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billable rates who can perform the implementations—an example of a high-leverage firm. Chapter 2, professional services firm benchmarking addresses this issue in detail.
A firm that focuses on strategy requires a senior team that has the brain-power to perform analyses, think through strategy, and design customized, innovative business solutions for clients. For that firm, a smaller number of recent undergraduates to assist with research and delivery is more cost effective. Choosing the right staffing model allows a firm to be more competitive and dictates the arena in which the staff can play successfully.
Practice Model
The practice model, a group of self-contained practices, each with a single team of individuals sharing delivery, business development, and service development roles, is most commonly seen in management or technology consulting firms, or professional services firms that provide services across a broad set of industries and, in some cases, focus on more strategic issues.
Within each practice, a pyramid of people, senior and junior, have a specific understanding of an industry or function. This makes it easier to create effective specialist teams, while offering the option of going outside the practice to other practices for specialists in other functions or industries when needed. Essentially, practices are smaller speciality firms within the larger company while still being governed by overall firm guidelines that are imposed across the organization.
Specific definitions of practice groups vary across firms and industries.
They might be divided by substantive area, service line, or function. In consulting, for example, functions might include operations, strategy, IT, HR, change management, and business process management. In law firms, they might include labor and employment, corporate, tax, securities, and mergers and acquisitions. Other firms divide their practices by industry or client group, such as technology, financial services, media, telecommunications, and health care. Limited support functions such as finance, staffing, marketing, report production, research, and so on may be provided as shared services across practices. Chapter 20 on office management discusses categories of shared services that should be considered by the professional services firm in more detail.
Firms choose a practice group structure because it has the potential to attract a higher value of work and higher volumes of work from better clients.
Practice groups can most easily achieve superior market recognition of expertise in particular industries or functions, and more easily create innovative intellectual capital and service lines. They also create cohesive units across offices to better target and develop existing and prospective clients.
In addition, they can encourage and support the creation of cutting-edge
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products and services that differentiate a firm from its competitors and improve its margins.
Practice groups can also make it easier for firms to:
• Improve client-service orientation and enhance performance due to
pooling of knowledge and resources and continuity through sale and delivery.
• Better leverage junior professionals through improved mentoring, training, development, and retention.
Organizing a firm by practice does have its drawbacks. It is common to find that partners who function as practice group heads possess deep functional or industry expertise but may lack requisite management or sales skills needed to grow or expand the business. This is exacerbated by the way most firms focus on developing employees’ hard industry or functional skills while neglecting training in management and selling skills. Another drawback is that enterprisewide goals can be superceded by practice priorities.
To overcome these drawbacks, firms need should ensure that the organization supports and rewards development of management skills in addition to industry or functional expertise. This requires the senior delivery team for each practice to have strong business development competency. In addition, senior delivery team members must play multiple roles along the service/function and customer matrix. Regular cross-practice meetings putting together both junior and senior staff can also help facilitate communication, idea sharing and common business development tactics.
Functional Model
Firms that use the functional model have, in essence, created separate organizations focused on (1) delivery, business development, and sales and (2) service development and marketing. Traditionally, marketing resources are aligned with delivery while business development is aligned with customers.
Small firms or those specializing in supporting cross-departmental or industry-independent functions such as operations or information technology might have a tendency to be more functionally focused.
An important benefit of the functional model is that a staff specializing in sales and business development can be very efficient in identifying and quantifying new business opportunities. In addition, a single point of contact with the customer allows for maximum control of customer activity.
At the same time, a generalist sales staff has less depth of expertise in its customer ’s business needs and, it follows, brings less specific insight to the table and is less able to provide the widest range of differentiated, custom solutions.
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For firms operating under a functional model, it is important to build in a structure that encourages delivery team involvement throughout the sales and business development process, particularly in scoping. This is where the importance of transparency and knowledge sharing comes in. Unless sales and business development teams work with and share information with delivery teams, potential clients will not be able to understand the full possibilities and benefits of working with the firm. In addition, without clear channels of communication between the sales and business development team and the delivery team, it is impossible to present a united face to the client or to ensure smooth handoff of new clients to those who will deliver services.
Hybrid Practice Model
As the name indicates, hybrid practice models integrate practice and functional models to take advantage of the strengths of both types. They are divided into practices, but unlike strictly practice-based models, they include specialized business development and service development resources dedicated to each practice. Limited support functions are provided as a shared service. The hybrid model provides several benefits. With a staff dedicated to sales and business development, there is less chance of having troughs between engagements the practice models sometimes face. Because sales staff is dedicated to each practice, the staff members are more closely linked to the delivery team, therefore overcoming one of the drawbacks of the strictly functional model. With sales and business development staff linked so closely to the delivery team, the firm can gain increased credibility with customers and an increased ability to offer differentiated services. It can also offer better pricing and performance management.
This is not to say that the hybrid model is without challenges. One drawback of this model is that it comes with a higher cost structure due to staff redundancies and duplication of efforts across practices. Firms employing this model can also run into problems if their practices do not align well with customers and customer segments. The firm must, as with other models, see that the organization structure is frequently audited against the marketplace to be certain that it is of relevance to customers and is effective at developing new business and sharing knowledge internally. It is also a model that is most applicable to larger professional services firms—the matrix structure of the hybrid model may not make sense for smaller firms with a limited number of service lines, industry expertise areas and geographies.
Geographic Model
Some firms choose to use a geographic model. In this model, the firm is organized by region or country around vertical industry segments covering all
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functions. This can enable better focus on local and /or regional customer needs and market requirements. In addition, it supports better business development opportunities by facilitating stronger local relationships. It also allows for greater staff cohesion and promotes the development of office cultures. Staff lifestyles are improved because travel is minimized. Finally, cutting down on travel reduces overall costs to the firm.
As with all models, this one has some very real drawbacks. With a geographic model, if a firm is not careful it can wind up with what is essentially a portfolio of companies based on geography with a silo mentality organization that does not leverage the scale, knowledge, and expertise of the enterprise. Further, a strictly geographic organization can have difficulty in adequately serving the complex needs of multinational clients or successfully competing against more integrated rivals.
Firms can mitigate this challenge by developing and implementing
firmwide knowledge management and information sharing mechanisms
across office and geographic boarders. It is important to clearly articulate enterprisewide core values and to develop processes, including common training and professional staff development, that apply equally to all regions and offices. It can also be very effective to overlay a practice model on top of a geographic one so that the firm looks at not only the profitability of geographic regions but also the revenues of specific practices. This creates an incentive for people to share knowledge and expertise across regions, as well as to support sales and business development efforts on a firmwide rather than strictly geographic basis.
Role of Support Staff