Thoughts on ways to improve the management of professional services firms

Friday, March 30, 2007

Blog Posts of Interest

Photo: Gordon Smith, Airborne and out of the Stirrups, Armidale Show

With time so tight at the moment, I have a number of part completed posts. This means that I am in fact writing some material after the date appearing on the published post. So I have to watch that I do not put in stuff that in fact is later!

This post reviews some of the material that has been appearing on-line.

I continue to enjoy the Legal Soapbox in part because Legal Eagle writes about personal problems such as mixing work and family responsibilities. She also led me to this video, the Law Nemesis from the University of Queensland Law Revue. I have no ideas as to whether this insertion will work, since this is the first time I have tried to embed video.

A site that I like but also think is sometimes very strange is Shedworking and Homeworking. I like it because it deals with working from home, but I also find the focus on sheds, so many types of sheds, very strange.

Noric Dilanchian's site continues to be an example of just what a small law firm can do with the web. I admits to a vested interest here in that Noric is a fellow member of the Ndarala Group(here and also here).

I see that Noric is quoting on the site the work that Simone Flanigan did. Simone is now working in London, but did a range of work with Dilanchian including some joint work with me. Hi Simone.

I continue to enjoy Dennis Howlett's AccManPro, a blog with a particular emphasis on the management of accountancy practices. I was struck with a post from Dennis on the importance of being happy at work. He went on to say that John Bailey, KPMG’s UK director of coaching, was reported as saying that the onus is on a particular individual to develop talented people.

“This helps people to experience feeling well-managed, in terms of being treated in a way that helps them to maximise their performance and fulfil their career aspirations”

As Dennis said, "Hmm…not so sure about that." I think that this requires a full post to respond.

On an earlier post I responded to Bruce MacEwen's negative comments on the use of profit per equity partner as a performance measure. Now I see that Bruce has carried a report on the responses to a reader survey on the measure. Just in case I have not made my own position clear, I think that it - profit per equity partner - is dangerously misleading crap!

Well, looking at the clock that's all I have time for now. I will report on other blogs and posts of interest later.

Tuesday, March 27, 2007

Praise from Martin Hoffman for the Common Management Problem Series

I am grateful to Martin Hoffman for his compliments on my Common Management Problems series . This series takes me time because I want it to be simple and useful, drawing from my own experience. With Martin's approval, I am running his email to me as a post with my own comments.

Thanks for your series on Common Management Problems. I have a lot of ideas in my head about improving processes etc. Once I think I've got the solution, I will tell people. And move on to the next idea. And that's where I sometimes used to run into problems (and sometimes still do) because, as you point out, something that's obvious and clear to me, may not be as obvious and clear to the people I work with.

I think that Martin has caught something very real here. I think that any enthusiastic manager is prone to this fault. Certainly I am. Martin goes on:

But what I do now is to try and find "champions" who are quicker to understand and who I can trust to relay the message and repeat it and work with everybody else. In the beginning I tried to singlehandedly convince everyone in the organizations. Now I am trying to adhere to what I call my "Avalanche principle". I just try to push the right people, and usually it spreads. It doesn't always work. But when it does, the great thing is that those "champions" all feel like they have a stake in it, so they are very driven. And I get to think of the next thing sooner...

I think that Martin is spot on the money here. I think that we as managers have to create the climate, but when it comes to pushing things through we have to have our champions. Martin continues.

The other interesting observation here is that job level doesn't always matter. Sometimes it pays to inspire the very junior people and they will spread the message upwards.

Hallelujah brother! But its even better than that. Inspire the juniors and they will impose the message on difficult senior staff. Better still, they are usually the group with the best new ideas. Martin continues:

Anyway, I just wanted to say that I really enjoy this particular series on your blog. I hope you will continue with it.

Thank you, Martin. I will.

Monday, March 26, 2007

Interview with Chris Marston

It is a little while since I have reported on Chris Marston's Inside the Firm of the Future blog, although I have continued to read his material with interest.

