Thoughts on ways to improve the management of professional services firms

Saturday, April 28, 2007

Professional Services - Values, Culture and Depression 1: IT vs law

In my last post, Managing Depression - a problem for individuals and firms, I talked about the problems created by the growing incidence of depression. A community wide problem, Australian survey data suggests that the incidence within the professions is most acute among lawyers and patent attorneys.

Why lawyers and patent attorneys? Part of the reason is, I think, that these professions combine individual work with a high pressure billable hours culture.

To provide a comparative base, consider the case of the IT professional.

A significant proportion of IT professionals work in teams in a project environment. Pressures can be high, but they are dictated by shared project milestones. This makes for cooperative working.

Firm economics come back to yield on time, but the relationship between each individual's performance and firm profitability is less direct than in the billable hours environment. Once a price has been set, the challenge is to manage resources to bring the job in on or below budget. Performance measurement techniques focus on the project.

Compare this to law. Work is individual. Firm profitability depends upon the yield on individual time. Each month the firm's performance measurement system spits out reports that focus on individual performance. So performance pressures are individual and direct.

In IT projects there is a manager, the project manager, whose task is to manage the project. This includes managing the people in the project at least so far as that project is concerned.

There is no real equivalent in most law firms. In many, people management is in fact seen as a diversion, something that diverts scarce billable hours into firm time. People are meant to manage themselves to achieve their individual billings targets.

All this creates a culture in which depression can flower.

Posts in this Series

Precursor posts:

The Depression series:

Wednesday, April 25, 2007

Managing Depression - a problem for individuals and firms

A major national Australian survey carried out by Beaton Consulting and beyondblue: the national depression initiative studied depression in the professions. The survey, designed by beyondblue, was integrated into Beaton Consulting's 2007 Annual Professions Study.

Over 17,000 respondents completed the optional depression survey and were compared to a general population sample of 2914. The survey found that professionals and students experience more depressive symptoms than the general population.

When making comparisons between the professions, lawyers were found to experience the highest incidence of depressive symptoms, followed by patent attorneys. It was also found that respondents from law firms were the most likely to use alcohol or other drugs to reduce or manage feelings of sadness and depression. Depressive symptoms, however, were found to diminish with increased age, income and seniority.

More information on the key findings can be found here.

The Junior Lawyers Union blog has recently carried some rather sad stories on the impact of depression. I am not in a position to comment on the truth or otherwise if the individual stories, although the description of firm responses does fit with my own observations. Certainly, the stories illustrate the problems that can arise for individual and firm management.

Posts in this Series

Precursor posts

The Depression series:

Monday, April 23, 2007

Corporatisation (or corporatization if from the US) - Stocktale of Posts as at 23 April 07

One of the reasons why I do periodic topic based stocktake posts is the way it forces me to look back at past posts, to see what I have written and, more importantly, the things I have not written on.

Corporatisation is a case in point. Looking at the following list of posts, I can see a number of areas requiring follow up to fill gaps.

In only my second post (4 July2006) I looked briefly at the difference between self-employed professionals and business builders. The first group, the majority by number, focus on return from cash flow. The second focus on building a business looking for a return from the combination of cash flow and business sale. This leads to significant behavioural differences.

In the following post (also 4 July) Selling your practice: the self employed professional case I suggested that even self-employed professionals should take sale possibilities into account.

On 8 July I looked at the need for role clarification within partnerships in order to improve management and governance. This included the separation of returns on capital from payments for work. Once this was done, I suggested, the definition of roles and the remuneration to be attached to those roles could then be dealt with using conventional job analysis and remuneration principles.

On 11 July I introduced the topic of mergers, acquisitions and the abolition of goodwill.

I began by looking at the resistances and practical difficulties that would need to be overcome if returns from equity and capital were to be separated. I then suggested that separation of returns from equity and capital was linked to another issue, the increasing trend towards mergers and acquisitions within professional services, a trend associated with changes including demographic change placing pressures on both smaller and mid size practices to get bigger or get out. I then looked at the implications flowing from moves by some firms to abolish goodwill, suggesting that this created its own problems.

On 14 July I looked at the question of consolidation among accounting firms and especially the way that the WHK Group was using tuck-in acquisitions.

Then on 31 August in corporatisation in the Australian legal sector I foreshadowed a major series of posts looking at the Australian corporatisation experience across sectors. However, I then explained in on 6 September in corporatisation in the Australian professions - reasons for delay that I had met some practical problems including just how much to explain about the Australian system and that I had therefore put the matter on hold until I worked out the best way of handling it.

On 3o October I looked again at the question of the treatment of good will in the context of the proposed float of Integrated Legal Holdings. This was then followed on 3 November by a short note on corporatisation and structural change in the Canadian legal sector.

There was then a long gap until until 21 March 2007 when I looked again at the evolving corporatisation process in Australia, suggesting that law was now following accountancy down the corporatisation path.

