Thoughts on ways to improve the management of professional services firms

Thursday, December 28, 2006

PSVillage - I feel flattered!

Luanne Pirogowicz from PSVillage emailed me. I quote:

We were recently made aware of your blog "Managing the
Professional Services Firm" and were very impressed with the content and value it offers. We'd like to reference it on our website, and were wondering if you'd be willing to provide a paragraph that describes your blog.

I feel flattered. I know PSVillage. I am very happy to help.

I am not an IT professional, although I have worked with IT professionals for more than the last twenty years.

My message is that all professionals and professional service practices can learn from each other regardless of differences between professions. Hence my willingness to help PSVillage.

Sunday, December 24, 2006

Season's Greetings 2006

Business in Australia has now broken for Christmas. For that reason, I hope that you will not take it amiss if I wish you all regardless of faith, location or calendar a happy Christmas and a very successful new year.

May 2007 bring the world a greater measure of peace for all.

Friday, December 22, 2006

Five Things Meme

Photo: Belshaw Family, Rome January 2005

Everybody appears to start their post on this one by saying something like "I'll admit I am not a huge fan of chain letters or tagging games." They then go on to do it anyway!

In Tony Karrer's words:

In terms of tagging - I'm not sure who's already gone through this ... I apologize for continuing the pain ... hehehehe ... you see after you've been hazed, you ... well, you know ...

Thanks, Tony, I think, for tagging me.

What does all this mean? Well, the idea is that we all say five things about ourselves that people might not know then nominate some others to do the same.

It's not a bad idea at all because it means that people find out something personal on blogs that can be very serious. I have found that interesting and also found the process interesting because it has introduced me to some new blogs.

The five things about me:

  1. I am married with three wonderful girls, wife Denise and daughters Helen (18) and Clare (16). My daughters keep me young in part because they keep me in touch allowing me to span generations in a way that might not otherwise be possible.
  2. For the last few years I have mainly worked from home because in a two working parent household I have been the primary child carer. Cooking, transport, school things etc. This has had its professional costs, but has given me a closeness to my daughters that I value greatly.
  3. Tennis is now the only sport I play, badly but enjoyably, but I remain an inveterate sport watcher. Sport of all types. I especially enjoy watching the super 14 Rugby with my eldest daughter, although we have yet to win the tipping competition.
  4. This will not come as a surprise to those who read my personal blog, but I have wide interests, insatiable curiosity as to how things work and am sometimes far too serious for my own good. My family keeps on working on the last.
  5. The personal things I most enjoy are reading, activities with my family and conversation with friends. I used to enjoy cooking until I ended up doing it all the time. The things I enjoy least are city driving and tidying the house up!

Now who to tag for personal and professional variety?

Tuesday, December 19, 2006

How Law Firms Woo Women

In my last post I returned in part to one of my constant themes, the strategic challenge posed by demographic change to all professional services firms. This links to another theme, the changing gender balance in professional training (here) because of the growing dominance of women in university numbers.

Last Friday's Australian Financial Review (15 December) carried a story by Matthew Drummond that exactly that illustrates some of the points I have been trying to make. While the story focuses on law, its conclusions are more broadly relevant.

Drummond begins by noting that while law schools have been turning out more female lawyers than ever before (the female proportion is now over 50 per cent), women still make up fewer than 20 per cent of partners in commercial law firms. However, this is now changing as rising recruitment costs and cut throat competition forces firms to adopt family friendly policies in order to retain women.

Firms are now offering flexible working arrangements for lawyers with young families including improved maternity leave arrangements to compete for talent, especially among partners. Many have recently revised their policies, increasing the industry average to 10 weeks' paid maternity leave for lawyers, 16 for partners.

According to Janean Richards, President of Australian Women Lawyers, keeping women within the firm has become a greater priority in part because real recruitment costs have become so high. This is reflected in the stats - over the last six months women have made up 34.3 per cent of new partners, up from 28.4 per cent in the preceding six months.

This trend must increase if you look at the numbers I have provided in some of my previous posts.

Sunday, December 17, 2006

Past Experiences. Present Challenges. Future Predictions

I did not comment on the Learning Circuits big question for November - Are ISD / ADDIE / HPT relevant in a world of rapid elearning, faster time-to-performance, and informal learning? - simply because I add little to add.

For those like me who find the initials confusing, Harold Jarche provided some useful definitions:

  • HPT - Human Performance Technology
  • ISD - Instructional Systems Design [or Development]
  • ADDIE - a process incorporating Analysis, Design, Development, Implementation, Evaluation, stemming from the Systems Approach to Training (SAT)

I commend the November debate to those interested as a simple and quick way of coming up to speed on the issues involved.

The December big question (more accurately questions) is more open ended:

  • What will you remember most about 2006?
  • What are the biggest challenges for you/us as head into 2007?
  • What are your predictions for 2007?

I cannot resist answering from a personal perspective.

What will I remember most about 2006?

For me, 2006 has been the year of the blog.

I have always written as a way of clarifying and explaining ideas. However, in recent years this writing has been generally client or Group member(s) specific.

I was aware of blogs and blogging as a way of expressing ideas, but this was not central to my work or life. Then Sandra Welsman, one of my Ndarala colleagues, pointed me to the Is training snake oil debate? on the Learning Circuits blog. Things snowballed from there.

We prepared a paper on the snake oil debate (link above), followed by a case study on the use of blogs as a communications device within specialist medical colleges. To further the learning process, I then began experimenting in April (was it only April?) with my own and Group blogs, looking further at the practical issues involved with blogging.

In turn, this led to the use of blogs as a publishing device for making some of our material more readily available to a broader audience, as well as a platform for expressing comments and ideas. Since then, I have published several hundred thousand words combining both existing and new material.

I have always combined curiosity (I like to know the how and why) with broad interests. When I first started blogging there was a period while I felt my way. As the quantity of posts grew, I found that the material published on the various blogs was overlapping and informing other material.

For example, the analysis I did on demographic change on my personal blog was intended to help me understand the impact of demography on social, economic and political change. But this then fed back into writing on this blog. In similar vein, I have re-published past material on the Ndarala Group blog to provide back-up for some of the stories written on this blog.

One important feature of the year has been the way in which blogging has put me in touch with other professionals, further informing my own thinking. This has been especially important on the learning and development side.

I believe very strongly that improved people management is critical to improved performance within professional services. This is reflected in the weight that I have placed on people management issues in my posts. I also believe that improved people management is too important just to be left to the HR professionals, that it needs to be implemented across firms.

I also believe that good training is central to improved people management. Here I have drawn heavily on the knowledge of others and especially those outside Australia to inform my own training perspective. I do not necessarily agree with them, I have real concerns about the US approach to education and training, but the insights have always been helpful.

In all this, I suppose that one of my conclusions from the year is the need for learning and development professionals to come out of the ghetto that they seem to have imposed upon themselves. As someone looking at education and training in part from an external management perspective, it sometimes seems to me that I have a higher opinion of learning and development than do those working exclusively in the field.

Looking Forward to 2007

In looking forward to 2007, I would join the questions of predictions and challenges together.

Many of the younger Australian professionals have never seen an economic downturn. They live in a world of constant market expansion. I have and know what its like.

Professional services is what economists call a leading indicator in that many areas involve discretionary spend that firms can and do defer as economic conditions tighten.

