9. Cooperation
It contains values such as cooperation, solidarity, generosity and unselfish mutual support.
“Stewardship” is a term that defined another basic value at Arthur Andersen, since it made a synthesis of the concept of generosity with the almost monastic ideas of acting orderly with diligence to serve other people without returns and to give way on individual rights for the general benefit of all.
The term “stewardship” can be used in English in different ways and usually one must consider the context to know what is meant: in fact, it is not frequent to associate it with the ideas of generosity and a cooperative disposition. However, for this book’s purpose, these ideas are very much connected.
If we look at dictionaries, stewardship is close to comradeship, solidarity, service spirit and even administration, understood as placing resources in common for a collective purpose. If we went deeper into the term’s origin and its evolution we would find that stewardship is about the personal responsibility that somebody undertakes in order to care for the interests of others with a long term view, beyond his personal interest. Under this meaning, the term has specific applications in several fields, such as “environmental stewardship”, fiscal (caring about how to make sustainable long term expense programs), religious (God as true owner of earthly goods), organizational…
In any case, this concept is always present in the declarations on corporate and cultural principles of the Arthur Andersen world. In the specific corporate language of the Firm, the term was used in two main practical aspects.
On the one hand, stewardship was mentioned when referring to partners compensation in the sense that it was done through a “cooperative” distribution of each year’s profits, once operating expenses were deducted from revenues, and also in the sense that the value of their share in the Firm did not contain an eventual capital gain coming from the hypothetical revaluation that could come from goodwill. In other words, access to the condition of partner was by its very nature a professional decision and not an investment or financial one.
As long as the partner was professionally active he was entitled to his part of the income but, when his working life was over, he had to sell his shares at the nominal value of acquisition, without capital gains. Obviously, the application of this basic concept was reasonably complex. Over time was subject to evolution and introduced mechanisms (such as the Early Retirement Payment) to compensate professional retirement, which happened by the way at relatively early ages (around 56 years old).
This system had the virtue of pushing the organization towards growth and implied a concept of intergenerational solidarity because the partners, once their full professional vigor stage was over, gave way to younger partners and did not pocket the accumulated “goodwill” when leaving the Firm.
This same financial solidarity concept applied to compensation mechanisms to partners across different practices and countries. In fact, the Inter-Firms agreements were aimed at making the individual retribution of each partner (based on a participation unit allotment scheme by experience and performance) closely approach the income level designed for their experience and competence, independently of their type of practice or country base. We do not pretend in this book to make a technical analysis of how this model applied over time, no doubt with complex issues and flaws, but the main point is that it came from a specific philosophy that was intentionally kept until the very end. Obviously this formula helped also growth and development, since it made easy the launching of new practices and the establishment in new territories that received “grants” during their launching periods on the expectation that they would eventually reach return rates similar to those of the rest of Firm.
This way of structuring the partners’ compensation mechanisms generated by itself a remarkable spirit of cooperation: between partners, between generations, between practices, between countries, etc. It was not so much that partners “got along well” or that they had strong ties, but that the model and working system encouraged and, if anything, even forced them to cooperate.
The Spanish practice took advantage from its birth of this way of understanding the organization. The first Spanish partners raised this solidarity principle in all conviction and took pride of doing so. In fact, for many years, the Spanish practice was a net contributor of funds to the international organization, thanks to its development and its success in the local market. This fact, even if it gave way to some internal criticism and some tension with the international organization, was after all a “seal of pride” well shared between the Firm’s professionals in Spain.
Furthermore, in the case of the Spanish market, this way of understanding the business and the global partnership concept brought about, early in its development, a bid for having the local business led by native local partners. This measure, compared with what was happening in other rival firms, contributed significantly to the business development, since it came along with the acquisition of national clients (and not only those clients referred by the international practice) and placed Arthur Andersen ahead of some competitors in spite of their having made their deployment in Spain earlier than the Firm.
This spirit of cooperation reached further than the pure relation between partners. The cooperation idea translated into daily practice. The key for all this to happen was that Arthur Andersen professionals belonged to a very pronounced matrix model organization with many segmental groups in which it was worth to cooperate. They felt members of groups such as the following:
- specific office they belonged to
- professional rank (assistant, senior, manager, ...)
- year they joined the Firm (those of 82, those of 78, ...)
- professional practice (auditing, taxes, consulting, ...)
- industry specialization sector (banking, energy, public sector, ...)
- customer working team (customer X or customer Y)
In other words, each professional had common interests in 5 or 6 “tribes” relating to different aspects of their career in the Firm: training, customer, methodology support, etc.
Inside this context the option of no cooperation would be professional suicide. To contribute from experience, to interchange information, to share responsibility and mutual help, were part of daily work as natural elements.
On another side, these “segments” or “tribes” were strong enough even if they had just an informal character and they generated across groups very fluid relational schemes, which supposed a very powerful lever to favor business development and the launch of new projects.
Building up this spirit of cooperation is not easy and, above all, is very complex to maintain over time with the organization growing.
The inter-practice compensation systems work well and help new activity development while the eventual imbalances are small or short-lived. Certain practices give “grants” to others as long as there are reasonable expectations of future results that will compensate the investment. If structural imbalances develop, lasting in time, the compensation system suffers very strong tensions, either because it cannot support non-profitable activities, or because (the case of Andersen Consulting) a centrifugal movement develops.
International solidarity contributes positive elements to growth and organizational development, however it also produces a tendency to lead the most experienced professionals out of the organization when they have covered their theoretical productivity cycle, making thus difficult to retain expert talent that can be very valuable, especially in crisis management situations.
Finally, as long as an organization grows, maintaining a cooperative spirit can lead, wrongly, to the creation of bureaucracy set on keeping the cooperation systems in an artificial way and not truly linked to the business natural needs.