In all, there is still an awful lot to write about!

Previous Stocktakes

23 October 2006. People Management in Professional Services - Consolidated list of Posts as at 23 October 06

12 October 2006. Blogs and Blogging - Stocktake of Posts as at 12 October 06

24 September 2006. Professional Mudmaps - Cultural Differences Across the Professions: Stocktake of Posts as at 24 September 06

12 April 2007. Common Management Problems in Professional Services - Stocktake of Posts as at 12 April 07.

Sunday, April 22, 2007

Junior Lawyers Union Blog the lessons for management

My thanks to Legal Eagle for drawing my attention to the Junior Lawyers Union blog.

I am always looking for stories or case studies that will illustrate management points I want to make, and there are some interesting stories here. The fact that the blog is written from a different perspective adds to the value from my viewpoint.

Wednesday, April 18, 2007

Time for Reflection - Banksia Flower



Photo: Gordon Smith, Banksia flower

The Australian bush can be spectacular in its rugged grandeur and its bright colours. But it is also true that people from countries used to bright greens can find the sometimes muted olive green hues of our forests strange.

Growing up in Australia's New England I took the bush for granted. It was just there. Now that I live in Sydney I miss what, to use an Australian Aboriginal phrase, I think of simply as country.

We all need time to pause and refresh, something that I am not good at. Gordon Smith's rather wonderful photos bring the feel and smell back.

Sunday, April 15, 2007

Professional Services Management and the Dangers of Elitism

In my last review on blog posts of interest I mentioned a quote provided on Dennis Howlett's AccMan blog, finishing As Dennis said, "Hmm…not so sure about that."

The quote itself seems unexceptionable enough on the surface. Dennis notes 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”

I do not have the full context, so should not comment on the specifics. However, the concern that the comment triggered in my mind was simply the dangers of elitism.

I often hear firms say that we try to recruit the best. I also see firms emphasising the weight that they place on the development of their best people. I see firms struggling in the marketplace to attract the cream of talent.

Leave aside the problems associated with making a reasonable margin on the work of such highly paid and mobile professionals. Bruce MacEwen has dealt with this in his writing on the salaries paid to associates in US law firms (here for example). The fact is that for nearly all firms in all segments of professional services this type of elitist approach is neither possible nor sensible. In fact, it can be downright dangerous.

In saying this I am not saying that firms should be satisfied with mediocrity. I feel just the opposite. Nor am I saying that there is not a place for special recruitment and training programs. These have their place. What I am saying is that the approach to people management and performance improvement needs to focus on all people in the firm, not just the selected few.

I do not remember of the top of my head - indeed I have a mental blank - who first used the phrase ordinary people doing extraordinary things. However, a simple web search shows that the phrase has become extraordinarily widely spread across a variety of areas.

The point of the phrase is that extraordinary results come from extraordinary performance of all people in the firm, not just the few. A firm that can energize its total staff will nearly always do better than that relying on on a selected elite.

Monday, April 09, 2007

Changes in Public Administration and their Impact on Public Policy

Over the last six months I have written a fair bit on changing approaches to public administration and their impact on the development of public policy.

I am interested in the topic in a personal sense because I have worked within the public sector as well as consulting to Government organisations.

I am also interested in a professional sense because I feel that the importation into public administration of models developed in other areas and in particular management has had a negative impact on the development of public policy because of a failure to recognise the original limitations.

As an example here, in my post Problems with Performance Pay I pointed to some of the problems associated with the attempt by the Australian Minister for Education to introduce performance pay, a concept drawn from the management arena, for teachers.

One of the difficulties with the blog format, and conversely one of its strengths, is the way that posts move around a topic and also evolve with time. The strength lies in the free form offered to thought. The difficulty lies in the way in which the evolution of thought, the way in which ideas and evidence support each other, is concealed from all but the very persistent reader.

There are not too many of the last. While some of the visitors to this post do look at multiple pages, the average number of page views per visitor is just under two. Life is too short for people to track through a range of posts to establish connecting threads, even with search facilities.

As a way of challenging this limitation, I began the process a little while ago of drawing together my various posts on public administration across blogs into a single series of posts on the Ndarala Group blog, doing a little editing at the same time to draw out the linkages. My hope is that this will then present the work as a more integrated whole.

Depending on the results here, I will then look at replicating them in the standard web format because this makes it still easier for the interested reader.

For those who are interested, the introductory post can be found here. To make navigation easier, I am putting a full list of posts at the end of each individual post so that the reader can more easily go onto the next post. So from the introductory post you can follow through the five post so far put up in the series.

Saturday, April 07, 2007

Tim Russell

In my last post Common Management Problems - dealing with poor performers 2 I mentioned the work done by Tim Russell, one of my Ndarala colleagues.

I have since discovered that Tim has created his own web site, something that I have been after him to do for a while. The problem has been that Tim is simply so busy that it has not been on his list of priorities. The site includes some interesting material on his work.