I thought that I should mention that Chris has repeated an interesting interview on his blog about the founding of Exemplar.

Wednesday, March 21, 2007

Corporatisation - Law follows Accountancy in Australia

The individual posts on common management problems are not long, but they take a surprisingly long time to write. So while I am writing the follow up to my last post in the series, I thought that I should provide my international readers with a short update on the continuing process towards corporatisation in the Australian legal sector.

Australia's legal sector is now clearly following the trend set earlier first by medicine and then accounting in which aggregators buy up practices to create new corporate entities. As happened in medicine and accounting, the trend has been opposed by many in or connected with the profession. Nevertheless, I think that the trend is irreversible if only because, as I have argued elsewhere, the current treatment of goodwill creates a financial opportunity for the aggregators.

Chris Merritt's story in The Australian of 12 March 2007 provides a slightly sensationalised snapshot of the process at work.

Merritt notes that the 41 equity partners at the Australian law firm Slater & Gordon are expected to raise tens of millions of dollars from a float now in the final stages of preparation.

Details of the Slater & Gordon float are expected to be made public in the first week of April.

Merritt quotes sources as saying that the company is planning to use the money from the float to take over legal practices that have had difficulty adapting to changes in the increasingly complicated area of workers compensation and personal injury law. Slater & Gordon also hopes to expand into new areas of practice. Another attraction of a public listing is that the firm currently uses debt to finance a substantial proportion of its work in progress, WIP often created under no-win, no-fee agreements.

While much of the money raised in the float will go back into the business, a substantial amount will be distributed to current equity holders. The biggest winners are expected to be the firm's seven original partners who were behind its decision to incorporate in 2000. Since then, the firm has engaged in a string of mergers and internal expansions that have transformed it into a national organisation with 140 lawyers, 400 staff and 17 offices.

Other equity holders who stand to benefit from the float include employed solicitors who have gained equity in the business after being promoted, and principals in several small practices that have been taken over by the firm.

Merritt also reports that former Minter Ellison managing partner Phil Clark is backing a group which has already started incorporating and consolidating legal practices without a public listing. The venture, known as DJClark, has already signed up six firms.

According to Integrated Legal Holding's principal Brett Davies "there were plenty of valuable law firms throughout Australia and it was clear there was now a race to acquire them."

Sunday, March 18, 2007

Common Management Problems - dealing with poor performers

One question that I often get asked is the best way to deal with under performing staff. There is no perfect answer here, but there are a few practical things that you can do to reduce/deal with the issue.

The Manager as the Problem

In looking at my suggestions, bear in mind that poor management is the single most important cause of poor staff performance. So you need to look at your own management approach as well the under performing staff member.

Catch the Problem Early

One thing that I found is that too often emerging problems are either not recognised or not dealt with immediately, allowing a minor problem to grow into a major one.

This can be a special problem in professional services where people often work individually and in a degree of isolation from others. In more conventional organisations, day to day interactions - work and social - between manager and staff makes it much easier for the manager to see an issue and deal with it on the spot.

One of the reasons why I support (and here) simple management related appraisal systems not linked to pay is that they provide a regular structured way of looking at performance that can compensate to some degree for other weaknesses.

In the meantime, you can find out a lot, keep in touch, by asking simple questions.

Define the Problem: Get the Facts

Most people want to do a good job and be recognised for so doing, so you need to understand both the nature of the under performance and the possible reasons for it.

This may not be easy. Often, managers simply feel that something is not quite right, that the person is simply not performing in the way they would expect. Sometimes people seem to be performing well along one dimension, not on another.

Step one here is to write down your concerns and then test by looking at the facts. Sometimes the results may surprise you. To illustrate by example.

I had one staff member who was seen as creating work, as doing things that were outside her charter. There was considerable resistance to paying her overtime.

