who delivers the bad news of a struggling project or a dissatisfied client. Client staff who work with a client on a daily basis are the best form of quality control. Aloof, unapproachable senior managers may not learn about problems until they have reached a true crisis point.

Finally, the senior managers in charge of the client relationship should establish the proper early warning mechanisms that will help identify delivery areas requiring adjustment or course corrections while underway. The focus of these reports should be on providing an overview of status, while directing the partners attention to critical areas. Typical reports of interest include:

Weekly status reports for each project or client Project scorecards (red/yellow/green status) Periodic project reviews

Budget-consumed versus project-progress information

Senior managers should also solicit new ideas from professional and internal staff to help create new status reports that are helpful to both groups, usable for clients as well as not too onerous to prepare on a regular basis.

Crisis Management: The Best Laid Plans ...

What actions should the professional services firm take if, in spite of all planning and risk management, a crisis occurs? The crisis response will take form based on the nature of the crisis. A good text on this topic is Crisis Management: Planning for the Inevitable; see the resources section of this chapter for details. For major events, the firm should consider retaining a crisis management and/or public relations firm. Naturally, the right time to establish a good relationship with firms of this type is prior to the crisis.

However, the day-to-day crises that professional service firms encounter are related to the delivery of services and client satisfaction. Because client delivery problems are inevitable for any firm, the best way that firm leadership can distinguish itself is through excellence in remediation. How well firms recognize, control and resolve their mistakes can make an enormous difference in client satisfaction.

Each salvage operation will be different and, therefore, requires the involvement and judgment of firm senior management. For example, our own company had a client for whom we had completed a very successful engagement. An unrelated, follow-on project had gone astray, with a brutal combination of scope creep, personnel problems, underbidding, and geography conspiring to create poor performance. By moving rapidly to remediate the situation and ultimately discounting the fees and recasting the project, we

were able to get our services back on track and find a way to please the client. Over the long haul, we were able to continue working with the client, thus keeping an important relationship and a good reference for our services.

Litigation

Firms should avoid lawsuits related to the delivery of their services whenever possible. The distraction, expense, reputation damage, and opportunity costs emanating from even a successful lawsuit are immense. A failed lawsuit can be devastating. Firms that achieve a reputation for suing their clients will find their sales process an uphill battle.

I learned long ago never to wrestle with a pig. You get dirty, and besides, the pig likes it, an unknown author wrote. Occasionally, a client will take an unreasonable position on an issue and will be intractable during remediation efforts. Even when the end client is on the wrong side of the issue, the firm can wind up a loser from the energy, effort, and attention required to resolve the issue. Internally, we often call this pig wrestling and attempt to avoid it if possible. There are a variety of other ways to resolve disputes with clients, from appeasement to arbitration. A good cost-benefit analysis will usually point the way to the most appropriate approach for resolution.

Responsibility for Risk Management and Quality Assurance in the Organization

Ultimately, responsibility for quality assurance and risk management falls on the shoulders of the senior managers of the firm. These are the individuals with the experience, background, and judgment to determine the best course of action in most cases. However, the information most needed to make the right decisions, as well as new ideas, can come from the professional and internal staff. Firms with effective risk management and quality assurance programs establish a culture that holds the entire team responsible for ensuring quality delivery and mitigating risks. Success depends on the involvement of all-the risks and trouble that assail the firm daily are too numerous and varied to be mitigated by anything less than total involvement.

Some firms may choose to elect or appoint an officer in charge of these areas. The research on decision making shows that certain personality types may be more effective than others in this role. In a 2001 paper titled Worry and Mental Accounting with Protective Measures, Schade and Kunreuther10 hypothesize that a greater tendency to worry would intuitively be expected to lead to a higher level of [willingness to pay] for any protection. In fact, their research demonstrated that the reverse may be true-that worriers may make more cost-effective decisions than nonworriers. The researchers

contrast anxiety ( an emotion ) with worry ( a cognitive phenomenon ). Worry leads to thinking, analysis, data gathering, and effective decision framing. Prior research by Tallis, Davey, and Capuzzo11 found that worrying:

Acts as a stimulant

Clarifies thoughts and concentration

Gives the opportunity to analyze situations and work out the pros and cons

Adds to the problems and, as such, leads to exploration of different possibilities

The research concludes that low-worriers are likely not to care much about the risk, and hence may not calculate values of objects, losses and prices for protection. 12 The implications of this for firms attempting to improve decision making, quality assurance, and risk management are clear: Contrary to intuition, an effective worrier, not prone to anxiety-the emotional component of worry-may be their best asset.

RESOURCES

Norman Augustine et. al., Harvard Business Review on Crisis Management [HBR-

Crisis Management] (Boston: Harvard Business School Press, 2000). Thomas L. Barton, William G. Shenkir, and Paul L. Walker, Making Enterprise Risk

Management Pay Off: How Leading Companies Implement Risk Management Max H. Bazerman, Judgement in Managerial Decision Making (New York: John

Wiley & Sons, 1994). Steven Fink, Crisis Management: Planning for the Inevitable (Backinprint.com,

2001).

Matthew J., Hassett and Donald Stewart, Probability for Risk Management (ACTEX Publications, 1999).

Paul R. Kleindorfer and Howard Kunreuther, co-chairs. The Risk Management and Decision Processes Center at the Wharton School of the University of Pennsylvania, Available from http: opim.wharton.upenn.edu/risk.

James Lam, Enterprise Risk Management: From Incentives to Controls (Hoboken NJ: John Wiley & Sons, 2003).

Peter G. Neumann, moderator and chair, Risks Forum newsgroup, sponsored by the ACM Committee on Computers and Public Policy. Available from http: www .csl.sri.com/~risko/risks.txt.

Harry V. Roberts and Bernard F. Sergesketter, Quality Is Personal (New York: Free Press, 1993).

J. Edward Russo and Paul J. H. Schoemaker, Decision Traps (New York: Fireside Books, 1989).

J. Edward Russo, Paul J. H. Schoemaker, and Margo Hittleman, Winning Decisions: Getting It Right the First Time (New York: Currency, 2001).