MANAGING THE PROFESSIONAL SERVICES FIRM BY DAVID MAISTER

This is the first ever novel which David Maister ever wrote on professions.

The first part of this novel deals with the basic matters related to professional life. It
starts with explaining how you reconcile client needs and the ambitions of
professionals. The answer to which lies in the links between organization, economics
and the market for both clients and people. Then comes the stages which have to be
encountered during one’s professional life. It basically talks about the professional
firm lifecycle. How services mature, and what clients look for as they do. He deals
with this very obvious question in a simple way by saying that, clients can look for
experience, expertise or efficiency, otherwise known as brains, grey hair or procedure.
Any of these two could be the progressive approach of the client. Both of these are
quite different from each other and thus David Maister undertook a comparison of the
differences between these types of practices. Though both are equally effective, it
mainly depends upon the nature of work or more specifically, the field in which they
are working. Next comes a very important aspect of any organization i.e.,
profitability. Any firm which comes into existence and operation has a sole motive of
making profits and an ever increasing struggle to enhance revenues. Here the author
diverts the attention to the profitability formula and the different paths to profit.
Profitability is determined by two groups of two items: Hygiene and Health. Let’s first
consider the firs item, which is, Hygiene- This can be explained in terms of working
more hours and cutting costs. Working more hours will directly be proportional to
increase in revenue. So basically, this is an approach from the revenue point of view.
And as far as cost approach for emancipating profits is concerned, it is as simple as
reducing your production, marketing and various other costs incurred right from
purchase of raw material to selling the final product. Next item is Health- this can be
explained in terms of becoming more valuable and becoming more efficient. Health to
be considered requires a deep insight on how to enhance the efficiency of the existing
resources which can directly lead to increase in production and thus the profits.
Resources can be defined as any human or mechanical efforts required for initializing
the production and leading it to successful completion of the entire production
process. Any resource in between if working inefficiently will not only lead to delay in
the production but increase in all the related costs, thus reducing the margin of
revenue generated. Both of these items (Hygiene and Health) are measurable as
utilization or billability, margin, rate and leverage. After talking about profitability,
author now comes to a crucial but interesting matter, of solving the under delegation
problem. Under delegation is doing work that could be done by a less costly resource.
It is the worst and most prevalent bad habit among professionals adversely affecting
the interests of clients, partners and juniors. Under delegation leads to inefficiency of
the productive resources. It wears out the resources who work more than their
saturation levels thus hampering their effectiveness and making them less suitable
everyday. On the other hand, it leads to the wastage of the resources which are not
utilized to their complete potential, thus hampering their moral and leaving them
unsatisfied with their job. It not only hassles the human resources but also dampens
the firms’ image and goodwill which plays a very important role in the market these
days. However, it is ingrained and takes a tough, insistent managerial program to
remove it. But, it is worth it, because a one time effort will leave its impact over a long
period of time.