I established that she was indeed doing things that were outside her formal charter as laid down by a recent reorganisation. I also found the reorganisation itself was flawed, that mission critical work elements had not been properly recognised and that the staff member had in fact been forced to do the extra just to keep things going.

In another case, I found an undefined feeling that our receptionist was not doing her job properly, that she was away too much. All that was required here was a simple check of our records. This showed a pattern over some time of varying Friday and Monday sick days. So in this case there was indeed a problem.

Take a Deep Breath

Okay, you have got the facts. Now what do you do about it?

Obviously this depends on the nature of the problem. However, my usual advice is pause, to take a deep breath. Too often, people go into see problem, fix problem mode. This can be disastrous.

Take the time to think your course of action through.

What options do you have? Can you address it indirectly by, for example, changing work flows? Or your own approach? What is the fair thing to do?

Once you have done this, then you will have a better feel for what to do.

I will extend this analysis in my next post looking at common mistakes people make in acting on staff problems.

Previous Posts in this Series


The posts on dealing with poor performers now form the building blocks for a series on depression. The full depression series follows.

Precursor posts:

The Depression series:

Friday, March 16, 2007

Performance Measurement - Profit Per Equity Partner (PEP)

People love pecking order measures. I suppose that this is only normal.

I was reminded of this by a recent post Bruce MacEwen’s blog about the vexed question of the use of Profit per Equity Partner (PEP) as a measure. There Bruce discusses an article by Guy Beringer, a senior partner at Allen & Overy, criticizing the use of PEP as a measure. Bruce then suggests a number of alternative measures.

My problem with the way that PEP is used is that PEP, at least as I understand it, is grossly misleading because it combines and confuses two very different things, the return from work and the return on capital. This confusion is deeply embedded in traditional partnership structures and ways of thinking.

In earlier posts (here and here) I argued strongly that we needed to establish a clear demarcation between returns on work and capital. This links to my main problem with PEP, I don’t actually know what the measure means.

To begin with, it seems to imply that all partners have equal shares. This may but need not be true.

Then problems can arise where firms derive revenue from services other than legal services. These may include back office services as well as revenue from training and publishing operations, to name just three. These can work to increase PEP in ways that have nothing to do with supply of legal services.

Moving on, there can be problems with accounting processes. I know of firms that express the profit pool in terms of cash available to partners after meeting all cash out costs including development and capital costs because that is the real measure to them. Some firms on growth trajectories are prepared to take lower “profits’ now in expectation of higher returns later. The profit pool measures on which PEP depends are not necessarily consistent between firms.

PEP is also affected by the markets in which a firm operates.

Senior legal salaries are far higher in some markets than others. So to the degree that a firm operates in a higher salary sector you would expect PEP to be higher because the salary equivalent component within PEP is higher. This says nothing about the firm’s real profitability, the return on equity.

Just to amplify this a little.

In practice, we all know that some partners contribute more than they get, others get more than they contribute. That is one of the reasons I support more transparent systems. However, assume for the sake of simplicity that all partners are equally competent, work equally hard and make similar contributions.

In these circumstances each partner can leave the firm and get a salary or salary equivalent some where else. This is the return for labour and will vary between markets. If PEP is not high enough to cover this, then the firm is in fact operating at a real loss. So the varying salary equivalent component in PEP of itself says little about real performance.

Monday, March 12, 2007

Common Management Problems - managing up

People's inability to delegate properly is one of the most common complaints at the various management training workshops I have run, a failure I have discussed elsewhere.

A related but less recognised problem is the inability of many staff to manage up. By managing up, I simply mean structuring what you do and how you do it to make life easier for you and your boss.

Why is this important? Well, the delegation problems that staff complain about are difficult in part because staff have no direct control over the manager, they just have to put up with it. By contrast, staff can control what they do and how they do it. This includes managing the boss to make life a little easier for all. So how do you do this?

Take Personal Responsibility: The starting point is to take personal responsibility for managing those things that you can control, focusing on the way you do things. This sounds simple, but the most common complaint among bosses - and especially from those who are in fact bad delegators - is that staff will not take responsibility.

