is the often uncomfortable subject of effective selling. This section addresses the key marketing and sales issues for service providers, with specific tips and approaches for ensuring that the front office efforts are consistent with the specific market and industry under consideration. Key topics in this section include: sales management and tracking, marketing, service-line creation, qualifications and reference management, proposals and bids, strategic partnering, and intellectual capital development and protection.

Section III, The Organization: Attracting and Retaining the Best Professionals, discusses human resources and related topics. One of the top drivers of client satisfaction and successful delivery in the services industry is the quality of the professionals within the practice; we devote an entire section of the book to achieving world-class recruiting and retention. This section covers the topic in depth, including organization structure, career paths for professional and internal staff, training and professional development programs, recruiting, and on-boarding new employees.

Section IV, Services Delivery: Taking Care of Business, focuses on delivery of service to clients. While the services delivered in professional providers differ widely, many of the core approaches to successful management apply. These approaches include service delivery (planning, building, and managing), project management, resource (bench) management, risk management, and project P&L management.

Section V, The Back Office: Efficient Firm Operations, covers all the activities that support the operations of the firm. The back office section outlines the specific back office operations that must operate smoothly to ensure that the professional services firm operates efficiently. Topics include finance, accounting, HR, purchasing and procurement, asset management, IT, vendor management, real estate/facilities, legal, and office management.

unique issues of professional services firms

Professional services firms are different from other companies because there is no tangible product to sell. Regardless of how services are billed, the professional services firm gets paid for expending labor time on behalf of a clients problem or need. The input is time, and the output is thinking or documents in most cases. Since billings/revenues grow as the input grows (e.g., labor time), professional services firms are inherently labor, management, and HR intensive. This kind of firm may be contrasted with, for example, Ticket-master, an online provider of tickets to sporting events, concerts, and theater. At midnight on the U.S. East Coast, while everyone in the firm can be expected to be away from the job, Ticketmaster is selling hundreds, if not thousands, of tickets online to people all over the world. One additional ticket

sold does not equate to any labor input of one of its employees. Ticketmaster is a business that scales without a tremendous amount of incremental direct labor. Contrast this to a large law firm. If that law firm wins a new client with a large case, the law firm must provide enough attorneys to cover the case sufficiently. In most cases, the law firm will be paid for each hour that one of its attorneys bills. As the firm hires additional lawyers, it has to find space, manage their careers, provide training and tools, and so on. The professional services firm, more so than any other type of firm, requires the balancing of a large number of variables. Thus, the trick in scaling a firm is to develop simple processes, a successful hiring formula, and a recurring sales model, and strike a balance between customer loyalty and employee satisfaction.

The tendency in most firms is to concentrate on delivering the actual expertise to the client at the expense of all other things. Architects by training and experience enjoy designing structures. They are not necessarily proficient at (or even interested in) managing a business. Yet, as the firm grows, it requires more management time from the principals, causing stress on the organization. Do the principals continue to bring in revenue at top rates, or do they spend time on internal management issues?

Not only is more time required on internal management, but also the individuals need to be good at management. For example, we worked with a graphic design firm several years ago. A principal of the firm called to ask if we could assist him with a business strategy. He was one of the best graphic designers in the city, and his firm kept adding more and more clients. He had around a dozen employees, and while his revenue kept increasing, he was perplexed about how to manage the business going forward without jeopardizing the financial well-being of the firm. He was the primary designer and the lead sales generator. His firms clients included a large airline and prominent sports team. Some near-term steps for improvement included carving off nonstrategic management items to an administrator, including all infrastructure, facilities, and operations issues; outsourcing nonstrategic areas where possible (e.g., payroll); and defining both sales and delivery processes and roles more clearly so that discrete activities could be delegated to junior staff more easily.

How balanced is your firm? Here are some questions we ask when trying to get a quick overview of the status of a firm:

What is your revenue per professional?

What is your attrition rate? Do you have any difficulty retaining staff? How long is your sales cycle?

Who sells and who delivers the service? Are these the same duties or are they separated? Where is the leverage in the sales cycle?

What is your annual marketing plan?

What is your firms value proposition? Why should a client hire you?

How do you hire professionals? Have you had any difficulty bringing in experienced people?

What is your training program?

What does your organization chart look like?

What are the levels in your organization?

What are the career paths by level? How many direct reports do you have?

What is your leverage model? How loyal are your customers?

Do you have sufficient capital to grow?

What is your growth rate? What is your sustainable growth rate?

Are your invoices clear and accurate?

What do your employees and customers have to say about your back office?

How satisfied are your employees?

Where do employees typically go after they leave your firm?

The answers to these questions are covered in subsequent chapters. However, sitting down and asking yourself these questions should be eye opening and self-revealing. Areas with ambiguous answers may drive you to a particular chapter of this book.

Although our complete prescription for fixing or scaling your professional services firm is covered in this book, we are often asked for the short version of our program. The following checklist of specific steps across the key areas will help you think through a growth plan for your company, scale and improve financial performance, and begin reaping the rewards of a productive company:

1. Make sure the senior management team is following the same plan.

a. If anyone in senior management does not agree to the overall direction of the company, you cant be successful. You will need to develop a plan that all can agree to.

b. Make sure everyone on the senior team deserves to be there.

c. If there are any weak senior team members, replace them with stronger candidates.

2. Fix your organization structure to enable the firm to grow.

a. Figure out the division of labor that allows you to spend the most time on things you do best.