Thoughts on ways to improve the management of professional services firms

Wednesday, December 03, 2008

Australia's dominant role in Asia's legal services market

At drinks one evening in Shanghai, I was struck by the Australian legal presence in China. The following table illustrates in a fairly dramatic way just how big the Australian legal sector is in Asian terms.

Table: Asia's Top Fifty Law Firms by Country of Origin

CountryTop TenTop Fifty
Australia716
China27
UK-6
US15
Japan-4
Korea-4
India-3
Singapore-3
New Zealand-2
Hong Kong-1

Source: The ALB 50. Joint country firms allocated to main country.

The Australian dominance in both the top ten and top fifty is quite striking. Equally striking is the dominance of common law countries.

Looking forward, it will be interesting to see how Chinese and Indian firms perform. China is already number two.

The view over drinks in Shanghai was that China was using administrative action to tighten up on the grant of required visas to expatriate professionals.

From an Australian perspective, access to the Chinese market for legal services is a key issue in the current negotiations on a China-Australia free trade agreement.

Sunday, November 30, 2008

Managing the professional services firm - end month reflections November 2008

Tourism Poster

So we come to the end of another month and a rocky month it's been in some ways.

Just to take our mind of current troubles, this poster is from an exhibition by Australia's National Library, Follow the Sun - Australian Travel Posters  1930s to 1950s.

The scene is quite iconic of Australia then (c1930s) and now.

I continue to wonder whether I should merge this blog with Management Perspectives simply because two professional blogs are difficult to maintain.

I have decided not to for the present. To my mind, the two blogs are complimentary.

Management Perspectives provides a vehicle for my writing on economics and broader managements issues extending beyond this blog's focus.

I am better of maintaining both for the present, cross-referencing material as appropriate.   

Friday, November 28, 2008

Managing the professional services firm: a pause for reflection

As I write this post, it is twenty two days since my last post.

There is so much to write about. I have written many posts on other of my blogs, plus I have a large number of part completed posts on this blog. As issues come up, I start a post.

What to do? I have decided to bring up this explanatory post, then back-fill. I really want to maintain the continuity in my thinking and writing.

Updated

Australian law firms retrench

The economic downturn in Australia is clearly biting the legal sector.

A story in today's (28 November) Australian Financial Review - I cannot give you the link because it is behind the pay wall - records that Corrs Chambers Westgarth has retrenched fourteen lawyers to try to fit its business to the new economic landscape. This brings the total number of retrenchments including support staff to something approaching fifty staff.

Last week DLA Phillips Fox confirmed that it had retrenched twenty staff including twelve lawwers at its Sydney and Auckland offices.

Monday, November 24, 2008

A Scottish doctor's reservations about evidence based medicine - measurable vs the immeasurable

In my on-going series on the development of a discipline of practice, see Establishing a Discipline of Practice - stocktake of posts, I discussed the concept and some of the implications of evidence based medicine.

In Real world medicine a Scottish doctor expresses his concerns about the application of evidence based medicine in a UK context. In doing so, he makes a distinction between the measurable and immeasurable, suggesting that blind focus on the measurable

He has a point. Part of the reason for the development of evidence based medicine lay in the need to challenge and test previously accepted medical nostrums. However its blind formalised application can distort practice to just the measurable. This holds especially where application is mandated through formalised Government rules.

The issue of measurable vs immeasurable links to craft vs science.

Any practitioner knows that certain things work from experience even though the results cannot be proved in a rigorous scientific fashion. This is the craft component.

Yet we also know that practitioners, and this is not limited to medicine, apply things from belief independent of real results. Belief stands as a barrier. Evidence based medicine aims to test this. This is the scientific component.

In thinking about the development of a discipline of practice, we need to take explicit account of the importance of the immeasurable. Measurement is not all.

Postscript

A comment from Bob Quiggin on another post really made me laugh:

Just on evidence based Scottish doctors, perhaps the most famous is Sir Arthur Conan Doyle, who used to emphasise the importance of observation and evidence in medicine as a medical lecturer.

One of his favoured tricks was to take a beaker of foul tasting fluid, dip his finger into it, taste it, pull a face and then ask the class to do the same. Only after they had all tasted the fluid did he take them to task for not noticing that he had dipped one finger, but tasted another. Unlike them. :)

Nice story, isn't it!

Friday, November 21, 2008

In Defence of Partnerships

Who would have thought it? I have spent a fair bit of time crtically evaluating partnership structures. Yet now I feel the need to come to their defence!

The reason for this is simple. The best partnerships do tend to focus on their clients on one side, their staff on the other.

Note I say the best partnerships. Too many partnerships actually combine the worst elements of corporate structures on one side with the weaknesses of partnership structures on the other.

A key advantage of partnership structures at a time of economic downturn is that partners as owners can choose to reduce their own incomes in a way that senior managers in corporate structures cannot or will not.

This comes about because to partners as owners, reductions in remuneration flow (a partner loss) can improve capital performance (a partner gain).

I do not think that this detracts from the validity of my previous arguments. However, it does demonstrate the need to take a broad range of issues into account when considering firm structures.

Thursday, November 06, 2008

Economics of professional services - surviving recession 5: expanding the business 1

In my third post in the surviving recession series I emphasised the need not to simply freeze all new spending since this was likely to cripple your chances of doing the new things that might be required to survive a downturn. This is especially important if you want to grow the business despite the recession.

