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Firms are Ignoring the Surprising Numbers Behind Lateral Partner Hires in Professional Services
Professional services firms are betting big on lateral Partner hires to enable their growth goals but most of them won’t meet performance expectations. In fact, a significant portion will leave the firm or outright fail to meet targets within the expected timeframe.
While firms continue to draw a straight line between more lateral Partner hires and increased revenue, the data tells a very different story.
The Straight-Line Growth Assumption
It’s simple, right?
If a firm needs to grow revenue by $60 million, they need to hire 20 new Partners with a track record of building a $3m book of business at their current firms.
Problem solved.
Well, until you consider the math and harsh reality behind the rates at which lateral Partners meet performance expectations at their new firms.
Turns out, repeating the same level of performance isn’t as automatic as firms would like to believe.
Real Numbers Behind Lateral Partner Hires
This straight-line way of thinking assumes that 100% of lateral Partners will stay and meet sales numbers, quickly.
That assumption couldn’t be further from reality.
Our experience shows that 10-20% of lateral Partner hires successfully integrate into their new firm and hit their individual/team sales targets within the expected time frame.
Here’s what really happens when a group of direct admits enter a new firm:
- 50% will leave the firm within 2-3 years
- Of those that stay, nearly two-thirds will fail to meet their targets
So out of that group of 20 lateral Partner hires, a firm is left with 2-3 that stay and hit their targets.
Now the math problem changes significantly.
That $60m in growth you’re looking for? It’s not just about hiring a set number of partners—it requires a fundamentally different approach.
But why do so many lateral hires struggle in the first place?
The Uphill Climb for Lateral Partners
The same job at a new firm is not the same job.
When Partners move firms, they enter an entirely new ecosystem which presents a number of roadblocks to them repeating their past success. Even the most experienced Partners face performance hurdles like:
- Understanding and navigating a new culture
- Building trust and collaborating with Partners at the new firm
- Selling a new suite of products and service offerings
- Establishing a new reputation under a different brand
- Learning how to utilize new support systems
- Embracing different methodologies to client service and delivery
Without a structured approach, firms are placing big bets on lateral hires who ultimately underperform—making growth targets even harder to hit.
How Firms Can Better Predict and Accelerate Partner Performance
Given the high failure rates of lateral hires, firms need a more predictable approach to partner performance. That means shifting focus from just hiring external Partners to investing in both lateral integration and internal Partner readiness.
Invest in Partner Readiness
While hiring externally may seem like the quick and easy path to growth, investing in a Partner readiness program can be worthwhile as internal Partners are 3x less likely to fail compared to their lateral counterparts.
Internally promoted Partners are better suited for success because they know the firm’s culture, have already built relationships with their peers and with clients, and are more familiar with the go-to-market strategies the firm employs.
Consider the following when building a Partner readiness program:
- Remember that what got you here won’t get you there – use insights from industry-specific assessments, like the Verity Leadership Assessment℠, to build a Partner success profile based on your highest-performing Partners and skillsets that will drive future success
- Use that success profile to assess future Partners against the competencies and traits that have been identified to align with success
- Clearly define and communicate a promotion framework and process that demonstrates transparency and establishes trust
- Outline a post-promotion performance acceleration framework that utilizes tailored performance coaching to drive results
As an example, we partnered with a boutique professional services firm to improve their Partner readiness program which led to a 20% decrease in time to Partner and a 15% decrease in time to proficiency for newly promoted Partners.
With internally promoted Partners being 3x less likely to fail or leave the firm, investments in Partner readiness can create significant returns.
Design and Implement a Robust New Partner Onboarding Program
When it comes to lateral Partner onboarding, common practices include distributing laptops and business cards, putting Partners through a one-size-fits-all L&D program, meeting new colleagues, receiving a “buddy”, and joining standing calls.
In most firms, it’s a standardized rinse and repeat process for each new lateral hire.
While these things are important, they’re not enough to accelerate performance and predict success on their own.
There are 6 additional elements of an effective new Partner onboarding process that should be part of every firm’s approach to reducing Partner Time to Traction and enabling them to reach performance expectations:
- Use Targeted Insights from Industry-Specific Assessments
- Clearly Define and Measure Success
- Build Individualized Performance Plans
- Utilize an Effective Sponsorship Program
- Use Tailored Performance Coaching
- Engage Outside Perspectives
We recently published an article that goes into more detail on how to design and implement an effective new Partner onboarding program using these 6 principles.
The Bottom Line: It’s Time to Face the Lateral Partner Reality
The same job at a new firm is not the same job.
On the quest for growth, firms can’t simply draw a straight line from more lateral Partner hires to guaranteed revenue results.
In order to meet growth goals, firms need to understand the numbers behind lateral Partner hires and adjust their talent strategies to embrace internal Partner readiness and design new Partner onboarding strategies that tilt the math further in their favor.
At Kinavic Leadership Acceleration, we specialize in predicting and accelerating Partner performance so Partners perform better, faster, and are less likely to leave.
We’ve partnered with boutique professional services firms and global consultancies to design and implement Partner performance strategies that improve business results.
Are your lateral partners meeting performance expectations? If not, it’s time to rethink your talent strategy to meet your firm’s goals. Use the contact form to get in touch with our team today.
Angela Navarro
Angela is the CEO and Managing Partner at Kinavic Leadership Acceleration, where she leverages over 25 years of experience in human capital management to accelerate the performance of the leaders, teams, and firms that Kinavic serves.
