A firm’s ownership structure can include one or many owners and is typically governed by the size of the firm and its history. The partnership structure, for example, is common in law firms, accounting firms, advertising agencies, and others. Most professional services firms have owners who, whether classified as partners or not, are typically highly compensated and share directly in the income of the firm. However, professional services firms should not be afraid to share revenue and income. Associates and the other professionals who participate in the delivery of services can have performance standards that offer the potential to earn additional income on the basis of performance. Performance-based incentives are a must for any professional practice in order to encourage the professionals in the organization to maximize their efforts. They may not be owners, but they should be paid fair market value for the services they help the firm provide. Organization and partnership structures are discussed in detail in Chapters 3 and 10.
Employees/Volunteers/Human Capital
The focus here is on fair compensation for performance, creating opportunities for advancement, participation in decision making, adequate resources, and support to successfully meet responsibilities.
A strategic internal management system addresses each of these concerns fairly giving due consideration to each side. Success is not possible without the commitment of the management team.
A firm must also create rewarding professional experiences for its employees and provide growth opportunities that help them maximize their career potential, yet match the organization’s goal of being successful from business, operational, and economic viewpoints. The firm is sharing resources with its employees, even though they are not owners, by compensating them.
The employees are often a good place to start when deciding how to improve the management of a professional services firm, for example:
• Who is on staff, and what are their capabilities and qualities?
• How do the employees match up with the services the firm has de-
signed and wants to deliver?
• Are there realistic career opportunities for the employees at the firm?
Assuming that all professional credentialing requirements have been met, selecting the appropriate staff members to deliver services to a client depends
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on knowing what the firm’s marketplace says it needs from the firm (see next section, Clients/Customers/Consumers) and then determining the skill sets necessary to deliver services that meet those needs. Once the firm has established what those skill sets are, it should be uncompromising in recruiting, employing, and partnering with professionals who can supply the necessary inventory of skills. As Jim Collins, author of the bestseller Good to Great, emphasizes, “The main point is first to get the right people on the bus.”4 A firm that compromises by, for example, looking to spend less on people with fewer credentials ultimately will sabotage itself.
The goal is that a professional firm should adhere to a service delivery policy that is similar to the McDonald’s hamburger concept. All over the world, from Singapore to London to New York, McDonald’s objective is for its hamburgers to be prepared, and taste, exactly the same. In a professional services practice, the idea is that whether it is partner A or partner B
or partner C delivering the services, the client should encounter a consistent level of quality service. Every patient who comes into a clinic with a complaint should leave the clinic having experienced the same high-quality encounter with the physician or the physician’s staff. That’s the objective.
A firm that compromises on the skill sets, attitude, capabilities, or knowledge of the professional staff behind the delivery mechanism will not accomplish its objectives. This is a critical element to sustaining professional success.
It is acceptable to have less experienced, less qualified individuals within the professional practice performing certain defined tasks in the firm’s service delivery model. What is critical is that they are doing the right things at the right time. Associates also need to recognize their potential for growth within the organization and for career advancement opportunities. The firm must constantly examine these issues and ensure that the way they are being handled meshes with the firm’s organizational goals. Chapter 10 covers the topic of professional staff development.
Mismatches occur when overqualified people are delivering a low-quality task or service. This disrupts the firm’s pricing model, which cannot be at fair market value in such cases. There is no economic value to having a race-horse pull a plow. An even worse mismatch occurs when a less experienced person tries to do something that requires a higher level of skill than he or she possesses. The firm might temporarily make a greater margin on those services because the cost to the firm is less than expected. However, the ultimate cost can be high if the firm did not deliver the highest quality services, thereby jeopardizing its very existence.
There is a fundamental difference between an accumulation of individual professionals in practice and a professional services firm. Every staff member in a firm should understand that everyone in the organization is working toward the same goal, which is to accomplish the firm’s value objectives. If the firm has failed to establish a clear value objective, all of the professionals in
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the firm will be possessive about clients because they will not understand how they will benefit from pursuing the good of the organization. Individualistic attitudes—“This is my client” as opposed to “This is the firm’s client”—are still too prevalent in professional services firms. That attitude undermines the long-term health of the organization. It reduces the firm to a mere collection of professionals who have rented space together and are sharing common overhead. In a highly competitive, professional services-based economy, sole practitioners or small, loosely organized firms are at a distinct disadvantage. Every professional in a firm must learn to think, “Our firm is our best and most important client.”
Clients/Customers/Consumers
The key question for this group is: “Can we provide a better service at a lower cost?” An absolutely critical element of a strategically managed practice is the focus on the customer. It is essential that we understand what the customer needs and expects to develop successful services that add real value.
The key issue that a firm must address with its customers is whether they are in a position to demand higher quality services at a lower cost from the firm. If they are, the firm must respond both internally and externally.
This evaluation should start with every professional services firm asking this question: “ What do our clients really want from us?” If a firm has not had focused discussions with potential clients, if it has not conducted surveys of the marketplace, if it has not taken a look at what its competition is doing and how they are packaging their services, or if it does not know the key indicators of what the marketplace is ultimately saying it desires, then the firm will not be able to design services around the expectations of the constituency it wants to serve. The firm is going to be disappointed by the market share that it gets. It will be disappointed by the value the marketplace is willing to pay for the services that it provides, and it will be distressed that its competition is far more successful. Success with clients depends on how well the firm satisfies their needs.
Dale Cordial, CEO of the PT Group, is a highly successful physical ther-apist who has developed a franchise of rehabilitation centers throughout western Pennsylvania. He has implemented a management system similar to the one discussed here. Mr. Cordial notes:5
Success in any business starts with a philosophy. In our case it is a philosophy of patient care that we provide for our patients a very high intensity, high quality level of care to help them reach their maximum functional level in the shortest period of time, cost-effectively. With this philosophy in mind, we have developed clinical pathways to address patient compliance, number of treatment visits per diagnosis, and aggressiveness of care. Our measurement parameters are then defined around those goals. This process has made a difference in our business in two ways: First, the patient receives a very high level of care at a
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very cost-effective price. Second, it has made our practice efficient so that we are able to maintain profitability in this very challenging health care environment, despite continual pressure on reimbursement rates and treatment visit limitations.
Our philosophy of care also matches most third party payer agendas in that they are continually attempting to decrease their overall case cost and control the number of physical therapy visits patients are permitted. Large third party payers actually track our performance and give us a report card. By meeting or being more cost-effective than their network averages, we become one of their preferred providers.
Edi Osborne observes:6
Obviously, having a client-centered focus is a given. Although firms know this, they tend to focus on how they serve the client and not what the client needs.