Just because the economy has gone into downturn does not mean that you cannot increase billings in your existing practice areas, nor expand into new areas. However, you also need to be aware of the problems involved.

The starting point is to understand your marketplace.

How bad is the contraction in your key areas? If the market is down by a third, and this happened in a number of professional services areas in the Australian economic downturn over 1990 and 1991, then you have to increase your market share by just over fifty per cent to maintain constant fees.

If you are already the market leader, this may in fact be impossible. In this case, you will need to consider new areas if you are to maintain or increase billings.

The next point is to understand your competition. They will be facing the same problems, and may respond quite aggressively. You need to be able to understand this and take it into account.

An example to illustrate.

The 1990 crash meant that all the big shops suddenly started looking for new work to try to cover their fixed costs, in so doing bidding for jobs that they would not have considered before. In the case in question, the firm (the consulting arm of a big consulting firm) had a survey centre whose work had dropped very sharply.

The Australian Department of Defence wanted a capability census carried out of a small but important local sector. This involved identifying and then contacting every industry participant, writing the results up in a standardised way to allow the Department to make judgements about both existing capabilities and capability gaps.

Defence industry was one of our core areas. We really wanted this job, cut our costs as much as we could while putting forward a very detailed methodology. The Defence area in question wanted us to do the job because they thought we would give the best result. However, without giving away information, they indicated that the big shop had come in with a much lower offer, making it very difficult to reject them even though their methodology was not as good. We and the big shop were invited to put in revised offers.

We really agonised over this one, Finally, we told Defence that we could not lower the price further because this would almost certainly risk a cash loss on the job. The assignment went to the big shop.

Later when we found out the tender price (tender results of this type are on the public record) we discovered that our opposition's price was 60 per cent of ours. We knew our costs very well. It seemed clear that they had no idea of the real costs involved. And so it proved. The job took twice as long as expected at a cash out cost on our estimate more than twice the tender amount.

The third point is to understand your clients. In a sense, the starting point in surviving recession is to try to keep what you have.

Now this one may seem self evident. Of course you need to understand your clients. You do, don't you?

The problem is that understanding clients is quite complicated and is actually not well done because it involves interactions at a number of different levels. Many firms are really quite bad at it.

I will look at the detail here in my next post in this series.

Next post. Previous post. Entry post.

Monday, November 03, 2008

Common Management Problems - get the booklet

Some time ago I began the Common Management Problems series as a way of providing nuts and bolts advice that might aid especially professionals entering into management roles to improve their performance. Measured by visits, the series has been quite popular.

I have now turned this into a simple and quite short word document to make it more accessible. To cover processing costs, I have put a small charge on it of $A15 payable through Paypal. Those who do not want the convenience can still access the material through this blog.

If you would like your own copy, please email me at ndarala(at)optusnet(dot)com(dot)au and I will send you the Paypal account.

Friday, October 31, 2008

Distant Hills

20081019-08-25-31-acrossTheRidges

Just for variety, I thought that I should finish October with a photo by Gordon Smith.

This country in Australia's New England ranges is country that I know and love. Great gorges cut their way in from the eastern coast, creating a complicated range pattern. Enjoy. 

Tuesday, October 28, 2008

Managing the professional services firm - what people want to know 3

Continuing my irregular series on what draws people to this blog, the most popular posts among my last 100 visitors have been:

This was followed by four equal posts:

And then a further four equal posts:

Quite a range really.

At the moment I am just recording. I think that once I have half a dozen posts in this series, they will provide a useful guide to further writing taking reader interests into account. 

Friday, October 24, 2008

Professional Services Management - a note on problems with continuous improvement

This post is really a note to myself.

I have always been a supporter of continuous improvement as a management approach. Recently I have begun to have doubts about its application in practice.

Take a reliable part time professional who is yielding a good profit to the firm. He/she may be balancing work and family responsibilities. Now increase the pressure to try to improve results. This will often result in an immediate increase in billings. However, this may in fact be just a short term result.

If the person is already in a personal balance position, just balancing work with other commitments, immediate tension is created. This may lead to subsequent declines in performance and even the loss of a profitable professional. 

In theory, continuous improvement starts be recognising the constraints faced by individual workers. In practice, these issues are often ignored.

Tuesday, October 21, 2008

Economics of professional services - surviving recession 4: getting the cash in

Continuing my series on surviving recession drawing from our experiences in the last downturn (entry point for the whole series here), a remarkable number of professional services firms are not good at getting cash in. Too many carry excessive work in progress, essentially funding client operations.

As recession bites, clients begin to delay payments to preserve their own working capital. In our case, we found that the average age of our receivables began to blow out from just over thirty days to forty then to sixty and even 120 days. I am talking about good clients who could pay. This tightened an already strained cash position.

To overcome this, we launched a collection program. Our problem here was to find a way of doing this without disrupting relations with clients (and especially individuals) on whom we were dependent for future work.

Many firms in this situation try to rely on individual professionals to follow up their own clients. He/she is your client, you sort it. This can work. However, many professionals find it an uncomfortable process. It is also one that can alter relations between professional and client. To overcome this, we adopted a multi-stage approach.

