no formal role <strong>in</strong> the Executive,<br />
though David cont<strong>in</strong>ued to be responsible for the firm’s f<strong>in</strong>ancial management.<br />
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