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Thoughts on ways to improve the management of professional services firms

Monday, January 08, 2007

Reflections on Professional Practice and Practices


This Al Jazeera International photo shows a helicopter water bombing during last year's Australian bushfires. The point of the photo is that once you have to start putting out fires from on-high you are already in trouble. It is generally better to deal with the fire at source while it is small, and that comes back to improved management.

I have been musing about issues associated with professional practice, trying to clarify and structure some confusions in my own thinking. One of my key concerns has been a feeling that I need to find a better way to focus, link and present my own writing and thinking to make it more accessible.

Three Overlapping Knowledge Domains

In an earlier post, Towards a Discipline of Practice, I suggested that there were three overlapping knowledge domains within professional services:

1. The profession itself, whether it be engineering, medicine, law or training. What we do. Most professional education and training focuses on this.

2. The application of the profession in practice by individual professionals. Doctor/patient, lawyer/client etc. Essentially, how do we do what we do.

3. The management of the overall practice. Essentially, how do we manage what we do. I am using the term practice in the broad sense to cover the variety of business structural arrangements found within professional services.

We can think of these domains in terms of a matrix with the three knowledge domains and their various subdivisions down one axis, the various professional services fields and their subdivisions along the other.

The Challenge

When I began this blog my focus was, as the blog name suggests, on number 3, the management of the professional services practice. This remains my core focus. However, I have in fact found myself writing across all three knowledge domains.

The problem with this is that it can create confusion in the minds of individual readers. To tease this out a little, hopefully encouraging debate, I am now going to look briefly at the first two knowledge domains.

Knowledge Domain One: the Individual Profession, Knowledge Domain Two: Application of the Profession in Practice

While these two areas are very distinct, I have linked them together because collectively they bear upon one of my key interests, ways of enhancing cooperation between professions to facilitate true multidisciplinary working. This links to a second interest, the extent to which professions can learn from each other.

Originally, there were arguably three great professions, law, medicine and theology.

One of the features of the process of professionalisation was the way each developed its own knowledge domain, creating a separation and mystique from other fields of human activity and knowledge. Linked to this was the creation of self-governing processes giving the profession the capacity to define and recognise its own practitioners. As other professions emerged, they attempted to follow the same route, creating a professionalisation process.

In saying this, I do not want to become involved in the debate as to what constitutes a true profession. To me, the key distinguishing feature here is that a profession has a focus on the work of the individual professional. Rather, my concern is on the way professions and professionalisation create intellectual and cultural divides that limit cooperation and knowledge transfer between professions.

To some degree these divides are both inevitable and necessary. Every profession needs its own language, its own defined areas of knowledge, to facilitate development of and work within that profession. But problems arises when the divides are such that they blind professions (and professionals) to the gains that can arise from cooperation and cross-fertilisation. Problems can also arise for professions and professionals where professional barriers act to prevent the profession responding too needs that they were created to serve.

Let me try to illustrate all this by an Australian example.

Ophthalmology and Optometry

In Australia as in many other countries, there have been concerted efforts at official level to break down competitive barriers previously protecting the positions of certain professions. These efforts have been opposed by some professions under perceived threat, at times supported by professions who saw potential gains.

As part of this process, there were moves in different Australian states to grant optometrists prescribing rights for certain drugs, thus broadening the range of optometric practice. These moves were opposed by many ophthalmologists and by the Royal Australian (now Australian and New Zealand) College of Ophthalmologists on the grounds that optometrists lacked the knowledge, skills and judgement required to diagnose, prescribe and treat safely.

Despite these objections, the Victorian Government decided to grant certain certain prescribing rights and then asked the College to specify what additional training should be required before individual optometrists could exercise those rights.

The outcome here is described in a case study on the Ndarala Group blog. To provide the necessary advice, the College had to specify just what knowledge and skills were required to diagnose and prescribe safely and effectively so that this could be embodied in training activities. To do this it adopted a competency based approach, applying knowledge and skills drawn from the training profession. In turn, this has fed on into major changes in the approach adopted to the training of ophthalmologists in Australia and New Zealand.

The Lessons

All this may sound a bit arcane, but if we look at the case it does have broader relevance and not just to Australia.

To begin with, this project combined knowledge domain one (what we do) and two (how we do it). The College actually had to specify key elements in both and show how they were related.

This brings me to my second point. In doing this, the College laid down a methodology capable of application across the professions, one with the potential to demystify professions and, in so doing, to lay the basis for broader cooperation while also opening individual professions up to greater competition.