In most larger organisations, the direct client may authorise payment. However, payment then has to be made by accounts areas who may be operating under different rules.

We began with close monitoring.

Where our relations with individual clients were good (here I mean not just the organisation, but also the specific individuals involved) we found that we could sometimes get early payment even within thirty days by a private chat at the time of billing. In other cases where the individual might authorise but could not control payment, we focused on the accounts area. To do this, we had to understand the payment system in the client.

In our experience, the people we were dealing with in a professional role were happy to explain how their payment systems worked. Once we knew this, we could follow up.

Now here comes an important distinction from some firms. We did not ask our professionals to talk to accounts areas. They had neither the skills nor the time to do this. Instead, we used our own accounts people because they could talk like-to-like.

The approach was always the same. An initial call to check on the status of the account immediately following the thirty days. This was always done in a gentle, friendly fashion, seeking information. Our accounts people would always explain that they were doing cash flow planning. With on-going clients, a key aim was to establish individual relations.

In a remarkable number of cases we actually got fast payment. Where the accounting areas were operating under fixed rules - in one case an instruction to pay at 120 days! - we at least knew.

We already had tight work-in-progress monitoring systems in place, in combination with billing rules. A surprising number of firms do not - WIP can build and build. I have seen many firms still carrying WIP in the accounts that is more than five months old. This can play absolute havoc with accrual accounting systems because it creates a divergence between the firm's real position and that shown by the formal accounts.

If you do not have these systems in place, then you must establish them. Otherwise you may go broke while showing an apparent profit.   

Friday, October 17, 2008

Economics of professional services - surviving recession 3: don't freeze all new spending

This post continues my discussion on the best ways to survive recession, drawing from the mistakes we made in responding to the last major Australian downturn in professional services. Those interested can find the entry point for the whole series at the end of the post.

One of the first standard reactions to downturn is to place a freeze on all new spending.

We did this as the 1990 recession bit. Fees dropped by two thirds during the March Quarter. We were bleeding cash. We put a freeze on all new discretionary spending to give us time to respond. This proved to be a bad error.

The problem with this type of blanket freeze is that its stops all development activities in their tracks. It also increases the difficulties faced by existing activities in responding to changing market conditions. Both act to worsen the situation.

You may need to tighten spending controls sharply, but you have to ensure that cash continues to be available to support your recession responses.

Return to the entry point in the series.

Monday, October 13, 2008

Economics of professional services - surviving recession 2: know your business

In my introductory post in this series, I suggested that we had probably made every mistake in the book in responding to the severe downturn that hit the Australian professional services market place at the beginning of 1990, the last major downturn to hit professional services, at least in Australia.

Before describing some of our errors, I wanted to make a basic point: know your business. This may seem self evident, but in my experience the most fundamental error that firms make when facing trouble is to focus on corrective action without linking that to the nature of the business itself.

Most firms facing economic challenges respond in a small number of ways - they try to cut costs, they look for new business, if things are really bad they look for merger partners. Each has its place. However, the actual action taken has to be consistent with the firm's underlying business. To illustrate.

We had introduced an external director, a very senior experienced business executive with a sales and marketing background, to provide independent business advice.

As the recession hit and fees dropped, his advice was to cut back spend to the level required to restore profit. This meant retrenching professional staff. In start up, we were reluctant to do this because  it meant losing productive capacity and especially people whom we had invested in and were just becoming productive.

Both points of view were equally right, both equally wrong. Neither side knew at that point that the bottom of the downturn in the economy was then eighteen months away, a long period when you are struggling to survive.

Our director's business experience in sales and marketing lay in cyclical areas with considerable pools of trained people. The logical business response to downturn was to cut costs, then rebuild as the downturn came to an end.

Our business was different. Our productive capacity was directly related to staff time. Because we were working in a new area, developing new types of professional services, we had had to train our own people. Apart from loyalty issues, staff cuts meant a longer term reduction in productive capacity, not something that could be turned turned round quickly.

If you have to discuss serious business restructuring issues, please do so off-site. Our board meetings became difficult affairs focused on arguments about the quantum of the required cuts. Staff quickly became aware of the nature of the dispute. Enthusiasm and productivity dropped.

I said both sides were equally right and wrong. We did need to make cuts. However, instead of focusing on the cuts themselves, we should have focused on the business - what were core activities, what development activities might be deferred, how long were projected pay-back times and so on.

Had we done this first instead of moving straight to a discussion focused just on financials, we would have been in a far better position to address cost issues in a sensible way.

Each firm is different. The key lesson is that effective action in a downturn starts with the business, not the financials as such.

Return to the entry point in the series. 

Sunday, October 12, 2008

Economic Analysis - finance 101 and the global financial crisis

I began my professional career as an economist and policy analyst, later moving into management consulting. Recent developments in the global have led me to dust off some of my original skills.  Given this, I thought that it might be sensible to cross-link some of my economics posts for the benefit of readers to this blog.

Saturday Morning Musings - finance 101 and the global financial crisis provides a simple introduction to some of the issues associated with the global financial crisis.

Monday, October 06, 2008

There is no management silver bullet

Over on my personal blog, I have been trying to pull together some of my current concerns about management thinking. For those who are interested see:

I will add other posts as I complete them.

