10 Updates
Of Rainmakers and Managers

Of Rainmakers and Managers

Jan 10 2014, 12:18pm CST | by

What’s worth more? Bringing in a huge account? Or managing the hell out of it and growing it tenfold? These are questions that many partnerships encounter when they start negotiating their operating...

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28 weeks ago

Of Rainmakers and Managers

Jan 10 2014, 12:18pm CST | by

What’s worth more? Bringing in a huge account? Or managing the hell out of it and growing it tenfold?

These are questions that many partnerships encounter when they start negotiating their operating agreement or when they decide to revisit it because things have started to feel unfair to one or more partners. It is, in fact, the line of questions I hear most.

First, some definitions. When I say “rainmaker,” I”m referring to the partner who attracts and closes big pieces of business. There’s a lot of networking, promotion and relationship building that goes into this role. It can be time consuming and indeed, all consuming because much of it happens after hours. When I refer to the “manager,” I’m talking about the person who manages the day-to-day of the project, whether that means overseeing a team or doing the actual work.

But if there’s no rainmaker, then there won’t be anything for the manager to manage. Well, that’s not exactly true. The portfolio might not be as big, but that manager will use the good relationships she’s built over time to bring in work. It may not be as sexy or as big, but it’ll grow slowly and steadily. And the manager might argue that a Rainmaker needs the manager to take care of the customer and grow the business. While that is true, it is also true that projects and accounts can be run by non-equity staff.

Navigating the issue starts with realigning egos. Will the rainmaker acknowledge that the other parts of the customer care life cycle are just as important as the close of the first deal. Will the manager assert the value that reliable, steady service contributes to the bottom line?

There is no right answer. You have to decide whether the partnership makes sense. What are you gaining by having a partner that you couldn’t get from a skilled employee? What does the other person bring to the table that increases the value of the enterprise? Do you share a vision for the business? Are there special skills that you need to ensure the creative or financial success of the organization? What kind of agreement will make you feel resentment? Don’t commit until you have explored how different scenarios might play out, and you come up with a framework that feels fair to all parties.

If you decide to stay in business, the next thing to talk about is whether you need a more creative compensation model. Here are three ways to go about it:

  • Equal equity: I’m a fan of the equal split because it’s simple but I understand that it requires an enormous amount of trust and a certain willingness to let occasional inequities go.
  • Lockstep: British law firm use a system that rewards seniority and loyalty, by awarding partners points as their tenure matures. Promotions, pay raises, and bonuses are awarded in a systematic way, and not necessarily based on merit. To incentivize performance, some companies do a hybrid in which a portion of the compensation is merit-based.
  • Source of Origination: In this system, the partner who brings in business gets extra credit and extra compensation to go along with it. This can be executed as  purely proportional, where you track all business and divide profits up based on who brought what in. Or you can share profits up to a certain point and then allocate any additional moneys above that point to be distributed based on origination.

    The downside of this approach is that it can be hard to define origination. For example, if an account comes in and a manager takes over, after the initial engagement is over, and the client renews, does the manager get credit or does the rainmaker still get a piece? Some partnerships impose time limits for origination or define it by contract.Another problem is that some accounts are prone to cycles and over the course of years, things equal out but the income discrepancy year to year can be high. Purely merit-based partnerships may experience extremely high turnover (or collapse) if the compensation model is subject to such volatility.Some companies have developed sophisticated variations of the Source of Origination model, and assign points to each part of the account life cycle, or to particular roles/tasks that deserve credit. Under this model, the rainmaker may get credit for bringing in the work and the manager can earn credit for retention and growth. Meanwhile, the system can also reward thankless, non-revenue producing work such as pro bono or administrative.

The last thing to talk through is just as important as the first two: What happens if one of the partners fails to make the goal? Are there penalties? Second-chances? Or is it game-over? My advice here is to err on the side of compassion and take the long view. Plan for bad things to happen, because they will . And go easy on each other because the reality is that it’s unpleasant to be the low performer and what a partner in distress needs is support, not punishment.

Tell me about how you handle compensation or tweet me @furiouslymandy with the hash tag #committed. If you’re willing to share more details for a survey I’m conducting, please fill out my questionnaire .

If you liked this article, subscribe to my site and Forbes will alert you every time I publish a new post.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat wa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

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Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by rob ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat toda ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Dat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southe ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mo ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year inv ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar S ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Ki ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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