Thoughts on ways to improve the management of professional services firms

Sunday, December 17, 2006

Past Experiences. Present Challenges. Future Predictions

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

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

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

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

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

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

I cannot resist answering from a personal perspective.

What will I remember most about 2006?

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

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

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

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

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

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

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

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

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

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

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

Looking Forward to 2007

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

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

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

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

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

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

So economic conditions pose the first challenge.

The second challenge comes from demographic change.

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

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

The longer term problem can be stated quite simply.

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

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

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

This poses challenges at both profession wide and firm level.

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

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

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

Linking this back to learning and development.

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

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