From a professional services management viewpoint, the thing that I would add is that there is no such thing as a management silver bullet, a single solution that will solve your firm's management and business problems.

I know that this will sound self-evident. However, you would be surprised how often I have found clients expecting me to provide a simple universal solution to their problems, or help them implement one that they have decided upon for themselves.

Management is a practical art form, not a science. Further, it is an art form that has to be carried out within the very particular cultures of firms and sectors.

Business improvement comes from a constant focus on improvement and is best achieved by continuous incremental steps. It is far easier in practice to achieve 100 one per cent improvements than one 100 per cent improvement.

I used to do a fair bit of hiking. On a long road carrying a heavy pack, the only way to go is one step at a time. Further, you need regular pauses to regain your breath.

Management is no different.

Saturday, October 04, 2008

Keddies case threatens legal billing practices

Back in July 2008 in Corporatisation, Keddies and professional ethics I reported on the problems facing Sydney law firm Keddies centred on allegations of overcharging. Since then the firm has been forced to retrench staff, while the whole legal billing system in Australia is now under review.

Those interested can find out further details here.

Friday, October 03, 2008

Thursday, October 02, 2008

New England brumbies



The photo by Gordon Smith shows brumbies (feral horses) at the junction of the Chandler and Macleay Rivers in Australia's New England Highlands.

The brumbies have always occupied a special place in the Australian imagination in part because they are free, in part because horses occupy such a pivotal position in Australian life.

Just a break from serious stuff!

Wednesday, October 01, 2008

The financial crisis - when traffic rules fail



This scene does not do the story justice because I missed the main shot.

I was standing there in Shanghai watching the traffic. A number of drivers needed to go in different directions, requiring others to give way.

As I watched, traffic grid-locked because each wanted to do their own thing independent of others. As a consequence, it became a zero sum game in which all lost.

Tuesday, September 30, 2008

The Importance of old fashioned management

Like many of us, the current financial crisis has raised issues in my mind about the way we all do our jobs. I mean this in a broad sense, including our approach to management and to community and political involvement.

The fallacy of modern management explores one element of this. Put crudely, we have allowed ourselves to get caught in a zero-sum game.

Sunday, September 28, 2008

Economics of Professional Services - surviving recession 1: introduction

Continued economic problems mean slowing demand for most but not all professional services. Insolvency practitioners, for example, are likely to have a field day!

The length of the last boom means that many professionals have never experienced a downturn. I have, and it's not pleasant.

At the end of 1989, the Australian market for many professional services collapsed, down one third in a very short space of time, a leading indicator of a recession that did not in fact bottom until the middle of 1991. We were in start-up fast growth mode at the time. In responding, I think that we probably committed every mistake in the book.

Given this, I thought that it might be helpful if I did a short series of posts on the major mistakes we made.

Later, I will add a list of posts in the series at the end.

Posts in the Series

Thursday, September 25, 2008

Return from China

I have been in China, hence the further delay in posts.

While we were there the financial crisis broke. There was a sort of morbid fascination in watching it unfold. At the same time, it was also fascinating looking at China on-ground, comparing what I saw with perceptions formed through Australian reporting in particular.

Perhaps the strongest impression was the weakening in the Chinese economy as compared to continued Australian reporting on China's economic strength. This came through in things such as local reporting on declining car sales, declines in manufacturing because of declines in international demand.

Then there was the milk scandal, something of immediate interest because we both drink milk. The damage to China's reputation has been significant, something the country could well have done without. The economic knock-on effects as well have been significant because of the sheer size of subsequent product recalls.

Wednesday, September 03, 2008

Establishing a Discipline of Practice - stocktake of posts

I hold two strong professional views. The first is that the professions can learn from each other. The second is that we need to establish a consolidated discipline of practice across the professions.

This post simply list previous posts discussing the development of a discipline of practice.

Sunday, August 31, 2008

Raising one's eyes unto the hills



I don't know about you, but sometimes I get very jaded in a professional sense. When I do, I go to Gordon Smith's photo blog.

Gordon's photos are from my home area. This one shows wattles in flower.

Wattle also known as mimosa is Australia's national flower. I really love the colour.

Monday, August 25, 2008

Managing the Professional Services Firm - stocktake of posts

From time to time I do stocktakes, pulling together past posts. These get submerged. It is also more difficult to edit posts that may be a fair bit back in the past.

Given all this, I am in the process of updating past stocktakes and then bringing them to the front of the blog.

Sunday, August 17, 2008

Common Management Problems - responsibility without authority

This post continues my common management problem series with a look at a very common problem, responsibility without authority.

This one can be simply stated. You ask someone to do something, make them responsible for delivery, but then do not give them the authority to carry out the task properly.

This all sounds so simple to fix, yet the reality appears to be that this is one of the most common of common management problems.

In many cases, it is simply a matter of personality or approach - we want to micro-manage. Equally often, organisational structures simply do not allow proper delegation.

If the problem is the first, then it's up to us. If the problem is the second and the structures cannot be changed, then the only solution is to reduce the scope of formal responsibility so that it fits with actual authority.

Previous posts

Those interested can find a full list of the posts in this series here.

