Failure to be in command of improving your talent will be the single issue driving the polarisation of professional service firms in the years to come.
When the words “Our people are our greatest asset”, trip off the tongues of CEOs and managing partners – as all too frequently they do – they seem to lack conviction. Jane Simms writing in Director magazine recently says, “… what they really mean is: ‘Our top 50 to 150 people are our greatest asset and the rest are a disposable commodity’.” Buy one, get one free!
For some time, I have had an abiding conviction. It is one that still runs counter to common practice in professional service firms and goes like this: the best marketing strategy for any professional business is, in fact, a truly effective HR strategy. The way in which people are recruited, engaged and developed is quite simply the differentiator between firms.
2005 should be the year when, finally, the link between loyal employees, satisfied customers and profitability is realised. As I reflect on the last 16 years in professional service firm management, firms have become significantly more client oriented and market focused. They have recognised that they are service businesses first, professional firms second. This is real progress, but what happens next?
Internal marketing consultancy, Enterprise IG Business and Brand Engagement (BABE), estimates that, even in the best of companies, only a third of staff act as ‘brand champions’, a third add no value to the brand because they do not engage with it, and a third act as ‘brand saboteurs’. Let us go back to ‘the top 50 to 150 people’ who are ‘our greatest assets’ (our partners/directors) and take a closer look – if only because we know that, if any change is to happen at all, it has to start there. What do we find? How many fall in to the ‘adding little value’ or ‘undermining the brand’ categories? Believe me, it doesn’t pay to dwell on the answer. But this is all that many firms seem do as if in a state of suspended denial.
What we need is action and fast.
Customer service must be turned on its head. Firms now need to turn their attention to understanding and meeting the needs of their stars, the very partners who are generators and custodians of the business. They must provide a level of service to their partners and future partners that helps them become more complete business men and women, allowing them to operate much more effectively. In short, this means providing an ongoing development programme for them both as individuals and in teams.
The service standards set by clients today are growing ever more stringent and the competitive pressures they are applying make it unlikely that the same high levels of profitability can be sustained by professional service firms in the long term. Firms must: (a) become much more efficient; and (b) invest in the skills of partners so that their clients continue to perceive they are buying a superior service and that there is a competitive advantage in still using them. If firms do not do this, clients will take their business elsewhere, the firm’s profits will decline and the best partners (its human capital) will gravitate to a home where such an investment is made and profitability is better aligned to their lifestyle. Simple economics.
If Clementi’s recommendations are implemented and outside investment and talent is indeed attracted to the legal market, this is the least such investors would expect. They would want to be certain that their prized asset – their “product” – was as good as it possibly could be and that client adhesion was strong.
“Partner service” would be viewed simply as good stewardship.
A few firms heard the penny drop some years ago and are now reaping the benefits. Examples include Deloitte, Ernst & Young, PwC, Smith & Williamson, DLA, Eversheds, Freshfields, Herbert Smith, Wragge & Co, Cushman & Wakefield/Healey & Baker and DTZ. However, failure to address the opportunity to be in command of improving your talent will be the single issue driving the polarisation of professional service firms in the years to come.
Allied Domecq is probably a client of at least one of the firms mentioned above. We should learn from the visionary thinking of its chief executive, Philip Bowman, who last year identified the firm’s people brand as one of its nine core brands and promised it the same care and attention as its prized drinks brands. As Jane Simms says: “Better HR practice has to be led from the top – and too few chief executives engage seriously with people issues throughout their organisations. Until more CEOs walk the talk, they should not be surprised when their well-honed aphorisms come back and bite them”.
Simon Slater is founding director of First Counsel’s advisory division. He can be contacted on 020 7332 6336 or email Simon.Slater@first-counsel.co.uk
This article has previously appeared in “Managing Partner” and “Professional Marketing”.