In 1990 the Australian marketplace for professional services broadly defined collapsed, with total fees falling by over a third in less than nine months. In the case of my own firm, a start up that had grown rapidly over the previous eighteen months, we started 1990 with monthly fees of $72,000, monthly expenses of $62,000. Over the next three months, monthly fees dropped to just $28,000. In so doing, we went from comfortably profitable to financial bleeding.

I make this point because both the world and Australian economy are increasingly uncertain.

In Australia, the growth shown in the GDP figures is coming from the mining states. In the latest quarterly figures NSW, the biggest state in economic terms and as a professional services market, actually showed a GDP decline. If, as seems quite possible, this is repeated in the December quarter, NSW will be technically in recession.

So economic conditions pose the first challenge.

The second challenge comes from demographic change.

I have suggested before that the implications of demographic change pose the key strategic challenge for professional services firms in western economies over the next decade. I have also noted my frustration at my failure to get this message across.

Now it may be that economic downturn will ease the short term problem by reducing demand for professional labour. But this will be at best a short term easing.

The longer term problem can be stated quite simply.

The numbers in the entry level age cohorts are stagnant to declining. High university fees are reducing higher education participation rates in many countries. So the people that professional services firms have traditionally relied upon are simply not there.

In the first instance, the stronger firms will survive by eating up the people market for the rest, if at a higher price. We can already see this.

In countries like Canada and Australia, areas outside the main metro centres are already suffering from an aging professional structure. This will go critical over the next decade as people retire. At country level, some countries (Germany is an example) are already suffering net migration decline among younger professionals attracted to better prospects elsewhere.

This poses challenges at both profession wide and firm level.

At professional level, the inability of individual professions to meet needs will lead to continued erosion in professional divides. We can already see this. In the absence of sufficient doctors, other professional groups such as registered nurses are being given responsibilities such as prescribing rights previously the preserve of medicos. In law, areas of law such as conveyancing are now going to non-lawyers.

At firm level, firms will be squeezed between limited staff on one side, new competition on the other. Again, the bigger who can afford to pay more will be able to cherry pick among the rest.

In all this, improved people management will be critical to a firm's ability to attract, retain and upgrade its people. Failure here means longer term death.

Linking this back to learning and development.

The challenge for all education and training professionals is going to be to find the best way for both professional services as a sector and Government to respond to these challenges. We cannot help all firms, only those prepared to help themselves. But for those firms who are prepared to change, we are going to need to be able to offer new solutions.

Friday, December 08, 2006

Belshaw Takes a Break

Photo: South West Rocks, New England

Tomorrow I leave for a few days in South West Rocks, one of the most beautiful places in New England.

While there is an internet cafe in South West Rocks and I will be checking my blogs and responding to any comments, I do not expect at this point to make any posts.

I want a rest to rethink and re-charge.

Wednesday, December 06, 2006

Performance Measurement - a follow up note

In my last post I spoke of the seven deadly sins of performance measurement. While I mentioned Chris Marston, I had not seen the latest post on his blog' Get Your Calculators and Spreadsheets Out. Ready . . . Set . . . Hurry Up and STOP!!!!'

This post reinforces many of the messages I was trying to get across and is well worth a read.

Tuesday, December 05, 2006

The Seven Deadly Sins of Performance Measurement

The Juris more partner income blog had a useful post on performance measurement including some links to previous posts. However, it got me thinking about the reasons why I think that the current obsession with performance measurement has become so dangerous.

Human beings are not machines. We are complex creatures motivated by a range of different things, trying in day to day life to manage our confusions, to balance all the different pressures upon us. Performance measurement systems must take this into account if they are to have positive longer term results.

Thinking about this led me to define what I call the seven deadly sins of performance measurement. I see that Chris Marston has been dealing with some of the same issues. The sins are:

  1. Make people work harder, longer hours, to achieve target. This sin involves setting targets that can only be achieved through longer hours. People have only so much time. You can sometimes get an immediate improvement by making people work harder, but real longer term results depend upon working smarter.
  2. Set measures that depend upon things outside personal control to achieve target. A remarkable number of systems focus on personal charge performance as the central measure. This assumes that the work is there, that people have control over work flows. If neither is true, then your measurement system becomes an automatic de-motivator.
  3. Set measures that encourage your staff to over-charge the customer. Focus just on charge without taking quality and service into account and you build in an incentive to over-charge.
  4. Create a one size fits all system. People's needs and capabilities vary. A staff member that can only work limited time may in fact be very valuable. A staff member that can only do certain things may be very valuable. It all depends on how much you pay relative to the contribution. If you create a universal measurement system that fails to take relative contribution into account, then you may build in disincentives. You are also likely to end up making false judgements about staff.
  5. Focus your performance management system just on those things that can be measured precisely. Many key contributions cannot easily be measured in strict quantitative terms. The problem here is most acute for firms that limit their measures to financial variables. Because you get what you measure, however imperfectly, you can be sure that the things not measured will be ignored.
  6. Create a disconnect between firm values and performance measurement. Too many firms set up measurement systems that conflict with stated firm values. Your measurement systems should reinforce, not ignore or conflict with, firm values.
  7. Destroy fun. There is a strong connection between motivation and morale and enjoyment of work. Make the formal performance measurement system the central feature of firm life and watch the joy flow away.

Related Posts

Monday, December 04, 2006

Project Management in Professional Services

Good project management is central to the effective delivery of client services. Further, project management techniques can be applied in any organisation.

I mention this because we have started a new series of posts on the Ndarala Group blog on Project Management for Professionals. So far we have put up two posts drawing from our internal Short Guide to Project Management:

I recommend the series to all those who are interested in finding out more about project management.

Creation & Use of Case Studies - Training 2

This post completes the three part series on the use of case studies.

In the first post I looked at general issues associated with the creation and use of case studies. The second post focused on the creation of case studies for use in training. This post extends the training analysis.

Review of Case Study

Once the material has been prepared, it should be reviewed. The following questions adapted from from "Analysis of a Draft Case in Education" by Judith Kleinfeld( University of Alaska, Fairbanks, John Boehrer, 1999) should help you here.


1. Does the case offer a challenging decision to make or reflect on?

2. Is the problem balanced, with no single right answer or obvious solution?

3. Does the case provide contrasting perspectives on the problem?

4. Can the problem be analyzed through different frames? Is the case a good structure for applying, testing, or formulating theory?

5. Is the problem significant in the field? Does it raise issues that transcend the story?

6. Is the problem rich and subtle? Does it have multiple dimensions, e.g., interpersonal, organizational, political, policy, or ethical?

Intended Audience

1. Is the case engaging and thought-provoking? Does it capture the reader on an emotional, as well as an intellectual, level?

2. Would reader identify or empathize with any perspective in the case, especially that of the person or group facing the problem?

3. Does the case raise questions or issues that readers will want to think about and discuss?

4. Is the case appropriately difficult with respect to defining the problem, generating solutions, and/or applying analytic concepts and techniques?


1. Does the case seem believable and authentic?

2. Does the case tell a story, and avoid analyzing or editorializing about it?

3. Does the case have a concise, engaging opening that sets the scene, presents the problem, and introduces the decision-maker?

4. Does the case contain sufficient background information that enables reader to grasp the situation? Does the case have grist for the analysis?

5. Does the case tell the story in a clear time sequence, with rising and falling action, climax, and drama?

6. Is the writing lively and well-paced, without cliches, confusion, or unnecessary complexity"

Additional Virtues

1. Does the case present models of professional thinking - analyzing and thinking about a problem contextually, using frameworks in sophisticated and appropriate ways?