Wednesday, August 13, 2008

Managing the professional services firm - what do people want to know 1

I do try to monitor what people search on in coming to this blog because it gives clues as to things I should write about. However, my free stats package limits the data to the last 100 posts. So what where the most popular entry pages for the last 100 visitors?

The largest number of visitors by far (23) came to the blog front page. This includes regular visitors plus those searching on "managing the professional services firm" - a Google search on "managing the professional services firm" presently brings this blog up as number three.

Then at 14 visitors comes Designing a simple performance appraisal system - sample policy statement. Performance appraisal is a continuing interest - Designing a Good Performance Appraisal System attracted a further 3 visitors.

Chris Marston's 4C's of Value Pricing attracted 6 visitors. Searching around, value pricing continues as a hot topic in professional services, especially law.

This was followed by two posts, each on 5 visitors. Common Management Problems - the over-enthusiastic boss is as the title says. The common management problems series is intended to provide simple practical advice, so I am always pleased to see it score well.

Law, Life Style and Legal Salaries in Australia also came in with 5 visitors. Graduate Starting Salaries in Australia came in with 4, reflecting continuing interest in how much people are paid!

There were 3 other posts on 4 visitors.

Performance Measurement - Profit Per Equity Partner (PEP) deals with a topic that continues to be popular within the professional services blogosphere.

Causes of project failures - responsibility without authority is, like common management problems, one of a series intended to provide practical management advice. This issue - responsibility without authority - is one that worries many staff.

Corporatisation, Keddies and professional ethics is a short comment post with links to various stories dealing with the problems faced by this Australian law firm.

Then came two posts on 3 visitors.

I have already mentioned Designing a Good Performance Appraisal System. Also on 3 visitors was Problems with Performance Pay, an introduction to the problems that can be created in this area.

In all, quite an interesting set of posts with a particular nuts and bolts management focus.

Saturday, August 09, 2008

Blogging Perspectives - the need for persistence

This seems to have been a difficult year from a blogging perspective.

At the start of this year my own posting became very irregular, with just one post in January, none in February, five in March, then a long break to July. Looking around, I am not alone.

Just to take three examples on my regular visit list: Chris Marston hasn't posted since February, David Maister stopped posting in June for at least a long break, while the Juris blog morepartnerincome also appears to have entered a state of suspended animation in June.

Maintaining a blog can be hard work, especially when busy. Further, as postings become irregular it actually becomes harder to post because the ideas generated through the act of posting drop away. Think of a blog as a professional conversation; the pauses in the conversation increase until the conversation stutters into silence.

Most regularly maintained professional blogs have at least a few regular readers. Some rely on feeds, others simply visit. Depending in part on the frequency of posting, some visit once a week, some just drop in from time to time.

As posting becomes less regular or even stops, regular visits decline. People still drop in from time to time to check, but finding nothing new, they stop coming. Search engine traffic continues, although this too declines with time as newer content comes to dominate.

I noticed all this on this blog during the low post period. My own flow of ideas declined. The number of repeat visitors dropped right away. Then search engine related traffic started to fall.

One of the points I try to make about the role of blogging in a professional services environment is that the reason for blogging must be clearly defined. In my case, blogging is central to my continuing professional development. It forces me to articulate ideas, to search for new material. This is especially important if, like me, you are often working in a degree of isolation from day-to-day professional interaction.

All writers, bloggers included, mine their own experiences. In writing, we capture and present ideas and lessons from those experiences. From a purely personal perspective, blogging has been invaluable as a device that allows me to stand-back from and reflect on my professional work.

All this explains why I have resumed active posting on this blog. However, resumption of the blogging conversation has been harder than expected because the pauses in the conversation had become so long.

To manage this, I have chosen to back-fill. By this I simply mean that I am adding posts from a past point (in my case from the 1 July post - Break in posting) to create momentum and discussion, if only with myself!

I mention this because it explains the gaps between the dates on the post (in this case 9 August) and the actual publication dates (23 August) that some readers have noticed. I have to say that while the re-starting process has been difficult, it has also been invaluable because of the way it has encouraged me to revisit previous thinking.

Tuesday, August 05, 2008

Cadwalader Caned - strategic lessons

Bruce MacEwen had an absolutely fascinating post on the troubles of the US law firm Cadwalader.

The short story is that the firm achieved five year's rapid growth reaching profits per partner of $US2.9 million. In doing so, the firm focused on one main market area, structured finance. To Chairman Bob Link, profits were all.

The collapse in the US financial markets badly affected the firm. Their attempts to build alternative practice areas failed. Now the firm has been forced into dramatic retreat.

I will leave you to read Bruce's story. I do not think that the firm's problems were in any way linked to corporate approaches as Bruce seemed to imply at one point in his post, but to greed combined with strategic mistakes.

There is nothing wrong necessarily with a focus on one market area, nor indeed with dependence on a small number of clients so long as you recognise and compensate for the risks involved. However, the problem is that when you are on a roll you become blinded to those risks.

Saturday, August 02, 2008

Social change, demographic change and the professions

I have written a fair bit on this blog about the impact of demographic and social change on the professions. I will add links to some of these later at the end of this post.

Recently there have been a number of small incidents that show just how hard this is starting to bite.

At a function at Sydney university I chatted to some senior academics in dentistry about the current shortage of dentists in Australia. We need to expand dental training, but it is almost impossible to find the dental academics required to maintain current training levels, let alone expand numbers. Those still in the academy are getting older, adding to long term problems.