Now, in his second part of novel David deals with all the aspects relating to Client
Matters. Here he commences his vision with determining a suitable but practical
Practice Development Package. A complete procedure on how to go about the new
clients and the already existing clients has to be framed. It must be understood that
though its important to enhance to client base and thus your market share by pursuing
and ensuring the inflow of new clients from time to time, it is very important to
understand the significance of the existing customer base. It is the feedback and your
impact on these existing clients that brings in new clients. If a firm is unable to satisfy
its present leads, the new leads will never get generated because it is the present
which can build up the firm’s future and if the present remains dissatisfied and weak, it
can never lead to a strong and prosperous future. But, the relevance of new leads
cannot be overshadowed by the old leads. It’s equally important to ensure a effective
approach towards bringing in new business. So, the points to be taken under
consideration while planning the strategies are -What are the components of a
balanced marketing approach, how much attention should you give to chasing new
clients versus marketing to existing clients, what proportion should be spent
generating leads versus pursuing the leads you do have and what about listening to
the market and finding out what clients want. A very critical issue here relates to
listening to clients. It’s very necessary to ascertain the client’s needs. It’s on the
basis of his thinking and his requirements that the firm’s strategy needs to be
customized and initiated. David has put down a description of six different approaches
to getting clients to talk to you and tell you both how to be more valuable and also
what their additional needs for service are. These approaches not only help a firm to
get complete insight about the client but also help it to serve them in the most
appropriate way possible. Thus leading to a satisfied customer and bring in new
clientele as well. Every firm tries and shows the best work to their clients, but what is
necessary is that the work put up by the company should be appropriate ad best for
the client also. And this condition can be fulfilled only when the firm puts itself in the
client’s shoes and then analyze what quality and level of output and work is expected
by the customer. Because quality work done does not mean quality appreciation by
client as well. What would be the best plan and project for the client and not the firm.
Every client will have their own set of boundations and conditions under which they
prevail. It has to be kept in mind that every client has their own atmosphere of
operation and it is not necessary that what suite one client will suit other in the same
effective manner. Therefore, it is necessary to first understand the basis on which
project has to be initiated and then go ahead with it. So, every firm must think what
kind of experience do your clients get from you, using our own experience as
customers, what can we say about the balance between getting the job done and
being treated appropriately by the service provider and ultimately what do we want
when we are the client. To ensure this what could be a possible way is a service
quality programme. What management can do is try ad take a feedback from the
client during the various stages of development of strategy. It can therefore be
ensured that project is going the direction in which the client wants. Any negative
feedback at any stage can therefore be rectified there in. so, the idea to be
understood is, what management processes are needed to achieve service
excellence, what tactics work in pleasing clients, and methods (including client
feedback questionnaires) that monitor their delivery. What comes next after satisfying
a customer is increasing your customer base. This starts with Marketing to existing
customers because one satisfied customer gives you 10 new clients. It all depends
on your approach towards initiating the marketing strategy. There are various stages
that needs to be undertaken during this process of growing relationships; making the
0client disposed to use us again, making ourselves more valuable to the client so that
he gives us due consideration, uncovering the next client need. We also need to
explore why we tend to under invest in marketing to existing clients. And make it a
trend not to continue with this malpractice of under investing in such strategies. Now
you need to focus on what would a new client look for in your firm. That is, how
clients choose. You need to make very client realize that you are the best option
available to them. You will have to convince them about the efficiency of your
strategies which have worked in past and the capability of your firm to adjust with the
changes taking place in the corporate sector. An understanding has to be set up with
the client needs and what exactly they are looking for. Buyer has to be impressed with
your plans relevant to their requirements. So, what firms need to keep in mind is what
do new clients respond to when you are trying to win their business. The key
argument presented is that the essence of getting hired to understanding how clients
buy. Specific suggestions are made for impressing a buyer during the various stages
of a sales pitch or beauty parade. Clients need to be shown and told what they want to
see and listen. This acts as the key to bringing in new clients and leads in your firm.
Another step towards bringing in new clients is various ways of attracting new
clients. This deals with basically how to generate new leads and enquiries about your
services. That’s, how to make sure that your prospective clients get an overview of the
services which you can provide to them and how can they be effective enough to
them. You need to be sure that your future leads can lay hands on all the possible
information about your firm. Another substantial point to be considered is how to get a
group of professionals to execute a balanced package of marketing activities. That is
bringing the experts of this field under the same roof. A suitable group of people who
have a positive and broad outlook towards this practice have to be bought together.
There have to be professionals who can individually deal with their set of function and
then can collectively and compatibly execute it with the research of others in the
group. That’s how David Maister goes about explaining the key to satisfy the existing
customers and bring in new leads and clients.