2. Does the case suggest alternative strategies for addressing problems?

3. Does the case provide valuable information about a professional setting?

Case Revision Worksheet

Once the case becomes a ‘stand-alone’ document, the user (program trainer/facilitator) would the need to consider the following questions in preparation for delivery. This material is drawn especially from John F. Kennedy School of Government Case Program, 1999.


1. Why do I want to use this case in this course? (Course Objective)

2. What skills, knowledge, or attitudes do I hope to develop in the course participants through the process of discussion? (Learning Outcomes)


A stand-alone case may have more issues than what are to be dealt with in the course. It is important to highlight for readers what will be teased out from the case. It would not be necessary to change the case itself, but it is important to focus the attention of the user from the start.

1. What issue(s) does this case offer for exploration?

2. What perspective(s) do I want the participants to adopt when considering the issues?

3. What analysis do I want the participants to do that will further the course objective(s)?

4. What concept or theory might be relevant to this analysis?


1. How is this case to be used?

  • As example in lecture
  • As a scenario to which illustrates of particular issue or process
  • As a model from which a theory is developed
  • As basis for discussion and problem-solving…

2. What questions will generate the analysis and/or decision-making users will complete?

3. What analysis do I want the participants to do that will further the course objective(s)?

4. What are the questions (& sequence) I plan to ask?

5. What process options will I use?

  • formal presentation
  • informal presentation
  • seminar/open discussion
  • paired
  • small group work
  • role play
  • Q & A


What adjustments need to be made to the case document prior to distribution to readers?

1. How might the case be re-written so that I can teach it to achieve my objectives and the determined learner outcomes?

2. What is unclear/confusing/incomplete?

3. What needs to be added/taken out?

4. Do any perspectives need to be further developed?

5. What structural changes are needed? e.g., what decision point(s) do I want? where? Should the case break into parts (A) (B) ... ? What activities/timing are relevant for each segment?

Note on Copyright

The case study material is drawn from an Ndarala Group Guide prepared for the use of member professionals and clients. It is copyright Ndarala but may be copied with due acknowledgment. Incorporated material drawn from other sources should also be acknowledged.

Previous Posts

Thursday, November 30, 2006

Creation and use of Case Studies - Training 1

In the last post I provided a general introduction to the creation and use of case studies. This and the the following post look in detail at the development and use of case studies for training purposes.

The material is directed at both training professionals and other professionals who may wish to use their material for training purposes or who hire trainers.

The material assumes that you have already looked in at least broad terms at the questions posed in the previous section.

Case Writing Questions

The preparation of the case study starts with the questions to be answered. The case may already exist as a general case study, in which case it is being modified for training purposes, or it may be prepared specifically for training purposes.

The writer of the case study should answer the following questions. This person can be either the ‘expert’ who has all the information required at their fingertips, or a researcher who collects and drafts the case document. The questions are drawn from John Boehrer (1998).

1. What is the hard, unifying question?

2. What information do we need to address it?

3. What can I ask users to analyse? decide?

4. What decision process does the case give the reader to focus upon?

5. What questions can I ask about it?

6. What detailed narrative does the reader need to focus on it the important issues?

7. What information needs to be developed?

8. What will make the story work as a case? What conflict does it present?

9. What will make the case livelier? What quotes or details? What will make the case more personal?

10. What will enable readers to identify with the actors and get into the case?

11. How do the actors themselves perceive the situation? Can they be quoted?

12. What factors/constraints do the case actors perceive to be impinging upon them?

13. Who else is involved? What is their perspective/outlook?

14. What development/structure would be useful?

15. What might different parts of the case focus upon?

16. What is the link between the specific decision focus and a larger question?

17. What is the issue context?

18. What special problem does writing/revising the case pose? Information? Access?

Case Structure

Having answered these questions, we can move to the preparation/modification of material. A basic structure here is set out below.

1. Case Introduction

  • Title: identifies the content
  • Context: specifies the overall concept conveyed in the case study: (answer to: What does the case demonstrate?)
  • Objective: How this case relates to learner/learner situation. (answer to: Why is it important?)
  • Learner Outcome(s): what the learner knows (is able to do) as a result of interacting with the case-study: (answer to: What will I learn from this example?) These outcomes will relate back to the Q&A incorporated into the case.
  • Definitions/Background expectations: Are there any expectations regarding previous knowledge? Does student have to have access to specific resources? (Briefly highlight keywords and recall prior knowledge that case reader needs to grasp concepts contained in the case.)
  • Invitation to continue: nudge to move on, collect thoughts, and get into it!

2. Case Contents

Case Study— a comprehensive example of the concepts one wishes to convey. Often the case incorporates materials that describe or simulate the example. In using a case study, we are moving from the concrete and specific to generalised abstract concepts and principles.

  1. Start with a statement of the situation. Like all good stories, it will have a beginning, a middle and an end. It is generally in narrative form.
  2. Introduce any characters, objects, or organisations of importance, give them a ‘human face’ with feelings and emotions.
  3. Spell out crucial relationships between the elements.
  4. Incorporate a series of alternating questions and answers in discussion/story form. The questions are asked by one character/organisation, and answered by another character/organisation, by either word or deed. (The process of asking and answering the questions must stimulate the reader/learner to engage with past experience/knowledge and apply this knowledge to this example/case).
  5. If the reader is unlikely to have this knowledge then the concepts the person will need are generally referred to in some way as part of the resources of the case. (e.g. The research assistant consulted the copyright act section …. to ascertain…)

3. Case Summary

  1. Generalise /Relate directly to learners:
    · What will they get/have they gained by examining this case study?
    · What was significant about this case study?
  2. The final summary may be represented in a different format:
    · job aid, such as a checklist (Do you want the client to reproduce this/ have a handout?)
    · graphic (diagram, chart, table, illustration, and cartoon)
    · Q & A linked to the information provided in the case content

4. Potential Resources

  • Conventional business documents (reports, specifications, instruction manuals, memos, letters)
  • Blueprints & drawings
  • Spreadsheets of numerical data
  • Charts & graphs
  • Video or audio interviews

Note on Copyright

The case study material is drawn from an Ndarala Group Guide prepared for the use of member professionals and clients. It is copyright Ndarala but may be copied with due acknowledgment.

Previous Posts

Tuesday, November 28, 2006

Creation and Use of Case Studies - Introduction

Most professionals use case studies and for a variety of purposes. They help us consolidate our own knowledge and to explain that knowledge to clients and others. They can be used to document approaches for later use, as a base for the development of new approaches and for training purposes.

Given this, there are real advantages in the adoption of approaches to the development of case studies that will enable us to create them efficiently and then use them to maximum effect. For that reason, this post provides a short introduction to their creation and use

Key Questions

All case studies have to address certain basic questions, so it is sensible to start by considering these. You can easily turn them into a table, thus providing a standard form.

1. What is the objective to be met?

2. How will the case study be used?

3. What form (remember, form follows function) should the study take (structure, format)?

4. What content should be included?

5. Are there any special features that should be taken into account

6. Have I achieved my objective?


Case studies can be used for a variety of purposes:

  • To document what was done, why, how plus lessons learned for later personal use or to share with colleagues or with a broader audience. This might be done for professional development reasons, to assist in carrying out future work or to form a base for further service development.
  • They may be used for marketing purposes to show one’s expertise.
  • They may be used for training purposes.

It is important to take the time to think through just what you want to achieve. It can be frustrating and time consuming to prepare material that later has to be significantly altered or even completely re-written to meet another purpose.