This may sound extreme, but consider this.

Both Canada and Australia face a problem in regional areas because of an aging lawyer population. Young lawyers are reluctant to take on country general practice positions, preferring instead to look to bigger city specialisations. I may argue that this does not make sense in financial terms if you look at average financial returns, but it is (I think) a practical reality.

Track forward. If certain areas cannot get conventional legal services, then other ways will have to be found to give them that service.

One way of doing this, one that is already happening with conveyancing, is to take out chunks from legal services and allow others to provide the services involved. Another alternative, again one that is already happening, is to move to on-line delivery of certain legal services. These two could, of course, be combined.

Add in the emergence of both corporatised law firms and multi-profession firms including lawyers. At what point do we move to listed entities combining a variety of delivery modes and professional areas?

The initial move to float Integrated Legal Holdings as Australia's first listed law firm ran into a variety of problems including opposition from current legal regulators, although the float is likely to proceed in February. However, this is just a first straw in the wind.

My feeling is that the dynamics already in place guarantee major change over the next few years. I also think that within this change process, the capacity to define knowledge domains in the approach pioneered by the ophthalmology case is going to become increasingly important.

Thursday, January 04, 2007

Guidelines for Effective Negotiation

I have been editing some new material for inclusion in the project management for the professional series running on the Ndarala Group blog. This will start coming up shortly. In the meantime, I thought that one item was worth running here as a stand-alone check list.

Ten guidelines for effective negotiation:

1. Be prepared - know what outcome you want and why.

2. Minimise perceptual differences - ask questions to gain understanding.

3. Listen - questions are no good unless you listen to the answers.

4. Take notes - what has been agreed and what remains to be resolved.

5. Be creative - look for new solutions.

6. Help the other party.

7. Make trade-offs - trade what is cheap to you but valuable to the other party for what is valuable to you but cheap to the other party.

8. Be quick to apologise.

9. Avoid ultimatums.

10. Set realistic deadlines.

Wednesday, January 03, 2007

What Lawyers (and other professionals) appreciate

Back in December Tony Karrer tagged me to join in Five Things Meme requiring me to say five things about myself that other people did not know. Wandering around the blogosphere I was surprised at just how far this particular process spread.

In December there was another tag game, this time centred on what lawyers appreciate. A list of posts on the topic can be found on Life at the Bar.

In his response, Bruce MacEwen (Adam Smith Esq) said in part:

Lawyers appreciate professional management at senior executive levels of their firms. Lawyers are not taught, and by and large don't care to learn about:

  • competitive strategy
  • management 101
  • finance
  • marketing
  • IT, or
  • human resources.

Ergo those functions should be left strictly under adult supervision. Hire worldly-wise and savvy strategic advisers, Chief Operating Officers, Chief Financial Officers, Chief Marketing Officers, CIO's, and heads of HR, and get the lawyers out of their way.

What lawyers do care about is professional excellence, a collegial and fulfilling atmosphere, and above all else the ability to serve appreciative clients with impeccable legal counsel. Lawyers appreciate being able to focus on that to the exclusion of all else. Let them.

While I understand Bruce's point - you only have to look at certain managing partners to see what he means - I also found it depressing.

One of the features of all good professionals regardless of field is that they have, to use one of David Maister's favourite words, a passion for their professions. This holds whether you are a school teacher, a doctor or a lawyer. In this sense, part of the role of management is to help the professional do her or his job, to provide support and then get out of the way.

There is in fact a growing problem here in many professions - teaching is an example - where externally imposed requirements are forcing a growing administrative load on professionals. But beyond this, there are two main problems with the way Bruce phrased his comments.

The first is that the discipline of practice requires professionals to learn certain management skills.

Increasingly, professional practice involves project and team based work. We speak of team teaching, of multidisciplinary working, of teams of health professionals. This has always been a feature of areas such as IT, but is becoming increasingly widespread.

The discipline of practice also requires professionals to manage their relations with clients. The age of the God professional in which the professional dictated, the client accepted, is now long gone.

Increasingly, too, the growth of larger professional services organisations means that professionals are placed in management or staff supervisory roles as part of their normal professional role.

These things require all professionals to acquire at least those management skills relevant to their particular professional circumstances. This can create real problems because, as I have argued previously, professionals are trained in very different ways from managers.

The second problem is that many professionals simply don't have the luxury of following the course Bruce suggests.