There is a chicken and egg problem here in that bad delegation makes staff less willing to assume responsibility, thus adding to the problems created by the poor delegation.

Management Styles: The next point is to look at the way your boss works. Each person has an individual working style determined by the mix of character and experience. You have to fit the way you approach the boss within this style.

To illustrate by example. In an earlier post in this series on the over enthusiastic boss I talked about bosses who overflow with enthusiasm and new ideas, moving onto new things before past things are completed. Here I said in part:

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.

Making Things Easy for the Boss: The nature of much professional services work is individual, with a focus on individual performance. I do complain about this and the way it affects overall firm performance, but it is a reality that has to be dealt with.

Under individual pressure, people are less willing to invest time in managing others. The easier you can make things for your boss in managing you, the better the outcomes. What you do here has to be tailored to the boss's style, but there are a number of very practical things that you can do that generally work.

Perhaps the single most important thing is to adopt a structured approach so that your boss knows what he/she is dealing with in managing you. Bosses form views anyway, but you can determine or even change those views.

When asked to do something, ask questions so that you properly understand the task as well as any time lines attached to it. Summarise at the end to ensure that you are clear.

If you strike problems on a job, find yourself unclear or are likely to miss a deadline, let the boss know in time to allow a new approach to be worked out.

When you go to the boss with a problem or to report on progress, present in a clear and structured way. Don't just say I have a problem. Explain what the problem is, put forward any suggested solutions that you have. This makes it easier for the boss to understand and to respond in an effective way.

Be clear about the purpose of any communication with the boss, explain what you hope to achieve.

By the nature of the beast, most bosses feel instinctively obliged to provide solutions, answers. That's fine if that's what you want. But you may in fact simply want to discuss ideas, issues to help your own thinking. Things can get very messy indeed if the boss automatically moves into problem solving mode, leaving both sides completely dissatisfied. So tell the boss the purpose of the conversation.

Remember the boss is a person too. Here have a look at the first piece I did in this series on the isolation of being boss, a post written very much from a boss's perspective.

Most people like some degree of social interaction. They like to feel that people are interested in them. So take some time to chat, to find out what the boss has been doing. Your approach here has to be tempered by their personality and style.

Finally, try to structure your formal interactions so as to minimise time demands on the boss.

This is partially a matter of approach as already discussed, presenting things in a structured way. But you can also do things like working out how much time you think you need and then making an appointment, thus creating a structured meeting. You can also often wait until you have several things to discuss, again minimising disruption.

Previous Posts in this Series

Saturday, March 10, 2007

Gender Differences, Generational Differences and Personal Management Styles

In a series of posts last year on my personal blog, I looked at the question of differences between the generations - generation x, generation y and Nextgen. I returned to this theme a little later in Another Funny Mixed up Day where I protested the notion, among other things, that only those under a certain age could manage generation y.

I remain of the view that managing people is all about that, managing people, and has to be done individually independent of generational or gender differences. However, I am now reviewing some elements of my thinking.

Our individual professional and management styles are inevitably formed from our own experiences. My own style has been formed by my now extensive experience as a manager and professional adviser. This affects my approach in a variety of often unseen ways. We all know that this happens, but it can be hard to see unless something forces you to reassess things.

At present I am working as part of a team in a unit that is part of a much bigger Government organisation. I am held against a formal line position that is, in structural terms, at a level I last held in my early twenties. I am a fair bit older and have had a lot more experience than the majority of people I am working with and for.

While the organisation is very Australian in style - open, friendly - it is also hierarchical. Our unit is strongly female in gender terms measured by both overall numbers and management, in fact the first time I have worked in a female dominated group. As a consultant I have had many female clients and have worked in majority female teams, but that is a different thing.

To add to the complications, while I have had a lot of public sector experience, this has all been at a a national level. This is the first time I have worked within a state agency, and the culture and processes - the way we do things round here - are very different in all sorts of sometimes subtle ways. My styles and instinctive ways of acting derived from my own public sector experience do not necessarily fit in.