As a general guideline, if you expect that the material will be or might be used and re-used on an on-going basis, then it is better to start with a general case study approach. This should set out in a factually correct manner what has been done, why, how and to what effect. This content can then be amended to achieve your immediate requirement.

Time invested here is rarely wasted because it makes it much easier later to generate new material targeting particular needs. This includes both case studies and associated presentational material.

How will the Material be Used?

This question is important because it helps dictate the form the material might take. Key issues include:

Will you be using the material for your own internal purposes? If so, then you do not need to worry too much about format and presentation.

Will I be sharing the material with others? If so, how:

  • In presentations? Then do I need slides, handouts?
  • In written self-read form? Then the material needs to be designed for self study purposes.
  • On-line? On-line use has its own disciplines. In particular, because on line material is harder to read than the printed page, the volume of information per page need to be reduced to perhaps 60 per cent of that on the written page.

What Form should the material take?

This question needs to be considered along two dimensions:

  • One is the physical/electronic form. This is essentially determined by the answers to the previous question, the way the material will be used.
  • The second is the actual structure of the material such as headings, slides, the interfaces between material. This will be dictated in part by the objectives to be met and the way in which the material is to be used.

What Content should be Included?

The answer to this question depends in part upon the purpose to be met. That is, what information do I need to provide to achieve my objective?

In considering material to be used by others, another question has to be answered. What can I reasonably expect my audience to know?

This second question is very important since things that seem self-evident to you may not in fact be in the knowledge field of your audience.

Are there any Special Features that I need to take into account?

This step forces you to stand back and think again about just what you are doing. Are there particular confidentiality issues? To what extent am I using someone else’s material? If the material is to be run off by others, what printer will they be using? What are the special features of my audience? And so on.

Have I achieved my Objective?

At the end of the process, it is desirable to stand back and review just what you have done to ensure that you have in fact achieved what you set out to do.

At this point, it can be helpful to get one of your colleagues to review the material for you.

Note on Copyright

The case study material is drawn from an Ndarala Group Guide prepared for the use of member professionals and clients. It is copyright Ndarala but may be copied with due acknowledgment.

Posts in this Series

Creation and Use of Case Studies - Introduction

Creation and Use of Case Studies - Training 1

Creation and use of Case Studies - Training 2

Friday, November 24, 2006

Blog Progress Review - 24 November 2006

I recently switched this blog to the new e-blogger format. I did so with some reluctance because of a feel, since confirmed, that the new system still had bugs.

One plus, however, of the new system is the inclusion of tags or labels. However to make this work properly I need to go back and insert tags on past posts, a time consuming process. This has caused me to look back over past posts, to reflect on progress to this point.

I made my introductory post on this blog on 3 July 2006. I defined my objective in this way:

This blog has been created to encourage debate about and to provide information relevant too the management of all professional services firms. With time, I hope that it will develop into a valuable resource.

Since then I have written 74 posts of varying length, including a number of longish, some of you might say very long, thought pieces. Looking back at these, the content is certainly there. I have also gained at least some readers over the last five months. But I also have a feeling of some discontent.

Blogging approaches vary.

Some people make very regular often short posts, in some cases several times per day. In these cases readers come for interest and currency. Others make fewer, longer, posts. Readers still come to browse, but there is greater emphasis on the blog as a resource, with more people entering through search engines in search of specific information.

I straddle these approaches to some degree. I try to make regular posts, 3-5 per week, with a mixture of short and long posts. So I hope that I get both regular browsers and people through search engines. A google site search throws up 77 references to this blog, so Google at least is indexing the site on a reasonably regular basis.

If I have content, some readers, some search engine indexing, why then do I feel some discontent? Part of the answer lies in impatience, it just takes a while to build content. But, thinking it through, I think that the real answer lies in the difficulty of making information properly accessible within the limits set by the blogspot, e-blogger process.

Looking back over the posts, I have now written on most aspects of the management of professional services firms, creating something of a management primer. In doing so, I have tried to write from the perspective of both firm management and the individual professional and manager. However, the value of this material depends upon ease of access.

Earlier I began a series of stocktake posts trying to provide consolidations on a thematic basis. I think that I need to do more of this, now aided by the tag system. This should also help me keep track of lose ends, things started but not completed.

This would then give me three types of posts: the longer thought pieces, regular shorter pieces on items of interest, together with various types of stocktakes bringing previous material together.

In all this, the need remains to target so that I really meet the needs of current and prospective readers. This is the hardest part in building a blog like this since often I simply do not know. I can only write about what I think to be important and then try to modify in light of feedback.

Thursday, November 23, 2006

Common Management Problems - the over-enthusiastic boss

This post continues the series I began with Common Management Problems - the isolation of being boss, sharing with you from time to time some of the problems I have experienced as a manager. This one focuses on the dangers of the over-enthusiastic boss, a danger that I am personally prone too.

I suspect that we all know the type of person I am referring too. Brimming with enthusiasm and new ideas, he/she cannot restrain himself/herself, but immediately wants to share the new idea with those working for him/her. Staff may roll their eyes, but really have no choice but to listen.

Often, the over-enthusiastic boss has another feature as well, failure to indicate the purpose of the discussion so that staff do not know what they are meant to be doing with the discussion. Is this a new task, am I meant to be doing something with all this?

This can make over-enthusiastic bosses very poor delegators. They give new tasks before previous tasks have been completed. They also think in their enthusiasm that they are being clear when in fact staff may be completely confused but too polite to say so.

If you are an over-enthusiastic boss my advice is to pause, to take a deep breath before rushing out with the latest idea. Remember that a core part of your job is to help your people do their jobs better, and you do not do this by overloading or confusing them.

If you work for an over-enthusiastic boss your position is more difficult. However, there are a few things that you can do.

If you are not clear just what is intended by the discussion, ask. If you are being asked to do something, but it is not clear to you just what, again ask. If you are working on a priority task, then say that. Finally, if you are finding the whole approach creating really serious problems for you, then have a private chat with the boss.

Wednesday, November 22, 2006

Wednesday Forum - what makes a good (or bad) boss

I have written about some of the things that I think makes for a good and bad boss. I wondered what your views might be.

What do you think makes someone a good boss, a bad boss? Who has been your best (worst) boss and why?

Tuesday, November 21, 2006

Web Conversations November

One of my periodic reports on topics, conversations and sites of interest.

David Maister's blog led me to PS Village, an on line magazine for the IT professional services community that I had not seen before. I spent some time browsing articles and discussion threads (the magazine has a strong interactive element) and have added it to my watch list.

In passing, I noticed a very interesting discussion on performance metrics (here) at firm level that I hope to come back to at a later point.

While at David's blog I noticed that he had posed this question to his visitors: So, over to you? Why do YOU think some people are continually motivated to improve and keep trying while others are not? And can a manager influence that or is it inherent in individuals?

Anybody who reads this blog will know that I am almost obsessive about the need to improve people management in professional services. The world is not made up just of high flyers, but of ordinary people doing the best they can to balance work and life. My experience has been that most people want to do a good job. The job of the manager is to help them do that.

Here I thought that Chris Marston had a rather good post, Are Corporate Firms Dizzy From Chasing Their Tails?, about the treadmill created by top law firms in recruiting and then managing their new associates.

Innovation is very much the flavour of the month just at present. Here I noted a quote from Professor Kanter on Martin Hofmann's blog:

"Innovation seems to be rediscovered in each managerial generation (about every six years) as a fundamental way to enable new growth. But each generation seems to have forgotten or never learned the mistakes of the past, so we see classic traps repeated over and over again. Some of these repeat offenders include burying innovation teams under too much bureaucracy, treating the innovators as more valued corporate citizens than those who work in the current business, and hiring leaders who don’t have the relationship and communications skills necessary to foster innovation.”