If you look across professional services, the reality is that most professional practices are just too small to afford complete professional management. Willy nilly, many professionals including lawyers have to become involved in management whether they like it or not. And many do not like!

Professions and professionals respond to this challenge in different ways.

In the case of doctors, for example, where individual practice had been the norm, multi-doctor practices became common. Each doctor remained in individual practice but with a service company providing shared services (premises, receptionist, accounts etc). Now, with increasing compliance loads, many doctors are opting out of individual practice into paid employment.

In other cases many professionals opt for self-employed status to minimise management load, working on their own or with a single part or full time staff member. This group faces very particular problems in that they either have to learn to do themselves or outsource, and outsourcing has its own problems. In Australia, the present biggest single complaint among self-employed professionals is their inability to get adequate accounting or book keeping support.

One of the reasons for the spread of franchise style arrangements in professional services is that they can help overcome these types of problems.

Those who wish to grow their practices as businesses face a new set of challenges because they often have to learn to manage as they go along. Generally, what these professionals need are basic management and associated business skills, together with simple scalable solutions that can grow with the business. Much of the discussion in the management literature with its focus on the bigger end of town is simply too complicated to really help this group.

My particular passion as a professional lies in finding ways to improve management. In this context I have a particular sympathy with this last group simply because I have been there.

Tuesday, January 02, 2007

Bridging Professional Divides - Education & Training

Happy new year to all.

I have often commented on this blog about the divides within and between professions.

One such divide that I have noticed is that between education and training professionals whose focus is on the education sector (schools, universities) and those who primarily have a training or learning and development focus external to the education and training sector. Obviously there is overlap, but the divide is still there.

I was reminded of this over the break by a discussion with Doug Belshaw.

For those who on the learning and development side who do not know Doug, he is a UK history and IT teacher who has, among other things, been pioneering the application of new technology in school teaching.

Doug's main blog is teaching.mrbelshaw.co.uk. I commend the blog and especially the post on the 20 best edublog posts of 2006. I noticed that it has listed a post by Jay Cross on informal learning, in fact an example of overlap. Doug also has a blog dealing with topics relating to his doctorate.

Bronwyn Clarke's blog also provides an entry point for training professionals into the parallel education world. Bronwyn is not posting actively at the moment, but has a number of interesting links.

On the other side of the ledger, I said to Doug that I would put up some information that might act as an introduction for professionals from the education sector to the parallel learning and development word with a special on-line focus.

The material that follows simply provides a taste. Those who follow this blog will recognise many of the names.

1. Learning Circuits Blog. This e-learning blog sponsored by the American Society for Training and Development provides a useful entry point.

2. eLearning Technology. Tony Karrer's blog provides a very useful intro to a variety of issues in the on-line training environment.

3. Stephen's Web. Stephen Downes' site contains a range of useful material.

4. Jay Cross has two main blogs - Informal Learning and the Internet Time blog.

5. I find Dave Lee's eelearning because he often comes at issues from a different direction.

6. Brent Schlenker's corporate e-learning often provides insights especially on technical issues associated with e-learning.

7. Dennis McDonald's blog on Managing & Living with Technology remains a valuable source of information on developments in the on-line environment.

Thursday, December 28, 2006

PSVillage - I feel flattered!

Luanne Pirogowicz from PSVillage emailed me. I quote:

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

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

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

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

Sunday, December 24, 2006

Season's Greetings 2006

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

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

Friday, December 22, 2006

Five Things Meme




Photo: Belshaw Family, Rome January 2005

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

In Tony Karrer's words:

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

Thanks, Tony, I think, for tagging me.

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

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

The five things about me:

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

Now who to tag for personal and professional variety?

Tuesday, December 19, 2006

How Law Firms Woo Women

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

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

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

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

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

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

Sunday, December 17, 2006

Past Experiences. Present Challenges. Future Predictions

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

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



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

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

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

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

I cannot resist answering from a personal perspective.

What will I remember most about 2006?

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

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

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

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

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

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

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

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

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

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

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

Looking Forward to 2007

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

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

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

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

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

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

So economic conditions pose the first challenge.

The second challenge comes from demographic change.

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

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

The longer term problem can be stated quite simply.

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

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

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

This poses challenges at both profession wide and firm level.

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

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

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

Linking this back to learning and development.

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

Friday, December 08, 2006

Belshaw Takes a Break


Photo: South West Rocks, New England

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

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

I want a rest to rethink and re-charge.