Now coming to the third part of the novel, this deals with human resources of the
firm. David says that its necessary for every individual working in the firm to do a self
analysis and gain the conclusion whether his career is going in the correct direction or
not. A good income is necessary but not sufficient. Good income can take care of your
monetary needs but there has to be a balance between your professional and
personal life. If your professional life is affecting your relations in an adverse way, just
take out time to think whether your career is taking you to a right path or not. Also,
only because a job is giving you good compensation doesn’t mean that its suitable for
you. Each individual has their own distinct skill sets which are suitable for a
particular job. So, its appreciable if one could analyze his own skill set and match it
with a suitable job. You must have a healthy balance sheet, which mean focusing on
two key groups of assets: your skills and your relationships. Its always better have a
balance between al the aspects of your life rather than giving importance to just one. It
leads to an irresolvable situation in future. So, its advisable to keep a track of your
personal life as well along with professional life. This was a way to decide in which
field you want to shape up your career. Once, you have decided your branch of
function, you are embedded with the responsibility of developing the skills and
knowledge base of your juniors, i.e., building up the human capital. You must not
only work towards exploiting the existing skill set of your resources but also try and
develop other skills as well. This will be helpful in not in increasing the efficiency but
also in the personal development of your resources. New skills will enable them to do
various other tasks and operations which they are responsible for but were not
capable enough of doing them. This can be done by swapping of tasks among your
team so that they become familiar with the complete procedure and not only their
specific jobs. This will help them to gain the skills required for performing the other
functions involved in a process. Many other ways have been listed by the author to do
this task including swapping among the departments, delegating your work, allowing
to take extra responsibilities and so on… It is easy to focus a lot on exploiting skill to
earn an income, but you must also work at building new skills. Apart from skills what
keep your subordinates moving are the motivation levels in the atmosphere. For
sustaining any human resource it’s not only the good renumeration which is necessary
but also the motivation and support provided by their authorities. How do you excite,
energize and enthuse junior people is of utmost importance. Motivation through the
competition for partnership cannot be taken for granted (as it was so often in the past),
and professionals are not all motivated by the same things. In today’s competitive
world where everyone is busy cutting edges for success, the levels of stress have sky
rocketed. In such a situation it is necessary to maintain a calm and cool working
environment which can be done by either a small get together or may be a informal
meeting with your juniors expressing their problems, be it professional or personal.
This can prove to be a stress buster. What also motivates juniors is the recognition for
their good work. So, if you feel that your junior has done a good job, appreciate it in
front of everyone. This motivates him to work harder and better. A sudden day off or
dinner party can work wonders for motivation levels. It hard to fight against motivation
crisis but it’s easier to prevent it. So, make sure that the works turns on your juniors.
The motivation levels of your team is high, so what next. Next comes the importance
of scheduling. Assigning work to people best viewed as a strategic process, although
it is often seen as an administrative activity, scheduling determines the economics of a
job, the quality of the team that the client gets, as well as the skill building and
motivation of professionals doing the work. It is necessary to boost your team about
completion of work as per the schedule which has been set up. An unscheduled
activity leads to nothing but the confusion among the team which deteriorates not only
the quality of the output but also the quality of the team. It enhances the work
pressure, puts a question mark on the ability of the team and further more increases
the costs. So, its significant to be able to make your team finish each phase of project
by the scheduled time. What do the employees want in return for their efforts are the
due compensation in terms of partnership. Its necessary to ascertain what rewards
are people trying to obtain when they aim for partnership. Traditionally, making partner
meant receiving a number of rewards simultaneously: equity, internal and external
status, participation in decision-making. However, it is possible and maybe desirable,
to unbundled these rewards and broaden the structure of partnership. That’s for the
welfare of employees. Now, coming to the welfare of firm as far as human resources
are concerned, it is necessary for any management to be able to survive the people
crisis. Its not every time that the company will get the adequate supply of
professionals. Its necessary for the management to strike a right strategy during this
time when the firm doesn’t have sufficient staff. Firm management will have to change
as the supply of young professionals changes. Developing people is like refining ore
and mining for gold. How much time, cost and effort do you invest in refining ore when
gold is cheap, how does that change when the gold is expensive. This was one of the
first articles to identify and discuss the "war for talent." Its not that people which are
hired can immediately be expected to produce results. They have to be trained
according to the requirements of the firm. This requires time and incurs cost for the
firm. They’ll have to prepare a team to strike a balance between the costs incurred
and the revenue expected to be generated by these resources in near future.

The fourth part of this novel concerns the Management matters. This part relates to
how the managers add value to the working of their subordinates. It precisely
explains the importance of manager / coaches in professional practices. Unlike
managers in corporations who often has "position power" managers in professional
environments must act like coaches, not like bosses. Here's how they can make a
difference. This will help his team to accept him as a part of them and be more
comfortable to discuss problems and issues with them. This comfort zone cannot be
provided by the boss. So, be a mentor, be a leader, be a friend and be a guide. That’s
the key to win your teams trust and support without any inhibitions. Now that the
corporate environment has changed so drastically it is important to create strategy
based on the current corporate atmosphere and not the traditional approach.
Traditional approaches don't work, and its important to do it right. Strategy in most
professional practices is best done by starting at the level of the individual, and
ensuring that each person has a personal strategic plan. Group and firm-level plans
can and should be built on these starting points. Its not advised to commence the
plans on the grounds of complicated strategies. Its always better to start with a fast
track strategy based on a simple, ready to implement approach. Ask your team for
action commitments in four key (and eternal) areas: improve efficiency, develop
people, increase quality and get better business. And then allow them to build up their
own plans on this basis. Compile the individual approaches and develop an
appropriate strategy.

