10 unique dynamics of professional services firms that hinder change efforts

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Most training is useless. Just ask David Maister.Partnership Dynamics

Despite best intentions, many people who attend programmes to learn new skills and discover fresh approaches simply “go back to the way we have always worked” once they return to the firm.

Unfortunately our research, feedback and experience suggest professional services firms are particularly reluctant to change – even if the potential rewards might be great. Take business development as an example[1].

Professional services firms can appear very similar. Many firms say the same things, use the same stock phrases, present more or less the same PowerPoint slides (in large quantities!) and offer the same potential benefits.

Surely the way to win more client engagements would be to offer something slightly different from other firms – a new perspective for the client, an innovative illustration of how you would add value, an alternative approach to what has gone before?

Yet many firms continue to undertake business development in the same way they have always done, using standard templates, pre-determined responses and conventional processes.

Why? Why do professional services firms, compared to other industries, have a particular favouritism for the status quo?

Essentially, it’s because being different is risky and uncomfortable. Moving from the status quo requires an acceptance that failure is a realistic consequence of originality. In our experience, the prevailing culture and unique dynamics specifically found in many professional services firms amplify the perceived level of risk and intensify the consequences of failure. As a result, change is more uncomfortable and new ways of working are not always supported.

So what is specific about professional services firms that make them more averse to embracing change? Why do they perhaps fear failure more than other industries? What are the unique dynamics of a professional services firm’s culture that create a greater barrier to risk-taking, intensify the fear of failure and create a reluctance to try a new, different (but possibly risker) approach – when the rewards are potentially great?

From our own experience and using some excellent research by Prof. Laura Empson, we believe there are 10 unique cultural dynamics within professional services firms that diminish risk-taking, hinder originality and create a bias for the status quo:

1. Individual autonomy:

Partners of professional services firms often hold extensive individual autonomy. They want to preserve the right to apply their specialist knowledge and they don’t like to be told how to operate. Being asked to adopt a new approach may not be embraced wholeheartedly.

As a consequence, in regards to business development, firms often adopt strict brand guidelines in an attempt to align autonomous partners. This can often act as a straightjacket on those wanting to take an innovative approach.

2. Maintaining social capital:

‘Social capital’ is essential for individuals within professional services firms. Social capital is “the value created by leveraging knowledge that is embedded within social networks and interrelationships.”[ii] It relies on vibrant, creative and trusting relationships.

A high amount of social capital enables you to access more resources and to generate greater commitment as well as an increased level of belonging and status. Social capital also engenders trust which is, as a key enabler of knowledge sharing, critical to the generation of performance outputs in professional services firms.[iii]

Put simply, your social capital often determines your level of authority, reputation and credibility in the partnership group. As a result, partners are reluctant to try any new approach that might lead to a reduction in their social capital.

When a culture actively punishes risk takers there will inevitably be fewer of them, yet innovation by definition involves risk.

3. Power in ambiguity:

Prof. Empson has found that, in contrast to most other industries, many professional services firms have ‘ambiguous authority structures’ wherein the roles and responsibilities of ‘leaders’ are not clearly defined.

Firms often have their own unique internal, highly political leadership systems in which ‘everyone is a leader and no one is a leader’. Individuals with the interpersonal and political skills to understand and exploit these ambiguous authority structures can generate a great deal of power in professional services firms. Prof. Empson defined this finding as ‘power in ambiguity[iv]

A logical conclusion is that partners who want to maintain their ‘power in ambiguity’ within the firm will be unwilling to put their heads above the parapet and try a new approach if it could potentially damage their ability to exploit the ambiguous authority structure ‘under the radar’.

4. Burden of consensus

In professional services firms, a high level of consensus and commitment are required for processes to change. When internal politics are prevalent and partners hold opposing positions, it can lead to an endless cycle of consulting, analysing, recommending and rejecting new approaches. The capacity to adopt new creative original ways of working becomes difficult to achieve.

5. Selective intervention

Partners say they are happy to delegate responsibility to ‘management professionals’ (such as Marketing or IT specialists) but then regularly choose to veto and intervene. This makes it very difficult for these management professionals (who might be regarded as subordinate to fee-earners) to try to instil innovative approaches.

6. Social embeddedness

Another dynamic regularly found within professional services firms is ‘social embeddedness[v] – i.e. the ‘familiarity’ and strong relationships formed among partners who have worked together for many years and are ‘socially embedded’ within the firm.

While such a dynamic could be a benefit in some circumstances, an inherent ‘niceness’ or not wanting to ‘rock the boat’ means partners may avoid having challenging conversations and sugar-coat difficult messages.

For example, if a partner is steadfast in his approach to business development that continues to yield poor results, are his colleagues willing to have an honest conversation with him to suggest he refine his approach next time or try something entirely new?

7. Blame culture

Social embeddedness (point 6) has been described as a similar dynamic to that of ‘sibling relationships’ which are often characterised by finger pointing and blaming others for mistakes and failure.