Kind of says it all.

On a linked topic, I see that Noric Dilanchian and his colleagues have continued to add all sorts of interesting material on commercialisation to the Dilanchian site including their Lightbulb blog. I recommend the site to anyone with an interest in innovation and commercialisation and as an example of what can be done by a small law firm to create a powerful on-line presence.

Bruce MacEwen's Adam Smith Esq continues on my must read list. There was an interesting interview with Bruce in the Canadian Law Times. Like Bruce, I believe that law firms and others within professional services still operating on partneship models need to move towards a more corporate style management approach.

As an aside, I read Bruce's story on law firm advertising in New York (The 18th Century Is Alive & Well in New York) with a degree of amazement. David Anderson (I mentioned David's Small Business USA blog in a previous post) were chatting in another context about the differences in the Australian and US approaches to regulation. The sheer complexity of the US scene is quite remarkable.

Dennis McDonald's blog on living and working with technology continues to carry interesting material of value to anyone interested in the impact of on-line developments on life and work. I think that it is especially useful for those like me who are interested and simply want a heads-up.

Those who read my personal blog will know that I am very interested in patterns of social, cultural and political change. On this blog I have discussed, for example, the likely impact of demographic change on future management of professional services firms, suggesting that competition for people is likely to be the single most important strategic issue for most firms over the next decade. I have also discussed changing gender balances in the professions.

One aspect of these change processes is the need to move towards more flexible working arrangements. I was therefore pleased to see a post by Janet Hayes on the Juris more partner income blog arguing the flexible hours case.

This post has become quite long. I will continue my review in a later post.

Monday, November 20, 2006

Common Management Problems - the isolation of being boss

I thought that it might be of interest if I shared with you from time to time some of the problems I have experienced as a manager.

Australia has what the Australian historian John Hirst has called a democracy of manners. Differences of wealth, authority and power do exist in the country and have widened in recent years. But our language and attitude are egalitarian, democratic and somewhat cynical. This flows through into the nature of relationships within organisations.

I grew up in this world. It influenced my attitudes and approaches when I first became a manager in the Commonwealth Public Service. Among other things, it meant that I identified with and was close to my staff, an approach that got very good management results. Then suddenly I was promoted again and met a problem that took me a while to even recognise.

The Australian Public Service was then broken into four divisions:

  • the first division made up of the heads of Departments and senior statutory office holders - a small group - was at the top.
  • then came the second division, a smallish (several hundred) group of senior managers across the Service from branch head to deputy secretary level.
  • followed by the third division, the main administrative/clerical division
  • and then the fourth division, all the support staff.

To put all this in terms that may be more familiar, the first division was equivalent to managing partners, the second division to partners in general, the third division covers all professional staff, the fourth division paras and support staff.

At the time of the promotion I referred to I was a Chief Finance Officer (Director) in the Commonwealth Treasury in charge of a section with nine staff. I had acted as branch head for extended periods, but I was still seen in terms of my third division role. In addition, Treasury was a relatively open non-hierarchical Department in part because of the number of well educated, ambitious and highly intelligent junior staff.

I was then promoted to the Department of Industry and Commerce as its senior economist in charge of the Economic Analysis Branch. I was now a senior officer in a much more hierarchical department with three sections and seventeen staff. I had also also inherited a branch under pressure with serious internal problems that needed to be fixed.

I had made special transition arrangements and had been receiving copies of the pinks, all branch correspondence, for a month before I formally took over. I had also met all the staff at lunch and had spoken on a regular basis to the acting branch head. So I had a fair understanding of the nature of the work and indeed was already carrying out some of the duties at the time I moved across.

Then I hit a wall on arrival. I knew that there were problems, but I wanted to make my own mind up about them. And indeed I am very glad I did because the problems were not quite as they had been presented to me. But initially I found it impossible to get the information I needed to make judgments. There seemed to be some form of barrier.

I had not changed. I was still applying the management approaches that had worked so well in Treasury. So was was the difficulty? It may sound dumb, but it took a little while to work out that I was now being treated as a senior boss, that I had moved from being one of us to one of them. As a consequence, people were now filtering what they told me.

I know that this problem is not unique. I also know that most managers are aware of it, although my experience has also been that a surprising number do not recognise its full extent. I have seen too many CEOs in particular who think that they know what is going on, that they do get good information, when the opposite is clearly the case.

The first thing that I had to accept in my new role was that the problem was real and was not going to go away. It made perfect sense for my staff to treat me with a degree of caution because I was simply too important to them to do otherwise. Importantly, I was now wearing a wider range of hats so had direct responsibility for enforcing policy in a way that had not applied in the past.

I also had to accept that it was going to take time to build trust. Trust did not mean, to use an old Australian phase, being one of the boys, boys in this case including both sexes. Rather, it meant treating people consistently and fairly, protecting confidences, recognising achievement and providing top cover. We used the term top cover to recognise my continuing role in protecting my people, in ensuring that they had the operational freedom they needed to do their job.

I will write on the top cover issue in more detail later because I believe that this is an absolutely critical condition for the creation of high performing teams.

Given that the communications problem was real and that it was going to take time to build trust, I still had an immediate need to find out what was wrong in the branch, what to do about it. Here I did two things:

  1. I focused on understanding work flows. What was being done, who was doing it, how was it being done, at what standard? I must emphasis that this did not mean micro-management, itself a major problem in professional services. I saw my role in setting quality standards and then letting people get on with it. As I gained understanding I was able to identify a few immediate problems that I could act on that would help people, thus building trust.
  2. I also got out of my office a fair bit, just talking to people, while also encouraging a range of branch activities. Some of this was informal and social, just stopping by people's desks to ask them something, follow up something. I also tried to find ways of working with as many people as possible, trying to help them on particular tasks.

In combination, this started to give me a feel for the the real scope of branch activities, of the strengths and weaknesses of individuals, of the real problem areas. I was also able to triangulate, to look at a person or an issue using several different information sources.

People's perceptions are always imperfect.

Two of my people were perceived by the Department as non-performers. I formed a different view.

One in a fast response, high pressure area was being so badly crippled by tension induced migraine headaches as to render him a non-performer. Yet when I talked to him I found his deep knowledge of the Australian economy and of economic statistics invaluable. He also had a female staff member who I felt was being under-rated, who had considerable potential.

In this case, and with his full agreement, we restructured section operations so that the female staff member and I worked on the fast response stuff, mainly daily economic briefings to the minister, while he focused on longer term issues. His migraines eased, the standard of our economic advice improved, while the female staff member seized the opportunity, in so doing moving onto a faster promotion path.

The second case involved a deputy section head who was perceived as non-performing in large part because he could not work the required hours. When I looked at this case I found that he had a non-performing section head who spent a lot of time on a private business interests and that he was in fact trying to carry the section. I also found that he was a single father with four children, creating enormous problems for him in trying to balance work and family. There was simply no way he could be on call in the way the Department was trying to demand.

In this case I facilitated the exit of the section head. I say facilitated because the section head and I agreed that he should go on immediate leave without without pay to do other things. A little later he resigned.

In doing so I found that the Department was well aware of the performance problem. I spoke to the section head in the morning and then prepared the necessary request. The required Departmental and Public Service Board approvals came through in just two hours, with the section head on leave that afternoon. When I commented on this, I was told that it had been just too difficult to handle previously!