Now, Tim, my next target is to get you to create a supporting blog.

Friday, April 06, 2007

Common Management Problems - dealing with poor performers 2

My previous post on this issue focused on getting to understand the problem.

You now understand the problem and have to deal with the individual in question. What do you do? Again, while there are no easy answers, there are a number of practical things that you can do that will make things easier on both sides.

Note that I say easier on both sides. Depending on the circumstances, nothing may stop things being very unpleasant. But you have an obligation to the other person as well as yourself to makes things as easy as possible.

The Importance of Esteem

A very wise Ndarala colleague of mine called Tim Russell developed what he calls the microskillstm approach to interpersonal communication. Tim is an international trainer and management consultant with major clients on four continents.

Tim started by breaking all forms of communication down into a small number of classes. Examples include reflecting, summarising, give information, give opinion. He then went a stage further and linked each class to the effect on the other person's esteem.

Here Tim makes a very particular point.

All communication has some effect on self-esteem. When we nod or murmur mm mh during a conversation, we increase the other person's esteem by showing that we are listening. When we give an opinion, we may increase or decrease the other person's esteem depending on whether or not they agree with it, on what the impact is on the other person.

Because the effectiveness of communication is affected by listener response, the impact on esteem has a critical affect on the success of the communication. This needs to be taken into account in structuring discussions.

I make this point because conversations about performance, and especially poor performance, are some of the most difficult conversations of all since they bear upon a key thing for most people, the way we perform and are seen to perform in our job. The negative esteem effect can destroy the very thing you want to achieve through the conversation. The challenge is to manage this.

So how might you do this?

Know what You want to Achieve

The starting point is knowing what you want to achieve. If your primary objective is to gain information, say finding out what in fact is wrong, then you obviously need to follow a different approach than that holding if the person is to be fired.

I know that this sounds self-evident, but too often people rush in without a clear idea in their mind as to the end-point of the conversation.

Keep the Message Simple

People can only absorb so much before tuning out. This holds in all cases, more so where significant emotional content is involved. So you need to keep things simple, focusing just on core points.

Fit your Approach to the Message

You need to fit your approach to your message.

If your objective is to gather information, to perhaps confirm or scope a problem, then you start by giving information, explaining your concern. Then follow with questions to let the other person talk, to flesh things out. Summarise as the discussion proceeds to ensure that you have things right, that you have understood what the other person is saying. Then at the end summarise again, outlining conclusions reached including any agreed action steps.

If, on the other hand, you are going to fire the person, you do not want to get involved in an argument. The other person may well be upset, but you need to be able to handle this. So in this case you focus on giving information, why the action is being taken, what is involved.

There are a range of alternatives in the middle of these two parameter cases.

As a general rule, the greater the problem the more you focus on giving information, on summarising, less on asking questions.

I am not saying here that you stop the other person talking, although you may need to through judicious summarising. The key point is that, as a general rule, the greater the problem the more the purpose of the conversation is transmission of information to the other side, the less receipt of information from the other side.

Giving Information versus Giving Opinions

You will notice that I have used the words give information as opposed to giving an opinion. I have done advisedly because your objective is to explain, to give information and then, in most cases, to gain agreement as to next steps.

Previous Posts in this Series

March 12 2007: Common Management Problems - managing up

November 20 2006: Common Management Problems - the isolation of being boss

November 23 2006: Common Management Problems - the overenthusiastic boss

March 18, 2007: Common Management Problems - dealing with poor performers

March 27, 2007: Praise from Martin Hoffman for the Common Management Problems Series

Postscript

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

Monday, April 02, 2007

Adults and Social Networking

There has been an interesting discussion on Linkedinbloggers on the reason why adults as compared to younger people have been so slow to take up social networking tools for professional, business and personal use notwithstanding the apparent advantages.

I think that part of the reason lies in the use of the words "social networking tools" themselves. I think that these words carry a connotation that places the tools in a young ghetto. I also think that the emphasis on networking is a barrier since many adults are already struggling to keep in touch with their existing colleagues and friends and simply do not feel the need to network.

Beyond all this there is the simple problem of time.

In a case study on the Ndarala Group blog I looked at the possible use of blogs as a communication device within specialist medical colleges. There I referred to some work that I had done looking at the slow take up of IT among ophthalmologists. I said in part

To help understand this, I flow charted the daily life of an average Fellow. I found that they generally worked very hard seeing patients. While a few entered patient details into the computer, most dictated patient notes into a recorder over lunch and/or at the end of the day before they went home. They did so because this was the most time efficient approach. Then when they went home, often quite late, they had family commitments. This meant that they could not get onto the computer until quite late in the evening. However, this time was also their time for personal and professional reading, for personal business and for personal relaxation such as just watching TV.

The bottom line in all this is that no matter what the advantage to the college, Fellows will only access a blog if the time return to them is greater than all other alternatives.

I think that this remains true today.