A little later, I had a similar conversation with a group of doctors. They belong to a network in one of Sydney's more affluent areas, the type of area traditionally attractive to doctors for life style reasons. They, too, talked about the difficulties of finding new doctors for the network. They also talked about the impact of social change on the workforce.

The feminisation of the professional workforce has been a long standing trend. Women's need to balance career, family and children affects the way they work. Put simply, over time you need more professionals to do the same volume of work.

Men are not immune to this trend. They, too, are demanding greater working flexibility and are less prepared to make the specific long term commitments that used to be a feature of most professions. Again, you need more professionals to do the same volume of work.

The impact of these trends varies across the professions and from firm to firm. However, all are experiencing the double whammy of demographic and social change.

There is, I think, now clear evidence that firms are responding to these trends in their approaches to people management. However, my feeling is that those approaches are still too fragmented and do not adequately address the impact of the changes on the very design of work and of organisations themselves.

In a sense, we are trying to manage people in ways that will allow us to continue to do the same things. We have yet to come to grips with the idea that the things we do will have to change as well.

Somewhat later

In opening this post, I said that I would provide a list of previous posts at the end. Somewhat belatedly, I have now begun this.

Wednesday, July 23, 2008

Overcoming chaos in the home office

For much of the last few years, I have largely worked from a home office. Then I moved to on-site work.

My home office was always a bit chaotic. Things deteriorated rapidly after I moved to on-site work, not helped by the habit of my family of dumping things in my space for me to get rid of!

For reasons I won't bore you with, the need to find past papers has suddenly made tidying up a matter of urgency. So I have been going through the piles. In doing so, I suddenly realised that my presence in the on-line world has actually changed the way I work. More precisely, the way I should work.

I have my computer with its electronic files. Then there are my various blogs, web sites and social networking sites.

I tend to keep paper records because they are easier to read, while I have also been worried by things such as computer collapses as well as software changes. The quantity of electronic material that I can no longer access is quite astonishing! So paper records have been of great value.

No more. There are still some things that need to be kept in paper form, but now I have a wide range of storage options, as well as a content creation and modification process. Let me illustrate what I mean.

In my personal as opposed to professional space, I am an historian and economist. I write a fair bit of historical stuff that I would like other people to read. However, I struggle to find the time to write proper journal articles.

I know from experience just how ephemeral records can be. There is no certain way of ensuring that material is preserved. However, with an effective content creation process, you can improve both access (this is important in a professional sense) and the chances of your writing surviving.

The starting point is my blogs. I use these to explore and record ideas. In survival terms, I am dependent here on Google. If Google were to go down, this material would be lost. But in the meantime, blogging is a good way to develop ideas for later access and re-use.

Some of this material I transfer to my existing web sites. Here I can make longer material available in differing forms. As part of this, I have access to a password protected intranet that I can access from anywhere in the world. So I can post work in progress in various forms for later use.

This the most vulnerable point in the whole process in that survival depends upon the survival of the site provider on one side, my ability to keep payments up on the other.

To overcome this, I have begun to use Wikipedia to put up historical material, thus ensuring broader access. I have also just started to turn some of my material into forms suitable for book publication.

Linking all this back to my home office point. I simply don't need to keep a lot of the stuff I used too because my whole process has changed.

Sunday, July 20, 2008

Partnerships - Problems with Multidisciplinary Workings

In New South Wales, the use of multidisciplinary partnerships and of solicitor corporations has been permitted within legal practice since 1987. However, the conditions attached made effective multidisciplinary practices difficult to create.

In 1994, the NSW legislation was changed to try to make it easier to create true multidisciplinary partnerships involving lawyers. Then, following a 1998 report, conditions were further eased in December 1999, providing great freedom in the formation of such entities. Despite this, very few true multidisciplinary partnerships have been created.

The reasons for this are partially cultural.

In Multidisciplinary Working - Introduction I spoke of the way in which project management approaches allowed professionals to combine across disciplines. However, I distinguished this from full multidisciplinary working. To my mind, this occurred when professions combined in some way to create an integrated outcome informed by the knowledge and insights drawn from the different professions.

I extended this argument in Multidisciplinary Working - Practical and Professional Issues 1. There I looked briefly at some of the models that had emerged to try to manage different business and knowledge domains, of which multidisciplinary working was but one.

Underlying the arguments in both posts were the profound cultural divides that place the different professions into distinct silos. Professional Mudmaps - Cultural Differences Across the Professions: Stocktake of Posts as at 24 September 06 provides an early consolidated list of posts I have written in this area, a list that I must update. In doing so, I also need to consolidate the posts I have written on the creation of a discipline of practice; I see this as a key requirement for the creation of true multidisciplinary working.

In writing on multidisciplinary writing, I have become more conscious of the way in which differing legal and commercial requirements among the professions continue to create divides. The rules attaching to legal trust accounts is one such example, problems with professional indemnity insurance another.

These differing requirements almost need to be traced on a case by case basis if one is to provide effective advice on the creation of multidisciplinary firms, whether partnerships or incorporated entities.

Wednesday, July 16, 2008

FICPI Australia Annual Conference 2008

In my last post on Corporatisation, Keddies and professional ethics I mentioned a conference paper I was delivering later this month.