As highlighted previously, change has an inherent risk of failure. Why would someone try a new approach if the likely response to a possible failure is blame and finger pointing?

8. Little time for invention in an ‘activity driven’ culture

Many professional services firms are still ‘activity-driven’ with metrics often rewarding activities such as ‘utilisation’ and ‘billable hours’. In such a culture there is little incentive to try a new approach.

Partners will continue to use the same templates and standard responses they have always used, even if they don’t produce positive results.

9. Successful, new approaches are not widely shared or embraced

In some professional services firms, the act of sharing new approaches is not widely encouraged and mechanisms for sharing are rarely in place. We have found examples in some firms of certain sectors, service lines or locations using successful innovative approaches and other ‘silos’ still using old underperforming methods – each unaware of the other.

Why are successful approaches not shared or adopted firm-wide in professional services firms? It could be a result of ‘activity driven’ time pressures, the ambiguous leadership structures or high levels of individual autonomy (‘everyone is a leader and no one is a leader’).

Frequently we have found some partners who are willing to try a new approach and share their learning and others who decide to veto any new approach for their area of responsibility. Equally we have found some successful partners are unwilling to share their new, improved approach since it reinforces their reputation, authority and social capital.

10. A perceived obligation to preserve tradition

Professional services firms often have a rich history and partners may feel duty bound to maintain traditions and methods of working and perhaps more than other industries, often have an inherent predisposition towards maintaining the heritage of the firm. This suggests partners may be unwilling to take risks or deviate from the status quo and will continue to follow a conservative approach rather than challenge the firm’s traditions.

What next?

Based on the unique dynamics outlined above, our recommendations for professional services firms wanting to promote change initiatives would be:

1. Reframe your perspective and see change as an essential process for growth

Embrace the risk and uncertainty this brings. Even if your new approach doesn’t reap immediate results it can foster learning, teamwork, resilience and build commitment to the cause. Don’t celebrate losing – learn from it.

2. Be transparent – share failures and successes

In a professional services culture where ‘social capital’ is vital and there is ‘power in ambiguity’ this will be especially hard. Let employees know that trying a new approach and initially failing won’t necessarily damage credibility or reputation.

3. Create a culture which encourages employees to try a new approach

Should the approach go wrong, accept the failure as a team and don’t blame the individual. A system that actively rewards exploration, innovation and creativity will find more of it.

4. Don’t shy away from difficult conversations

Learning from failure can be a chastening experience but individuals should not be afraid to say (or hear) why they believe the approach didn’t work and discuss how the approach can be improved in the future.

5. Reward calculated risk

Stepping out of a comfort zone requires bravery and self-confidence. Ask the question: does our culture reward and encourage individuals who try a different approach or does it define individuals by their mistakes and setbacks? Too often in professional services it is the latter.

6. Adopt a structured consultative approach

Minimise uncertainty and discomfort by adopting a structured consultative approach, particularly to business development. Learn, practise and refine the key behaviours that will be required to succeed in many client-facing scenarios.

7. Review your metrics

Do your firm’s metrics promote change initiatives or do they hinder efforts by measuring and rewarding traditional, activity-driven outputs?

8. Ask your partners to reflect and take personal responsibility

Ask your partners and senior managers to personally reflect on the firm’s culture and take responsibility for trying new approaches and embracing uncertainty:

Q. Do we feel able to challenge old assumptions and try new approaches or do we keep doing things in the way we have always been done? Why do we have a preference for the status quo? Are we willing to challenge the current situation?

Q. Do we have the incentive or time to try new approaches or are we caught up managing the clients and work we already have? Do we actively seek out time to learn from successes and failures?

Q. Are we too concerned about protecting our reputation and patch of power? Are we afraid of being exposed and do we feel vulnerable?

Q. Are we willing to subject ourselves to criticism? Are we willing to share learning and admit mistakes following a new approach or do we prefer to maintain our social capital?

Q. Do we feel able to have difficult conversations with other partners if we believe there could be a better, new approach?

Q. Do we ‘play the game’ and report on the metrics that maximise our own advantage or do we challenge the rules and admit when we could have tried a new approach or done something in a better way?

Footnotes:

[1] Although this Point of View chooses to focus particularly on business development, it is also relevant to other areas of a professional services firm.

References:

[i]Professor Laura Empson “Who’s in charge? Exploring Leadership Dynamics in Professional Service Firms” Cass Business School June 2013
[ii] “The Oxford Handbook of Professional Service Firms” (2015) edited by Laura Empson, Daniel Muzio, Joseph Broschak, Bob Hinings, Oxford University Press
[iii]“The Oxford Handbook of Professional Service Firms” (2015) edited by Laura Empson, Daniel Muzio, Joseph Broschak, Bob Hinings, Oxford University Press
[iv]Professor Laura Empson “Who’s in charge? Exploring Leadership Dynamics in Professional Service Firms” Cass Business School June 2013
[v] Professor Laura Empson “Who’s in charge? Exploring Leadership Dynamics in Professional Service Firms” Cass Business School June 2013

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