Промышленный лизинг Промышленный лизинг  Методички 

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business: sales, delivery, training, intellectual property, hiring, and support. While this practice has entailed extra effort, the business improvement benefits have paid a more than adequate return to the investment.

A crucial part of good decision making for professional services firms is the pursuit decision for new business. Many successful service providers have an aggressive, sales-oriented culture. While this is effective for driving revenue, oftentimes the firm will overreach when selling the next deal and wind up too far to the right-hand side of the risk continuum. A successful senior executive from a professional services firm put it succinctly: Good business in. Good business out.

This phenomenon has been dubbed The Winners Curse and is a topic of study by Richard Thaler, a prominent behavioral economics researcher at the University of Chicago. In his book The Winners Curse: Paradoxes and Anomalies of Economic Life, Thaler outlines the dilemma:

Suppose that each participant in the auction is willing to bid just a little bit less than the amount he or she thinks the land is worth (leaving some room for profits). Of course, no one knows exactly how much [the project] is worth: some bidders will guess too high, others too low. Suppose, for the sake of argument, that the bidders have accurate estimates on average. Then, who will be the person who wins the auction? The winner will be the person who was the most optimistic about the [value of the project], and that person may well have bid more than the [project] was worth. This is the dreaded winners curse. In an auction with many bidders, the winning bidder is often a loser. A key factor in avoiding the winners curse is bidding more conservatively when there are more bidders. While this may seem counter-intuitive, it is the rational thing to do.9

Finally, one of the most effective risk-mitigation approaches employed by firms is simple, but rigorously enforced, policy and procedure. The larger the firm, the more important it is to put risk mitigation on auto-pilot through these methods. The importance (and positive effect) of this was recently highlighted for us. A senior manager of a service company we are acquainted with had his company acquired by a Fortune 50 entity. Immediately, all manner of new policies was implemented, which was both startling and amazing to a small company. Armed guards, sign-in protocols for guests, document disposal guidelines, new systems security requirements, and other changes both large and small were the order of the day.

While the majority of the changes made sense, others seemed to be overkill (e.g., the window blinds had to be closed in a certain way to avoid any incidence of espionage by occupants of errant helicopters flying near the 12th story of the building). The larger story, however, is that an enormous company manages to avoid any new risks through the blanket application of security protocols that had been designed over time and found to work. While not all of them made perfect sense in their specific application, it was easier



to mandate them en masse and get back to work than sort through them individually. Thus, a large company with billions of dollars can still manage to control the day-to-day minutiae required for effective risk management.

Specific Actions to Reduce or Avoid Risks

There are a variety of specific actions that the professional services firm can take to avoid some of the risks outlined previously in the chapter. While by no means a comprehensive treatment, we have addressed a few.

Internal Risk. The best prevention for internal risks is good hiring. Motivated and honest professionals provide mitigation against both expected and unexpected risks. Going beyond hiring practices, professional services firms should ensure that proper firm governance codes are established and followed, as well as codes of conduct and policies as outlined elsewhere in this chapter. Finally, appropriate finance and accounting checks and balances should be implemented. These common accounting practices are well-explored territory, with dozens of available books and guides available.

Delivery Risk. The best prevention for delivery risk is clear communication with the client. Eventually a project will suffer from scope creep, a key staff member will leave, or some other issue will be encountered. Clear, rapid, and open communication with the client that drives to solutions for both parties is the best cure for unanticipated delivery problems.

Other delivery risk mitigation tools include contracts (also covered in Chapter 19, Legal Considerations, in this book) as well as errors and omissions (E&O) insurance (covered in Chapter 16, Purchasing, procurement, vendor and asset management ). In short, the contract terms should limit the firms liability to a reasonable amount (fees received or no more than the limit of the firms insurance coverage). The contracts should also specify methods for managing disputes that fall short of litigation, such as arbitration.

Client Risk. The best way to avoid the risks associated with clients is to avoid clients of questionable financial standing. Because services are generally impossible to repossess in the event of bad debt, a few bad receivables can erase firm profits. Firms can determine client viability through credit checks and other research inquiries (Dun & Bradstreet Small Business Solutions, smallbusiness.dnb.com, as well as other information on business research web sites such as Hoovers, www.hoovers.com).

While work is underway with a client, senior firm managers should ensure that they keep up with the clients financial health, as well as internal client politics, all of which can affect the firm contracts. Good managers will develop multiple sources of information inside a client and have more than one or two sponsors within a given client at different levels, providing



additional insulation from personnel changes or client political battles. Going on-site with clients is one of the best ways to accomplish this, and senior managers should visit with their major clients on-site not less than once every two weeks.

Firms providing services to specific industry segments should also keep up with overall industry trends to avoid any surprises and stay ahead of surges or cutbacks in spending, changes in legislation, merger activity, or other industry news.

The level of acceptable risk may also vary according to the current level of the business climate. Firms with large demands on their time may be able to take on fewer, less risky clients, whereas firms hungrier for business will take on larger risks.

External Risk. External risks are the most difficult to estimate and control. Most mitigation against these types of risk come from either avoidance or the purchase of insurance. Firms must work diligently to ensure the safety of their internal and professional staff. For companies engaged in work in at-risk areas, firms such as Kroll Worldwide (www.krollworldwide.com) provide related risk consulting services.

Finally, for hard-to-estimate external risks, professional services firms should work with their insurance provider to determine proper policy types and coverages.

Quality Assurance

Many of the key elements of quality control are the same as those for risk management: leadership and expertise, quality professional staff, client-tested methodology, process, standard operating procedures, and policies. A firm that is good at risk management is generally good at quality assurance.

In the late 1980s and early 1990s, the quality movement produced endless literature on quality in manufacturing. Many of the same concepts from quality manufacturing apply to the professional services firm as well. The resources section of this chapter contains references to some of these. A personal favorite of ours is Quality Is Personal by Harry Roberts and Bernard Sergesketter. This book takes the concepts from quality management and applies them to the individual in daily business activities. Training programs or reading from this book will provide benefits to professional staff within the firm.

Another important factor in ensuring quality delivery is culture. Firms that celebrate whistle-blowing and institute a culture of senior management ap-proachability will have a chance to solve problems before they become too difficult to handle. Unfortunately, the culture in many firms is one of shoot the messenger. Senior management must work to instead glorify the messenger



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