I now restructured the section, making the deputy section head acting section head. With his cooperation I also restructured the work to give him greater time flexibility to meet family needs with other staff providing back-up when he was not there. He was later confirmed in the section head position.

None of this would have been possible if I had not spent the time required to overcome the communication barrier created by my role as boss.

Sunday, November 19, 2006

Small Business USA - a business primer

I must congratulate David Anderson for a series of outstanding posts on his Small Business USA blog.

This is a new blog in which David has been working his way through key issues facing firms that wish to bring in new equity partners. He began with the business plan and is now discussing marketing. While David's starting point is admission of equity, the posts are building a core business primer relevant to all businesses.

I mention the posts on this blog for two reasons.

First, the posts are relevant to all those concerned with the management and marketing of professional services.

Secondly, the posts provide a valuable check list for all professionals providing management or business related advice.

Keep up the good work, David.

Tuesday, November 14, 2006

Legal Fees Review Panel - Legal Costs in NSW

Chris Marston and I have been having an off-line conversation on issues associated with value pricing. As part of this I sent Chris a copy of a recent report by the Legal Fees Review Panel on Legal Costs in NSW.

Given continuing US discussion on time based billing and associated problems, I thought that this review of the Australian position might be of interest to a broader audience (here).

Friday, November 10, 2006

Professional Services - On Time, Time Keeping and Performance Management

One of my recurring themes with my colleagues has been the need for all of us to keep time sheets. I know some do and some don't. But, in my view, we all should. So I would like to start by looking at some time keeping issues.

When I go into a professional services firm, I start by finding out about their time keeping systems. I do this regardless of the assignment. Why? Because as a strategic consultant with a strong expertise in professional services firms, I know that measurement drives performance. That is, we focus on the things that we measure. And in doing so, we set the structure for performance across the whole firm. To illustrate.

If the time keeping systems are sloppy, then I know that I can normally get an immediate improvement in bottom line performance by tightening up those systems. The reason for this is simple. Our memories about time are very imperfect. As a general rule, filling in time sheets at the end of the day normally leads to underestimation of time on time on particular jobs of up to a third. This figure can rise to 50 per cent if time sheets are filled in on a weekly basis. So it is important to capture time properly.

In my experience, people often become very uncomfortable at this point. We have been charging the client x. We are going to lose our clients if we now charge them x plus 30 per cent. Sometimes these concerns have a degree of validity. If so, we know that the firm has a performance problem that has been concealed by the sloppy time keeping in that they have in fact been discounting their fees. Nevertheless, improved time keeping nearly always flows through to an immediate and positive bottom line impact.

This holds for both time based and fixed price charging. In fact, accurate time keeping is most important in fixed price or blended charging modes because otherwise you cannot dtermine the real profitability of either individual jobs or different classes of work.

Performance follows measurement

The next thing I look at is just what is measured and the targets attached to those measures since this indicates immediately what problems the firm might have, as well as just what will work in that firm.

I start by looking at individual time recording. What hours are staff expected to work, how is that time broken up between charge and firm time?

Now there is substantial variation in approach here between firms in terms of target hours and the break-up of those hours. However, from my experience there is an almost universal rule that firms focus first on charge time, after all that is where the income comes from, with firm time treated almost as a residual to be minimised. I also know that where this happens the firm is likely to experience problems in terms of over-runs in charge time, together with unwillingness on the part of staff to commit time to marketing or personal development since this is usually included in firm or non-charge time.

The lesson here is that firm time is an asset that requires conscious management.

I then look at the way in which performance is assessed.

A key issue here is the extent to which measurement, especially for more senior professionals, is solely based on personal performance. As soon as I see this, I know that the firm will have problems of delegation and revenue maximisation.

A second, broader, issue is the way in which measurement links to the stated objectives and values of the firm. As soon as I see a conflict here I know that there is a problem.

Time keeping, performance measurement and performance for the individual independent

Many smaller independents argue that these issues do not apply to them. We are small and know our own business. The reality can be quite different.

To begin with, most if not all of us overestimate our real working hours. As soon as I hear someone say that they work 55 hour weeks, I am suspicious and want to know what they mean by work.

Now I work reasonably hard. I also keep very accurate time records, logging off whenever I stop work. For example, my time on this report is recorded. During the shower I just had (I mainly work from home), I stopped recording and have just started again. So I know my real working hours very exactly.

Some weeks I work very long hours. But when I look at the overall pattern, I find that my average hours across the last five calendar years as a whole ranged between 43 and 44 hours per week. Further, given family commitments, the only way I can get to these figures is by working early in the morning, at night and at weekends.

So you can see why I am suspicious when some one tells me that they average 50 hours plus per week. It suggests to me that they do not really know their time. And, consequently, they cannot really judge the value attached to that time. The only way to overcome this is to keep proper time sheets.

Of course, it's not just the hours we work but the distribution of those hours that is important. Here time keeping is very important in adjusting priorities as we go along.

On Activity versus Reflection
One of the things that I try to focus on in time monitoring is the level of time devoted to service and personal development.

In my experience, independents can be broken into two groups, those that act and those that both act and reflect.The majority of independents act, get the job, do the job. Of course they learn to some degree as they go along, but this is limited to what they notice and internalise while doing the job. A smaller group stands back and reflects on what they have learned. Within this second group, a still smaller cohort attempts to define and document.

In my view, action combined with reflection is essential to professional and business development in laying the basis for future work. Further, the process is greatly reinforced where the lessons are properly defined and documented. Without these steps, we will not have the things we require two years out.

On the difficulties of reflection

The problem, of course, with reflection, definition and documentation is that it takes time. This can make it very hard to do.

I was reminded of this at a dinner in Sydney for one of our senior colleagues who was in Sydney because of the work he is doing with a specialist medical college on the definition of medical competencies.

Over dinner, our colleague talked about the fascinating leading edge work he has been doing with another client. All those present could see how this might form the basis for a new national service offering. We could all share our colleague's frustration about the way in which other pressures made it difficult for him to do the necessary thinking and writing required to really take advantage of the work.

There is no easy answer here. We just have to do the best we can, recognising that we are all human. The key thing is to recognise that action is required and therefore to allocate at least some time despite other pressures.

Thursday, November 09, 2006

Ndarala launches new blog

I put the Wednesday forum aside this week because I have been working on another project.

I have not talked much on this blog about my own activities because I have seen the primary purpose of the blog as improving the management of professional services firms. However, I need to talk here about what I do because this sets a context for this post.

My day to day activities centre on two things:
  • trying to help individual clients, especially professional services firms, improve performance
  • coordinating the activities of the Ndarala collective.

Ndarala is a funny animal. Formed in April 1996, our mission is to help the independent management related professional practice and professional achieve their objectives through cooperative action while maintaining true independence. We try to achieve the first through the creation of a framework that will facilitate cooperation, while the second dictates that members chose the level and direction of participation that suits their individual needs.

Making this work is not all beer and skittles. The very fact of independence that creates the need for cooperation also creates the main barrier to cooperation.

One of Ndarala's strengths lies in the spread of its people across professions including law, engineering, training and management consulting, a second in the service spread of its professionals, a third in the different marketplaces served. While this diversity creates its own challenges, it also provides an opportunity for cross-fertilisation. Certainly I find it very valuable in a professional sense.

Collectively, the Ndarala people create a lot of material of value. This is presently widely spread. We have therefore decided to create a new Ndarala blog to try to make this material more accessible to a broader audience while also providing a forum for comment on specific issues of professional and management interest.

