Useful ideas for professional service providers
Professional service firms have very few places where they can turn for advice and best practices on how to run their businesses, according to Maureen Broderick in her book The Art of Managing Professional Services: Insights from Leaders of the World’s Top Firms. The book aims to help rectify this by providing insights derived from more than 130 in-depth interviews with leaders of professional service firms in the fields of accounting, advertising, engineering, consulting, executive search, financial services and law.
Although the book presents some survey data, the survey process does not seem to have been particularly scientific. The firms were selected on the basis of being “acknowledged and respected by their peers”, being amongst “the top-rated firms”, and being cited by trade associations, rating companies and publications. Thus the content is better approached as a useful compilation of ideas, rather than as a rigorous analysis of industry best practices.
The book contains chapters on organizational values and culture, human resources, client relationship management, service offerings, financial management, marketing and sales, partnership and ownership structures, strategic planning, governance, and leadership style. Different professional services firms do things in vastly different ways, and I suspect that the author had difficulty in formulating a clear consensus on many of these issues.
Many of the firm managers interviewed described their professionals as “highly intelligent” and “extremely smart”. Perhaps that is what you tell an outsider when asked about your firm, but the privately held views of those experienced in professional services firm management are rarely so effusive. This leads to a suspicion that there may be some systematic bias in the responses. For example, 92% of firms gave themselves high marks for how well they managed equity and compensation; clearly the responses were coming from the managers, rather than from those who were being managed.
Notwithstanding these issues, the book does contain some very interesting insights. The chapter on finance contained some revelations about different ways in which firms do financial planning, and different metrics which they use. The chapters relating to partnership and governance structures are also likely to be of considerable interest, as these can be contentious issues and it is always helpful to see how other firms approach them.
The book confirms the widely-held impression that professional services firms tend to do their own strategic planning very poorly, and do not recognize how increasingly critical a role good information systems play in a firm’s profitability. Professional services firms also do very poorly with diversity, being strongly dominated by white males.
The author is correct in asserting that there is very limited information available on the best ways to run professional services firms, and for that reason this book will be essential reading for managers and leaders in such firms.