All this has forced me to look at the ways I work. I thought that I would share some of this with you because I think that it is relevant to management in general, to approaches to team and project work and to the development of new working styles that are now required because of the combination of demographic and cultural change.

Nothing that I say should be construed in any way as a criticism of the place where I am working. My focus is on the things that I am learning, the lessons as I see them for management in general, professional services in particular.

The Female Influence

The office has a softer, more social feel to it, with constant small social gatherings and celebrations for everything from Chinese New Year to International Women's Day to St Patrick's Day to welcomes for new arrivals.

This week my wife and I celebrated our twentieth wedding anniversary. I came into work to find hearts all over my desk, with congratulatory messages. I must say that I like all this, although as a male I found the International Women's Day shoe parade a little unusual as a work break!

Looking around, I contrasted the female feel of the place with two other models.

The first was the conventional organisation where the tone is male and women adopt the male styles, including aggression.

The second, one still common in many parts of professional services, is the largely female support unit within an organisation whose overall tone has been set by conventional structures.

Problems here were encapsulated for me several years ago when I was facilitating the appointment of a a practice manager for a smallish law firm. One candidate described the core role of the position as "managing the girls." Needless to say she did not get the job, but her attitude effectively summarised the problems sometimes found in female dominated support units.

I am not quite sure how you increase the feminine in conventional organisations, but I do think that we can learn in terms of the importance of the small ceremonials.

Generational Differences

This is the first time for a while that I have had a chance to work with younger people at the same level, looking across and up as compared to down, the manager perspective. I find this very interesting, in part because it fills a gap.

I know my daughter's generation (my girls are 17 and 19) as well as older generations, but I have had far less direct contact with those in their twenties and early thirties. Now looking up and across as well as down, I can see clear generational differences, although I am not sure that they are accurately captured by the conventional generational descriptors.

I am clearly more obsessive about work, less laid back. My younger colleagues work hard, but also (I think) have a more balanced attitude.

Management Experience

While there are generational differences, this does not affect the basic principles of good staff management. But here there is a real issue, one that is I think wide spread, and that is reduced real management experience associated with the hollowing out of middle management and the move to small team working.

Management is a skill and as such has to be learned by doing.

By the time I was thirty I had had reasonably broadly based management experience acquired in incremental bits. People today are not so lucky. Indeed, today people can and do reach senior management level without ever actually managing anything! This can lead to monumental organisation threatening stuff-ups, although the effects are usually lower key.

We try to compensate for this by reliance on systems supplemented by training, but this is really not enough. We actually need to build in, create, specific management experiences if we are to overcome the problem.

Learning New Roles

One of my problems as a professional has always been my desire to do as well as advise. I am not alone in this. All management related professionals suffer from this to greater or lesser extent simply because we want to see our advice implemented. This can be a real problem because it leads to us confusing our roles, becoming involved in things outside our mandate.

This is another lesson for me in my current role because I must limit myself. I have put must in bold to emphasise the point. If I do not, I move from asset to uncomfortable liability.

I knew this before I arrived, but have found it unexpectedly difficult.

In some ways, I have done every job in the current unit from top to bottom. I also have years of organisational experience. I find myself constantly wanting to react outside my formal ambit, to change things, to take command. However, this would not only undercut the chain of command, but is also potentially dangerous because I lack understanding of all the organisational nuances, the things that are known but unsaid.

My role has to be supporting the team to achieve the things they want/need to achieve. I think that I can play a valuable role here so long as I am disciplined.

I have emphasised this point because I believe that it has broader personal, professional and management importance.

The idea that we have to learn to work in teams, to adopt different roles, has been popular since at least John Naisbitt's Megatrends. Yet the reality is, I think, that it has rarely happened. We are all stuck in the roles and persona's we have developed. We still have to learn how to do this.