Strategy at Grant Thornton Canada

Canadian Journal of Administrative Sciences, Dec 2004 by Hutchinson, Ian, Vibert, Conor

An Interview with Alex MacBeath (CA, MBA), CEO of Grant Thornton Canada

Ian Hutchinson and Conor Vibert: Can you provide a brief history of Grant Thornton?

Alex MacBeath: Grant Thornton began business in Halifax in 1939. Harvey Doane, a sole practitioner, founded the firm that was to be known as H.R. Doane and Company for more than 40 years. From its initial base in Halifax the business expanded across Atlantic Canada, initially through a series of mergers and new office openings. During the 1960s and 1970s the firm expanded into Ontario and the West, mainly through a series of mergers with local firms. Three major events during the 1980s and the 1990s shaped the firm today. The first occurred in 1981 when we associated with Raymond Chabot Martin Par�, the largest independent firm in Quebec. Also, during 1981, we were the third member firm to join a new international organization of independent accounting firms called Grant Thornton. Ten years later in 1991 we merged with another large independent, Pannell Kerr McGillivray. They had a very strong presence in Western Canada and in Ontario but not in the East or Quebec, so in that sense it was a very good fit for us. These associations really created the firm we have today, with a presence across the country, in all the major markets of the country, and in association with other independent firms that provides strength and breadth internationally.1

IH & CV: Grant Thornton is a professional services firm. How is it structured differently from the traditional corporation?

AM: As compared to the traditional corporation, professional services firms possess some unique features. One difference is that Grant Thornton is a partnership. Its partners are the owners, the managers and the producers of work. In that respect it is almost as if all the shareholders of a corporate entity show up for work everyday to make strategic decisions and then carry out the decisions. Another feature of this partnership structure is that organization-wide change can be difficult to achieve. Such change really requires the active "buy-in" of the entire partnership. On the other hand, when that "buy-in" is attained there is a tremendous opportunity to leverage the power of the partners, making it possible to move ahead more quickly with significant change than might be the case in a traditional corporate environment. Professional service firm CEOs (executive partners), even though they occupy formal leadership roles, do not have substantial authority by dint of position. Indeed, in these roles one must lead and manage through influence not through the position itself.

IH & CV: Can you provide any further insight into how the GT partnership governs itself?

AM: How do you govern and manage a firm where there are 180-200 partners, all of whom are owners? Let me speak about that on two different levels.

First, at the governance level, we have a policy board. Our Board of Directors comprises 12 partners who represent partners from across the firm. They are elected by the partners themselves and they are there for three-year terms so there are four new partners that come onto the Board every year. That Board has two fundamental roles. One role is as a representative of the partners. A second is to develop the vision and the strategy for the firm itself. Sometimes those roles are in conflict given that the Board also has responsibility for the allocation of income among partners.

second, at the operational level we have 15 "office clusters." Accordingly we have 15 profit or reporting centres. That is where the practice is managed. Some of those office clusters are large and there may be a management committee within that cluster. If you go back 10 years we had a regional structure. We had divided the country into 44 offices in six different regions. There was a regional managing partner responsible for each of those areas and that created a focus on local strategies for a local market. It helped develop regional capabilities, but it was difficult to leverage this across the country. What we've done recently is try to break down those regional barriers and create a management team that has an operational focus as well as a service line, area of practice, and functional focus. Today our management committee comprises several partners who have an operational focus, someone who is focused on developing the service and the products that we offer, and someone who is responsible for the HR piece, which is such a critical element of what we do. That structure supports our efforts to develop well resourced office clusters capable of serving the dynamic needs of our clients.

Interestingly, this clustering of offices also gives us more critical mass within a specific region and allows us to develop new services and new products on an ongoing basis. As a result, our clients have access to the best resources of the firm, not a 360 degree partner who has some knowledge in a whole series of areas, but rather a 360 degree firm within which we have a number of professionals delivering the desired services.