In doing so, we have also been influenced by the increasing tendency of people to search blog posts for material as compared to broader web searches simply because so much current material is now best accessed by blog.

The new blog does not pretend to be an easy read. Because we are planning to use it as a point of reference as well as a place of comment, many of the posts will be much longer than normal, full articles in their own right. Further, the spread of interests of Ndarala professionals makes for a wide range of potential topics.

Still, we hope that it will prove to be of value to a broader audience.

Tuesday, November 07, 2006

Professional Services - selling your practice: making the sale succeed

I was flattered to receive a mention on Chris Marston's Inside the Firm of the Future, although I should note for the record that I am not myself an attorney, an inference that could be drawn from Chris's words.

Chris's article Apathy Abounds, Until The Walls Come Tumbling Down addresses the issue of poor succession planning in medium and big size firms, using a comparison between partnership and corporation structures to make a number of points relating to management and governance. These are issues that I have been addressing as well.

In my last post I looked at the mechanics and some simple maths associated with sale of small practices. In this post I want to look briefly at what is required to make a sale a success for both side. This is not rocket science, simply basic common sense.

The approach I described in my post was designed to reduce financial risk while increasing chances of success through transition arrangements with sale price dependent on performance in the period after the sale. However, risks still remain.

These risks are not so much financial, but rather the danger that scarce time may have to be diverted from other activities to try to make things work. Both sides can take action to reduce this problem.

Key Risks

There are a number of common reasons why acquisitions of the type we are talking about run into problems. They can be summarised this way:
  1. System and process incompatibilities. Information such as client records must be migrated from the old to the acquiring practice. Because systems and processes vary between practices, problems can arise in doing this.
  2. Business incompatibilities. This area includes service offerings, billing approaches and pricing policy. Simple imposition without thought of the acquiring firm's billing and pricing policies may lead to very real business problems.
  3. Client loss. Acquisition without a clear client migration strategy may lead to significant client loss.
  4. Cultural incompatibility and integration failure. This links to earlier points, but extends beyond this to include issues of cultural fit between the selling professional or practice and the new firm as well as failure to properly transfer knowledge from the original to acquiring practice. A clear integration strategy is therefore required.
  5. Exit failure. Exit failure comes about because both sides have failed to define properly how final exit is to be handled. Results can include unhappiness on both sides together with client loss.
Importance of the Due Diligence Phase

As I said, none of this is rocket science. Yet I remain amazed at how often both seller and buyer fail to address these issues.

The due diligence phase is critical if problems are to be avoided. Too often, this phase is seen in narrow terms, checking facts, negotiating required contracts. In fact, it is the core phase during which all the management issues associated with the acquisition need to be addressed and a proper integration plan developed.

Monday, November 06, 2006

Professional Services - selling your practice: terms of sale

Many self-employed professionals or small independent practices assume that nobody would want to buy their practice. In fact there is a marketplace, albeit imperfect, for such practices. This post looks briefly at the mechanics involved in the most common sale approach.

The normal steps are:

  1. Buyer and seller define an agreed date for the acquisition.
  2. The seller agrees to continue to work for the acquiring firm for an agreed period to ensure smooth transition of the practice business to the new owner. This is normally a minimum of a year but can be longer depending on mutual interests.
  3. An agreed remuneration package is defined for the transition period. This is usually based on an agreed percentage of the fees flowing from the acquired practice client base taking into account overhead costs, any added service delivery costs and a profit margin for the acquiring firm.
  4. An agreed price is defined to be paid at some point in the future, often the end of the transition period, based on the performance of the acquired practice during the transition period. The price many be paid in a single payment or may involve several payments again linked to performance.

A simple example showing the maths in operation. Assume a small practice with a single professional coming up on retirement, own office and a secretary, fees say $200,000 with a pretax net of $120,000. This is the type of practice that might normally close or simply run down as the owner gets older.

The two parties agree that that the practice will be acquired on the following terms:

  1. The seller will receive 50 per cent of the paid fees he/she generates during the following year from both acquired clients and work done by the owner for other firm clients. Say this is $200,000. The acquired professional will get $100,000.
  2. The seller will receive a cash payment at the end of the year based on 60 per cent of billed fees generated during the previous year from the acquired practice adjusted for any potential bad debts. Say this is $220,000. The acquired professional will get $132,000.

Under this arrangement, the acquiring firm pays out $232,000 plus any added variable costs associated with the extra business but receives $220,000 in added fee income. This means that it has acquired an added fee base of $220,000 for a net cost ignoring any added variable costs of $12,000.

Assume that the seller would have kept the practice going for another twelve months and then closed. He/She has received $232,000 for the period, an extra $112,000 as compared to the closure option. Both sides have benefited.

I recognise that there are many variables involved. In a later post I will look at what is involved in making this type of arrangement work.

Friday, November 03, 2006

Corporatisation & Structural Change in Law - a Canadian Perspective

As part of my monitoring I came across a very useful post on the Canadian Slaw blog, the practice of law in the 21st century, looking at some of the changes in the profession from a Canadian perspective.

One thing that I found interesting were the similarities between the Australian and Canadian perspectives. The writer, Jordan Furlong, looks at the changes in the UK as a consequence of national competition policy, linking this to possible changes in Canada.

In Australia, too, national competition policy has forced changes across all the professions, with the change wave now hitting law.

I note that Canada also has problems in attracting lawyers to regional areas. I suspect that, again like Australia, this problem is not unique to law. All very interesting.

Professional services & the Demographic Time Bomb - a postscript

As part of my research on demographic issues, I came across a rather interesting blog called demography matters providing demographic information as well as discussion on the individual country position around the world.

Thursday, November 02, 2006

Wednesday (more correctly) Thursday Forum - The Demographic Time Bomb

Continuing my attempt to encourage discussion, my last post (31 October) People Management in Professional Services- the Demographic Time Bomb dealt with the impact of demographic change in an Australian context. Just to summarise a few key points:
  1. The number of Australians attending University has not increased significantly since 1996. The economy has gown rapidly since then. Part of this growth has been supported by productivity improvement (working smarter), part by people simply working harder. Growth has now reached the point that there are skilled labour shortages across the economy.
  2. In the absence of an increase in the proportion of Australians going to University, the number of Australians attending University over the next ten years is unlikely to increase. Further, over this period an increasing number of the baby boomer generation will be retiring. All professions and professional service firms will be struggling to find people to support growth and replace retirees.
  3. Attitudes to work have changed and are continuing to change across the complete age spectrum People are tired and less willing to make the personal contributions (the working harder) that supported previous growth.
  4. If my analysis is in any way correct, people recruitment and management is going to be the single most important strategic issue firms will face in the next decade. Why, then, do so few appear to be worrying about the issue?

Is my analysis for Australia correct? Do the same problems exist in other countries? Are firms in fact responding? What do you think needs to be done?

Tuesday, October 31, 2006

People Management in Professional Services- the Demographic Time Bomb

On 12 October in Changing Gender Balances in the Professions - a question for you? I reported on the changing gender balance in Australia - the increasing dominance of women in many professional courses. I wondered if this pattern was repeated in other countries, what practical impact it was having in management terms.

This shift in gender balance is taking place at a time of demographic change in developed countries, an aging of the population. I looked at the Australian impact of this in Demography, Universities and the Trades in Australia, a post on my personal blog. One of my key conclusions was that numbers in the traditional university entry level cohorts were essentially stuck in a narrow band.

