Keeping an open book on the partnership
With the passing of the Limited Liability Partnership Act this year, firms can no longer be secretive about their operations. Giles Murphy says this greater transparency means they need to be sure of the efficiency of their management systems
It was once accepted that a partnership’s finances were a closely guarded secret and one could only guess at the amounts being earned.But this traditional view is changing. Greater transparency is seen by many firms as an opportunity to gain respect from clients and possible recruits. Besides, there is marketing value in moving up the league tables and inclusion inevitably involves some disclosure.With the passing of the Limited Liability Act in July and the opportunity for firms to incorporate as a GB Limited Liability Partnership (LLP), the need for transparency will increase. Reporting a firm’s financial position will become more standardised as businesses will have to follow the Act’s requirements. In today’s climate of greater transparency, even those organisations that do not convert to GB LLP status could face requests from clients or potential clients to see detailed financial information and even partners’ earnings.In addition to these external pressures, greater openness is expected internally, particularly if firms are to motivate and retain partners and employees. All of these factors are combining to engineer a change from the secretive past. With this openness, comparisons can be made between firms’ performance. Those responsible for results are increasingly finding that they are being judged by their figures which are having to be made more readily available.So what should firms do to ensure their internal systems help maximise the organisation’s potential performance?
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