Why This Topic Is Important

Employees are a professional firms most important asset. The firms product is intangible. When clients buy professional services, they are, in essence, buying a firms people. Thus, a firms reputation and success depend exclusively on the talent and intelligence of the people delivering it. To prosper, firms must hire the best people, develop them, motivate them, and build in career paths that keep them committed to the firm. Yet, the very people who make a professional services firm stand out can be those who are most difficult to manage. Regardless of specific industry, employees at successful professional services firms have the same general set of personality characteristics. They are energetic, strong-willed, opinionated, confident, and always in pursuit of new challenges. They work best in a dynamic environment that allows them the freedom to do what they do best.

Like any other business, however, a professional services firm needs to have adequate structure to coordinate everyones efforts and offer one face to clients. The question top management must constantly grapple with is how to put in place an organizational structure that gives employees the freedom to operate creatively within the context of a stable, functional firm. How can the firm rein in employees appropriately without establishing so much bureaucracy that they no longer feel they have any choices? For an organizational structure to work under these conditions, it must balance the need for clear definition and explicit coordination of roles and responsibilities with the need to preserve enough autonomy to engender creative, cross-functional decision making and problem solving.

There are several different models for professional services firm organization, but they all have the same key success factors:

They align systems, structure, and governance to forge strong links among employees, the firm, and clients.

They manage and measure performance to establish firm priorities, articulate firm culture and values, and ensure employee buy-in.

Systems and processes are stable enough to facilitate effective management, yet flexible enough to ensure responsiveness to changes.

The overall purpose of the chapter is to examine how to build these key success factors into the organization model for the professional services firm. It does so by discussing:

Common organizational components of professional services firms How to determine organizational goals in order to choose the best organization model

The three organizational models most professional services firms adopt,

including the strengths and challenges of each Why ownership and governance issues have special significance for

professional services firm organizations How an effective organization can support creativity while simultaneously facilitating the firms business success Key responsibilities and typical promotion paths The role of support staff within the organizational model The importance of building training and career development support into the firms culture to strengthen and reinforce the organizational structure

How to create mechanisms that encourage knowledge sharing and eliminate as many boundaries and fiefdoms as possible, regardless of which organization model is used

Professional Services Organization Overview

Professional services firms are first and foremost service businesses. By their nature, they, and the professional staffs they employ, are customer facing. The responsibility of any professional services organization is to identify the specific nature of the customers problem, define it in meaningful terms by focusing on the business impact to the customer, and offer meaningful solutions. As valuable as this is, the product being sold is intangible, the result of processes that flow through the organization, from customer inquiries to project delivery. Thus, the selling of professional services and the rendering of those services can seldom be separated. The firm must present a consistent face to clients throughout the entire sales/service cycle. All professional and administrative staff, though they may not have direct customer interaction, are a part of these processes, and, regardless of which specific model is used, organizational structure must reflect, support and sustain this. Firms must develop integrative systems that aid in this process. This is true regardless of which organization model a firm chooses.

There are other key components of all effective firm organization models. Because they, in essence, sell knowledge and expertise, firms must be learning organizations. Because they must be able to balance increasing client demand for specialized knowledge with need to develop generalists and maintain high levels of employee utilization and productivity, firms must create structured processes and methodologies to transfer knowledge and expertise throughout the enterprise. Because by their nature, they need creative, intelligent, individualistic people. They must create structures that attract and retain talent. Because the most successful professional services employees tend to be people who may not respond well to rigid bureaucratic

structures, firms must systematically use other methods, such as compensation tactics, to change cultural attitudes and motivate behavior.

Organization Structure

The choice of organizational governance and structure has critical implications for professional services firms. In a typical corporate enterprise, roles and responsibilities are highly defined. But that model will not work in professional services firms where the key constituencies-owners, managers, and employees-are often overlapping groups of people. Senior people, generally partners, are not only the owners of the business and the leaders of the business but also the salesforce and the administrative leaders. Even employees with less seniority must be flexible and able to take on multiple roles. Generally, only the most junior staff members are focused exclusively on specific job content and delivery. Almost immediately, job responsibilities begin to expand to include managing client projects, identifying and developing important client relationships and opportunities, and taking on more and more responsibility for internal firm management. From an early point in their career, staff must begin to learn how to coordinate marketing efforts, as well, to present a unified face to clients. These topics are also addressed in Chapters 3 and 11, which should be read in conjunction with this chapter.

The organization model must provide the freedom to allow people to take on more and more responsibilities. While guidelines and standards are needed to keep the firm on track, its important not to constrain professional staff with artificial boundaries. They must understand their roles and responsibilities, but they also need the freedom to explore and push their boundaries a little bit. This is best done by broadly defining roles and responsibilities, rather than narrowly defining specific jobs. Because it is counterproductive to limit individual potential, promotion of staff from one level to the next must focus around core competencies or skills that, once mastered, indicate readiness for the next level. That requires the firm to develop a clear path with explicit requirements and competencies for each level of promotion. Booz Allen, for example, has defined a set of core competencies and behaviors that professional staff are expected to master at each specific level. This gives them a benchmark for their current place within the firm, based on their capabilities, as well as clearly defining what will be expected of them at the next level and beyond.

The clear definition of roles and responsibilities is a business imperative as well. Process responsibility, or the explicit definition of roles, is critical to ensuring that all firm resources are harnessed and efficiently coordinated to best respond to the requirements of the enterprise and its clients.