Coming to fifth part of this book, which deals in partnership matters. This part starts
with explaining how to go about partner performance counseling. This basically
explains how to design a process to help partners improve, including establishing
performance criteria, designing the counseling process, allowing for self-evaluation,
career planning, goal setting and action planning. It takes a great deal of information
and insight about strategic planning to successfully undertake the above processes.
And that’s what is required to be done when it comes to partners because at the end
of day they will be funding all the strategies. So, its necessary to have a time to time
counseling with partners to keep them updated with the current happenings. Every
partner in the firm has to be fairly and equally compensated. This is called the art of
partner compensation. Lets discuss the important elements of a good compensation
setting process. It's not just about the final number. Justice must not only be done, but
it must be seen to be done. It must be ensured that everyone thinks that the
judgments made are thorough, comprehensive, informed and fairly arrived at. Its
necessary for the welfare of the firm that each partner be equally treated and
demanded for. Its not necessary to disclose the compensation given to each partner to
others. Patterns in partner compensation can be looked at from a different
perspective by each partner rather than direct disclosure of each partner’s
compensation. The question arises whether the compensation awards of all partners
should be disclosed to the whole partnership. For this author describes an effective
way to help partners see what has and has not been rewarded, without disclosing
everyone's individual pay. Compensation given to each partner is based on their
contribution to firm in various fields and aspects. The entire pay depends on the
weightage given to these different aspects. What weights do firms give to various
components in determining compensation is the key to this part. Based on a poll of
law firms, a survey shows how much weight firms tend to give to getting business,
working hard and managerial responsibilities. And its this weightage which determines
the final pay of all the partners. Next comes the issue of partnership governance.
This describes how the uppermost positions and committees in a professional firm
should be designed. How to differentiate between the policy committee and an
executive committee. And also determining the role and powers of a managing
partner. This might be a little complicated as to which position to be assigned to each
partner.

The sixth part of this book deals in Multisite Matters. Basically talks about the various
kinds of firms and the differences in their way of working. How does the most
successful professional firms in all the professions operate is a valuable knowledge
to gain. The strength of the collaborative team-based approach to firm management is
explored, using public-domain information on firms such as Goldman Sachs,
McKinsey, Hewitt Associates and Latham & Watkins. Now lets talk about the
difference between the way of operation between entrepreneur and partnership
firms, i.e. hunters and farmers respectively. Firms based on individualism and
entrepreneurialism differs from team play firms. They can be compared in terms of
approach which they follow and the one which is most likely to succeed. Also there is
a lot of difference in the method of running these either of these firms. These kind of
firms can also be differentiated on the grounds of organization, compensation and
management systems. The next concerning factor is how to make the network work.
The problems in coordinating multidisciplinary and multisite operations, and how to
make them work. Includes a discussion of how the network can empower the local
practice and help different units jointly pursue the multidisciplinary or multilocation
client. The chapter also includes some opening thoughts on breeding collaboration.
Next he digs into the process of creating a collaborative firm. The author digs
deeper into the processes that breed collaboration between different groups, stressing
face-to-face contacts through rotation (exchange) of staff, joint activities and cross-
boundary managers. Also discussed are more common, but weaker, tactics such as
transfer payments and information sharing. He also focuses on coordinating
industry specialty groups. What should a cross-boundary manager be trying to
accomplish. The roles of chief marketer and chief operator – which adds the most
value. Includes five ways to share knowledge in a network.

The last section of this book deals with asset management. This is basically the
summary of the entire book- An evaluation of the qualitative caliber of
business, explicitly rewarding skill transfer, measuring and rewarding
client satisfaction levels, establishing balance sheet goals in partner
performance counseling, placing more emphasis on developing existing
client relationships, debriefing of work to promote learning and
establishment of processes to capture project management efficiencies.