Stephen Krouzecky (Hodgkinson McInnes Patents) invited me to be one of the key note speakers at the Australian Federation of Intellectual Property Attorneys (FICPI) 2008 Conference to be held on Magnetic Island from 25 to 28 July.

Australian legislation is to be changed to allow patents and trade marks firms to incorporate, perhaps the last professional services sector to be so affected. For that reason, FICPI has decided to focus this year's conference on issues raised by the corporatisation of patent attorney firms. I am to be the key note speaker at the session on the management and operational issues raised by the adoption of corporate approaches.

Stephen invited me to present because of the posts I had written on corporatisation within professional services. This reinforces a point I have made a number of times, the way in which an on-line presence can be used to reinforce professional standing.

Sunday, July 13, 2008

Corporatisation, Keddies and professional ethics

I have been reworking some of my material on corporatisation in professional services for a conference paper I am delivering later this month.

One of the concerns associated with corporatisation is the risk that it might create new ethical conflicts. I dealt with this one briefly in a post in May 2007, Corporatisation and Professional Ethics.

One difficulty faced by those who would oppose new corporate forms on ethics grounds is the reality that ethical conflicts can already arise in a billable hours environment. In this context, the troubles that have beset the Australian compensation law firm Keddies Lawyers are instructive.

Those who are interested can find some coverage of the Keddies' issue here:

I am not in a position to comment on the detail of the Keddies case. However, if you stand back from the detail, you can see how existing billing practices can create ethical problems independent of the nature of firm structures.

Tuesday, July 08, 2008

‘”The Elephant in the Room”: Working-Time Patterns of Solicitors in Private Practice in Melbourne

Skepticslawyer remains one of my favourite blawgs, in part because of the breadth of its coverage. Here I noticed with interest a post by Legal Eagle, “The Elephant in the Room”: work practices of solicitors, commenting on the release of a report on the working time patterns of solicitors in private practice in Melbourne.

Legal Eagle's post contains a link to the report as well as commentary on the material set out in it.

Back in March I put up a short post on Associate attrition in law firms - five bottom lines. If you look at Legal Eagle's post, you can see why churn remains such a problem in legal practice.

Saturday, July 05, 2008

Common Management Problems - micro-management

This post continues my common management problem series with a look at the micro-manager, one of the most common reasons for management failure.

All staff know the micro-manager. This is the person who cannot let go real control, who tries to set, control and check every activity. Lacking authority and responsibility, staff cease to be independent workers and instead become no more than arms and legs for the manager.

One common symptom of micro-management can be found in the complaint by managers that staff will not take responsibility, that they have to do everything themselves. When I hear this complaint, I automatically check for micro-management. Most times I find it.

With some managers, micro-management is a deeply entrenched feature of their personality, a need to control. There is often little you can do with such managers to improve the situation. If they are important in their position because of their knowledge or particular skill-sets, you may just have to work around them. Otherwise, you are better off removing them, or at least reducing their staff management role.

The partial or inconsistent micro-manager can be a particular problem, simply because they are harder to spot

Often insecure, this type of manager would not usually see themselves as a micro-manager. If queried, they would say (correctly) that they do give staff autonomy.

The core problem with these managers is that they are inconsistent. They stand back in most cases, but then intervene on an irregular basis. Having allocated a task with a report back deadline, they then ask before the due date, have you started or finished this task?

The staff member in question who has been trying to set his or her own priorities may not even have started the task. Now he/she finds a worried manager creating worry in the mind of the staff member. Suddenly the staff member has to shift focus, even though something else may suffer.

This can have exactly the same effect as the more extreme micro-manager cases in that staff take less responsibility for their own work, pushing responsibility up-stairs to their manager.

From an overall management perspective, it is easier to help the partial micro-manager improve performance, subject to one qualification: the problem has to lie with the manager, not the firm itself.

Too often, partial or inconsistent micro-management by one manager is in fact a symptom of, a response to, micro-management at the next level up. In worst cases, micro-management across the firm may be a cascade effect from the CEO or managing partner. Here we have a systemic problem.

One difficulty with micro-management is that it can yield high performance simply because the manager in question is so driven. However, it also has great dangers.

I saw a simple example of this recently at project level. The manager in question had to go on leave in the middle of a critical project roll-out. While the rest of the project team had the skills required to continue the roll-out, the project struggled because team members did not know everything that the manager had been doing, nor did they have the authority to take over key elements of the manager's role.

This case illustrates the practical problems that can arise should the micro-manager suddenly leave the scene.

At a more macro-level, the firm suffers because the bad drives out the good.

Staff who cannot work in a micro-management environment leave. Those who remain are less likely to be able or willing to accept responsibility and to provide the drive that the firm may need. Remove the micro-manager or managers, and the firm may go into sudden decline as a consequence.

Previous posts

Those interested can find a full list of the posts in this series here.

Tuesday, July 01, 2008

Break in posting

This has been a long break in posting. There have simply been too many pressures to allow me to post regularly.

In all this, I have missed the discipline of posting. Even when posts are short, they provide an opportunity to consolidate my thoughts.

There is an irony in my failure to post because I am such a strong supporter of the use of blogs as a professional device. I am failing to deliver on my own advice!

