Hierarchy, a great model for manufacturing companies and other businesses, is a poor fit with talent-driven organizations such as professional service firms. How should a professional service firm organize to achieve its strategic goals in today’s business environment? In a partnership, there is the belief that “we’re all in this together, no matter what.” This sense of shared destiny historically has been the source of power for partnerships. Benjamin Franklin articulated the principle in 1776, when he reminded his fellow patriot rebels: “We must indeed all hang together, or, most assuredly, we shall all hang separately.” The partnership structure proved useful to professional service firms because it fostered alignment between the professionals and the organization and strategy of the firm. It achieved this complex alignment, almost unconsciously, and it was able to do so for two reasons – strong peer relationships and the participatory processes of partnerships. Today, growth, globalization, and changes in ownership are undermining the historic partnership structure and challenging the partnership spirit. Professional service firms must make decisions about their structure and governance that reinforce as much as possible the two essential attributes that partnership has always created: strong peer relationships and participatory processes. Partnership of Peers Talent-driven companies, like professional service firms, limit the height of their organizational pyramids and try to create a flatter structure that reinforces the sense of governing through a partnership of peers. Peers are not necessarily equals: Some partners hold larger ownership stakes than others, or deliver more outstanding performance year to year, or provide better counsel to their partners and junior staff. But despite these differences, the mindset is basically democratic – “we’re all partners here.” So for all the healthy competition among partners, in the best firms there is an equally healthy measure of collaboration and cooperation in the interest of the firm. The Power of Participation The notion of participation, of actively involving senior stars who don’t occupy formal management positions (as well as those who do) in key decisions is firmly ingrained in the governance process. Senior stars expect to be consulted on decisions that affect them personally. If they are not, they will voice their dissatisfaction or show it by moving toward the door. Therefore, by necessity, the governance of professional organizations has to be more inclusive and participatory than traditional corporations. There is a dark side to participation. Broad participation in decision-making and consensus building slows decisions down. It can also make it difficult to reach a definitive conclusion when so many players are involved in the decision process. Also, participation can diffuse responsibility. If everyone is in charge, no one’s in charge. In professional service firms where leaders are overly deferential to their partners’ views, the decision-making process often seizes up. More than Structure & Governance Organizational decisions that reinforce peer relationships and participation can help a firm nurture the alignment between its stars and objectives, but they are useless without the basic underlying belief in the principles of partnership. How can firms maintain this belief and commitment to partnership when so many forces are at work eroding them? Ultimately, the answer lies in culture.