Strategies for Dealing with Underperforming Business Partners

A business partnership equates to a shared responsibility. It’s an arrangement whereby two or more people contribute individual properties, skills, duties, performance, and knowledge, among others, to the business with a goal in mind.

Losing one of those, especially performance, signifies your partnership may dissolve.

Every business or firm always has a productive partner and an underperforming one—a partner whose performance diminishes over time. It’s a challenge that no managing partner wants. However, ignoring these issues will only lead your business to more problems, especially in terms of profitability.

The sooner you address the issues, the quicker you’ll find solutions. In this article, learn what underperformance in partnership is and the strategies to resolve it.

How you understand underperformance generally equates to a better understanding of your company's expenses in your spend analysis. Underperformance means performing less or failing to do what’s expected. It means more expenses for your company due to the loss of work.

Meanwhile, in a business partnership, a partner’s underperformance depends on the requirements written in the partnership agreement. It could be a list of criteria the business expects you to meet, the terms of the agreement, or the performance guidelines of the partners' duties. Failure to do so only means underperformance.

It is important that in every business, these criteria, guidelines, and terms are well-defined in the partnership agreement so that you can carefully review who the underperforming ones are. Generally, or most of the time, underperforming partners frequently bill fewer working hours than the others or have failed to meet the client’s expectations more than twice.

Moreover, they can be partners with multiple mismanaged engagements or have failed to improve and develop a self-sustaining attitude towards projects, regardless of the chances taken.

It is essential to know who these partners are so that a managing partner can introduce interventions that can either alleviate the problem or stop the escalating issues all at once.

First, you must acknowledge that there is an underperforming partner. After that, discuss the issues with them. Sometimes, many managing partners forget that discussing the issue right away with the concerned partner generally assists in pinpointing the growing problem.

Talking with your business partner helps you understand their point of view, the issues that trouble them, and why they can’t perform well. In this manner, as a managing partner, you can assess what you can do to help.

Moreover, the dynamic can be effectively elevated when you team up with a respectable senior partner when assessing the situation of the underperforming partner.

In most cases, once you can initiate an underperforming partner to talk about their performance and why they are not doing what needs to be done, later on, you can inspire them to hustle better, engage more, and improve their performance.

Some businesses ignore the issues of a struggling partner, hoping they will come back stronger or quit. These scenarios are straight-up bad. Most partners who don’t perform well are aware of their underperformance, and most of the time, they don’t know what to do.

While waiting for them to improve, your company is losing money. The cost of lost work and lost client confidence will just pile up. Generally, underperformance leads to unproductivity, and unproductivity leads to unprofitability.

You should quantify these costs and use the computation during your partner's compensation review or a one-on-one discussion with the partner. Use this to express your concern effectively about their performance.

You might inspire them using these calculations of how great their impact is on the company and how they can do better. Remember not to blame them, but simply express your concern using these numbers.

Once you’ve inspired them to improve underperformance, develop a plan to redirect their goals back. Create a performance-rehabilitation program. You can start by issuing specific goals for them to achieve and helping them understand why this is important to finding their focus again.

These measurable goals can include setting a specific number of client engagements as a target, raising their time spent subject to a fee, and setting incentives if they reach a certain percentage of closed client deals.

After that, you can establish a support system for achieving their goals. This support system can be:

A withdrawing partner, or a partner withdrawing from a partnership, can either continue or dissolve the partnership, depending on the partnership agreement or the state law. However, the process must be handled gracefully.

When an underperforming partner opts to leave the partnership since not all are willing to rehabilitate, you must be sensitive in showing them the door. Practice your utmost patience and flexibility in dealing with an underperforming partner.

While it’s important to know when to cut ties, it’s also equally essential to maintain the morale of the partnership. Avoid aggressive moves like slowly diminishing their equity to force them to quit or giving them short notice by asking them to leave.

Handle everything according to a partner’s withdrawal process in your partnership agreement or state law. In this way, your company’s reputation will be secured, and you will be at ease during the process of the partner’s withdrawal.

Handling underperforming partners can be an overwhelming issue, especially for managing partners. However, when done right, the organization will definitely benefit from this. We hope the article above will shed some light on understanding and dealing with underperforming partners.