Despite my failure to post on a regular basis over the last six months, the blog has continued to attract search engine traffic. In December 2007 it passed 11,000 visitors. The number today is 16,477. So my previous work is still attracting readers.

So I am going to try to resume posting as from 1 July, simply catching up on the July back log and thus getting back into a pattern of regular posting.

Thursday, March 20, 2008

Causes of project failure - lack of central control


Photo: The PC-9/A is the two-seat single-engine turboprop aircraft that is the major basic training aircraft for the Australian Defence Force (ADF). The PC-9/A is best known to the public as the aircraft flown by the Air Force Roulettes in aerobatic displays at major events throughout Australia.

This post continues my short comments that began with Causes of project failures - responsibility without authority on the common reasons for project failure.

Some years ago the Australian Defence Forces began the development of a new basic trainer aircraft. The project ran over time and budget, a not unusual result with a Defence project. In this case, the over-run was so bad that an Inter-Departmental Committee was formed to review the project.

The Committee concluded that the project should be cancelled. Instead, Australia purchased the Pilatus PC-9.

A core problem with the project lay in the absence of central control. The Air Force as client kept wanting changes to the design of the plane. There was inadequate central control to resist these demands. The core design was never frozen, while costs blew out.

How often have you seen this, where the client keeps changing its mind?


Saturday, March 15, 2008

Causes of project failures - responsibility without authority

Recently I had cause to look at some projects that had failed or were, at best, on the point of failure.

In my series on project management - see Project Management for Professionals - entry page - I looked at some of the steps involved in effective project management. Here I did not deal with one of the main causes of project failure, the allocation of project management responsibility without authority.

You cannot run a project properly if you do not have the authority to do so. Too many organisations allocate project management responsibility, but are not prepared to over-ride existing decision structures in the way required to make the project work.

I do not have a solution to this. It just is.

The only advice that I can give to project managers facing this problem is the need to be prepared to drive things through, to force decisions. If the organisation will not meet the requirements dictated by the project, then you really have no choice but to stand down.

Monday, March 10, 2008

Associate attrition in law firms - five bottom lines

I was rather struck by the quote from Bruce MacEwen:

The problem, in a nutshell, is attrition. Despite increased salaries and bonuses, more (professed) attention to work/life balance and associate development, more indisputable investments in stress management, concierge services, and day-care, by years three to four anywhere from 30 to 50% and more of associates are out the door.

This problem is not unique to the US, nor just to law. The reasons are complex and relate to the way many professional services firms are managed.

Bottom line one: too many firms take all the fun out of work.

They do so in all sorts of ways. Too much emphasis on narrow performance measures. Too little emphasis on recognising personal success. Limited grant of real professional autonomy. The list goes on.

Bottom line two: firms are inconsistent.

How many firms have you seen where a real gap exists between the firm rhetoric and the way that performance is actually measured? How many firms have you seen where a firm emphasises perfomance while actually accepting the opposite, especially at partnet level?

Bottom line three: give the guys a break.

Unrelenting pressure can destroy anyone. There has to be a balance. People require time to recharge, to gather their strength. This is especially true for the best performers, even if those performers themselves do not always recognise the need. So look for ways to give your best people a break.

Bottom line four: make things easy.

The single biggest impediment faced by many associates in getting their job done is their superiors. And here the biggest problem is the availability of scarce supervisory time. If you waste your associates' time, they will leave.

Bottom line five: recognise that your associates have a career outside your firm.

This one is hard. How do you invest in and support people who might leave? The answer is that you must.

We live in a cynical world. The reality in most western countries is that staff no longer have an automatic loyalty to the organisation. We - public and private institutions - have told them that they must look after themselves and they have taken us at our word!

In this world, trust must be earned and re-earned. Ignore this fact, and you will lose your people.

Friday, March 07, 2008

Project Management for Professionals - entry page

Now that I have again started to write about project management, I thought it sensible to establish an entry page that would bring together my various posts on project management. Later I will add linked themes to introduce you to related issues.

The posts are not intended for the professional project manager, already skilled at the craft. Rather, I hope that they will provide an introduction to the ordinary professional or manager in a professional services firm interested in the way that project management can help improve performance.

The Project Management Posts

Wednesday, March 05, 2008

Project Management in Professional Bodies

Well, back from my break and ready to go again.

Several years ago I was involved in the introduction of project management approaches across an organisation.

The idea made a lot of apparent sense. Much of the work of the organisation, a significant professional body, was in fact project based. Application of structured project management approaches should improve efficiency at project level, while also making the organisation's work more transparent and accountable.

The move failed. There were significant short term gains, but application collapsed because the transparency and accountability created came to be seen as a threat to the authority and autonomy of the organisation's governing bodies.

Part of the problem here lay in the fact that many "decisions" were not in fact decisions at all. Some reflected political and professional interplay within the profession and were really markers of that interplay. Others fell in the "it seemed a good idea at the time" class.

The governing bodies were quite comfortable with all this because the process accommodated all the personal, political and professional differences to be found in any profession. The introduction of project management approaches failed because the transparency it created interfered with the internal political processes.

Thursday, January 10, 2008

A break to recharge

I am taking some weeks off from posting to recharge. I expect to be back on line at the start of March.