This comes through when we look at student numbers. In a later story I discussed the report released by Bob Birrell and Virginia Rapson. This suggested that there had been no real increase in the number of Australians attending university in the decade since 1996, with all the apparent increase in numbers coming from an increase in overseas full fee paying students. Education services is now one of Australia's largest export industries.

With stagnant numbers expected to continue in the entry level age cohorts for the next decade, and in the absence of significant change in post school education participation rates, by 2016 Australia will have had two decades of zero increase in actual numbers attending university.

Over the last decade the Australian economy has grown rapidly by world standards. We have accommodated this growth largely through improved productivity aided by skilled migration. Part of the productivity growth has been real (working better), but another part has simply come from working harder as measured by increased working hours.

After a decade of fast growth, skilled labour shortages have emerged across the Australian economy from skilled trades through para professionals and professionals. In some cases, engineering and dentistry are examples, these have reached crisis point requiring urgent corrective action.

There is a further factor. Skilled people are increasingly mobile in a world marked by global skills shortages and increasing competition for particular skills. Something over 800,000 Australians now live abroad. In the words of a Senate Committee (here) that examined the expatriate issue, "Australian expatriates increasingly tend to be young, highly skilled and highly educated", that is just the group the professions need.

Australia clearly has a problem. If we now track forward, you have to ask how we are going to sustain growth in the face of stagnant student numbers combined with growing global competition for good people. Worse, over the next decade an increasing number of baby boomers will retire, so we have to find replacement people as well as people required to carry out new activities.

I have painted a fairly stark macro picture. If my analysis is in any way correct, then individual firms are going to be struggling to get and hold the people they need. They will also be facing another challenge as well in that attitudes within the professional work force towards work have changed, a process that continues.

I know a fair number of Australian senior professionals. I find it disturbing that so many of them are to greater or lesser extent unhappy with their professional life. They are, quite simply, tired of the constant pressure. In the words of one person I know well, "It's just not fun any more."

When you look at younger age groups, you find an increasing proportion that are no longer prepared to pay the price associated with traditional career success. They, and especially the women, want a different life style.

I am writing from an Australian perspective. However, I do not think that this is a uniquely Australian problem. The demographic patterns that I have talked about are wide spread, while my monitoring of global discussions suggests that the attitudinal issues I am talking about are also wide spread.

This brings me to something that puzzles me. If my analysis is correct, the people challenge is going to be the single most important strategic issue all firms will need to address over the next decade. Why, then, is there so little apparent interest in it? The discussion is there, you only have to look at David Maister or Bruce MacEwen to name just two to see it, but it does not seem to be getting the traction it deserves.

Is it because individual firms think that they can deal with it themselves? Are people just too busy to focus? Have I simply missed the discussion?

I don't know, and I find it very frustrating. There are so many things that firms could and in my mind should be doing now to set themselves up to manage the issue, things that would improve performance anyway. How do we get the story across?

Monday, October 30, 2006

Corporatisation in Professional Services - Goodwill and Integrated Legal Holdings

"It is something of a misrepresentation to suggest that there is goodwill at all", said one senior Perth barrister. "Who in the legal profession recognises goodwill? The big firms do not recognise goodwill." Quoted in the Australian Financial Review, 27 October 2006, in a response to the proposed float of Integrated Legal Holdings.

To my mind, this is one of the most absurd comments that I have heard. Goodwill is the core asset of most professional services businesses. To say that it has no value is like saying that the practice/business has no value beyond a limited range of tangible assets.

In an earlier post - Professional services : mergers, acquisitions and goodwill - I looked briefly at the goodwill question, suggesting in part that action by partnerships to abolish goodwill opened the way for corporatisation by creating a gap between the partner share as valued by the partnership and the external market value.

This is not rocket science. The key question in buying a business is the level and sustainability of profits. Here it does not matter if the business assets are tangible or intangible. Abolition of goodwill allows an aggregator to get a practice at lower price by offering partners a return for an asset carried in the books at zero value.

We saw this in medicine. Corporatisation and aggregation began with the higher value added areas such as pathology, but then spread into general practice. Doctors, especially the older ones, rushed to sell their practices. The big question was whether or not the profit margins were large enough to support the process. So far the answer appears to be a qualified yes.

Law is far more profitable than medicine. Not only are top partner incomes higher, but so also is profit as a percentage of revenue. To this point law has been protected by regulatory barriers. These barriers are starting to go. As they do, the aggegators will move in.

Friday, October 27, 2006

Professional Services Management - Conversations

This post reports briefly on some of the conversations I have been involved with on and off line, as well as interesting posts I have seen.

David Anderson of View Italy (one of my favourite soul blogs: just look at his latest story on cheese) has launched a new blog called Small Business USA focused on his professional work as a private equity adviser. The blog is still new, only seven posts, but includes a range of material relevant to those interested in professional services. For example, his post on Is it a Business or a Job raises very similar issues to those that I have been trying to get across in my comments on the self employed professional vs the business builder.

Noric Dilanchian continues to add superb content to his site. I really enjoyed his post on a recipe to make a high net worth chef. Perhaps Alaric 1 would indeed have demanded a different ransom to leave Rome unsacked!

Noric spoke during the week as a Sydney lawyers' seminar on precedent automation. He and I have been working together over many years on knowledge management issues through our joint involvement with the Ndarala Group. Knowledge management is not easy because it starts not with technology but with management analysis. At some stage (I say some stage because the quantity of things I want to write about seems to just keep on expanding) I will take some case studies here.

Those who read this blog will know that improving people management in professional services is one of my obsessions (here for a summary of previous posts). Bruce MacEwen's Adam Smith blog had an interesting story on Allen & Overy's attempts to improve associate retention. The story begins:

Associate retention/attrition may have always been a chronic problem for the (legal) industry, but is it only me or is the situation actually deteriorating? Annual attrition rates of 25% at AmLaw 50 and UK 50 firms are now widely reported, and as I previously noted one downtown NYC firm lost 7 of its first-year class of 25 associates between September, when they arrived, and the following April over just 7 months.

This is a real problem that affects firm profitability across many professional services areas. Take the cost including time of graduate recruitment. Add to it the training costs including time for first year training. Then divide it by the number retained at the end of the second year to get an average cost per head. The results may frighten you. Keeping staff is not rocket science. Why, then, are so many firms bad at it?

I have to be careful about commenting on Chris Marston's Inside the Firm of the Future simply because I do not want to make it seem as the though the whole thing is just a two way conversation between the two of us. I think that Chris is suffering from the problem than many of us suffer from, the challenge of getting readers to respond.

Personal Reflections, my personal blog, now gets a steady stream of comments if from a very small group. I value this enormously. Each respondee is of great value, even that very small number ofanonymouss nasty responses. But it all takes time. So Chris, keep plugging away, you obviously have readers, and I will keep commenting if sometimes biting my tongue!

Because I regard each of my favoured blogs as a personal friend, I do regular searches looking at people who have linked to them in some way. Here Chris's blog led me to Jay Shepherd's Gruntled Employees blog. Jay, I like you comments on work-life balance.

This morning I chaired a meeting of Plan4Life, a small JV that I am chairing on behalf of a client. Our first multi-disciplinary training offering on estate planning being developed in conjunction with the University of Technology, Sydney, should launch in March next year.

I will brief on this later. For the moment, I simply note that this JV encapsulates another of the messages that I am trying to get across on this blog, the need for new approaches that will break down the silos separating the professions so that we can move towards a truly multi-disciplinary approach.

Enough for the moment.