You can get the same impression looking at the job descriptions that many firms put together when searching for a new leader. There is often a long list, including both “qualifying” characteristics (such as “integrity”) that most realistic candidates are likely to possess, as well as a number of factors that will truly distinguish the best candidates.

Very frequently, the desired characteristics that are listed are in conflict with each other. For example, firms often say that they want their leaders to be both decisive and consultative. These are both virtues, but there is a risk that they can neutralize each other as a guide to choosing the best candidate.

Similarly, it is not uncommon to find firms who say they want leaders who are especially adept at being active externally (dealing with clients, shareholders, the media, the community) and also be active internally: motivating people, readily available, and managing the firm’s affairs. These two skill-sets are not the same. Taken together, the message can be confused, if not completely contradictory.

The situation can be made even more difficult. Many firms make lists of generally desirable characteristics of a leader, failing to recognize that the best set of attitudes, skills and behaviors depend on the individual firm, the specific opportunities and needs that the organization faces, and (for example) how ready the organization is to make changes.

After all, there’s no point selecting an Olympic-level coach for a team of people who don’t want to play that game. There’s no point appointing a skilled cost-cutter if the primary strategic need is to grow revenues in new markets!

For professional firms run on “partnership” principles, the bar is raised even higher. Unlike a corporation, which can (and usually does) select its leaders according to the views of a relatively small Board, the choice of a new leader in a professional firm usually requires taking into account the preferences, desires and ambitions of a broad group of partners, shareholders or senior vice-presidents.

The need for this is not driven (just) by ideals of democracy, participation or consultation. It’s about ensuring the organization’s understanding and acceptance of the CEO’s (or managing partner’s) mandate.

All too often, I have seen CEOs and managing partners criticized, resented and made relatively ineffective by being judged (both by their Board and those they manage) on aspects of the role they were not chosen to perform.

As I pointed out in a previous article Accountability: Effective Managers Go First, it is hard to hold a leader accountable if there is not a clear, unambiguous understanding of the role. Many leaders prefer it this way: they like the freedom of action that comes from an unambiguous role. However, as my co-author Patrick McKenna points out, leaders are, inevitably, going to be judged: wouldn’t it be better for all concerned to know, in advance, and with clarity, what the true, real expectations are?

This seemingly obvious principle is widely neglected in practice. In many firms, in many industries, in many countries, I have learned, people are appointed to managerial positions without detailed consideration of the requirements of the role.

Many firms go directly to a discussion of the merits of individual candidates, based on a very general job description, without priorities established among the characteristics listed for the “CEO search.”

If, however, you (first) have an in-depth discussion of what you seek in a leader, the weighting given to competing virtues can be discussed dispassionately, and not be excessively influenced only by the specific candidates involved.

A Diagnostic Tool

In order to assist with this process, I have designed a simple diagnostic tool that can be used to facilitate your firms’ discussions of the characteristics it seeks in a leader.

In the questions that follow, there are a series of “paired” qualities that a good leader might possess. In each case, either quality in the pair might be desirable, and (perhaps) an equal balance desirable.

However, the point of pairing these qualities is to ask: if there HAD to be a choice between the two items in the pair, which would each respondent really prefer in a leader?

A simple way to “force” people to think through their preferences (and also to provide a simple way to aggregate the views) is to ask them to allocate 100 points between each of the paired items. Thus, if the respondent thinks the CEO should be mostly focused on the external community rather than inside the firm, he or she could allocate 90-10 or 80-20 to the “outside / inside” pair.

So, what are the “either / or” choices you might present to your firm? As you scan the alternatives below, bear in mind that either side of the pair is (or can be) a virtue in a leader. The issue here is to set priorities, avoid ambiguities and conflicting messages and force some clarity.

Do you want your CEO / Managing Partner to be someone who…

• Focuses on working inside firm versus focuses on a high profile with clients and marketplace
• Is good with numbers versus good with people
• Leads in accordance with a strong personal ideology of his or her own, versus be the kind of person who tolerates different views, values and approaches
• Has a track record of generating business, versus a track record of managing people well
• Is the type of person who thinks we need to make big strategic moves, even if they involve bigger risks, versus someone who thinks we should make small, incremental changes
• Has strategic acumen personally, versus the ability to facilitate and let others innovate and make strategic choices
• Has the best business qualifications, versus has the best character qualifications
• Prefers to confront problems early, even if this can be disruptive, versus the kind who avoids conflict until it’s necessary to tackle it
• Focuses on preserving the firm’s historical culture versus changing the culture to adapt to meet new challenges of the marketplace
• Moves fast versus someone who acts deliberatively
• Emphasizes ambition and growth, versus someone who emphasizes caution and risk management
• Emphasizes reasoning and logic versus someone who emphasizes emotion and excitement
• Acts a peer, a first among equals, versus someone who is clearly a leader and will manage that way
• Is primarily a “businessperson” versus being “ideology-driven”
• Acts as the firm’s “face” or “identity” in the media, versus someone who facilitates others achieving a high profile
• Is a fresh face versus a known quantity
• Is very self-confident, versus someone who acts with humility
• Already has a clear view of where we need to go and what we need to do, versus someone who will develop that with us after appointment
• Is a pragmatist, versus a visionary
• Primarily has a “hard head” versus a “soft heart”
• Focuses on getting things done (i.e. a “driver”) versus someone who focuses on getting it right (i.e. an “analytical”)
• Has an introverted style, versus someone with an extroverted style
• Focuses on capitalizing on short-term opportunities, versus someone who focuses on long-term wealth creation
• Makes changes through dramatic, big moves, versus someone who makes changes through continuous, insistent pressure
• Sets the example of hard work, versus someone who lives a balanced personal / work lifestyle
• Is diplomatic, versus someone who is “straight-talking.”
• Is usually sympathetic to people’s personal problems, versus is unwilling to allow sustained underperformance.
• Has a track record of personal professional success, versus has a track record of building an organization
• Is usually trusting of others, versus not easily fooled
• Prefers to manage people directly, versus prefers to work through others
• Is decisive versus consultative

• Is hands-on, involved in the details, versus hands-off, sets the direction and then holds people accountable

  Naturally, it is possible to adapt this questionnaire to your own firm, inserting key trade-offs that I have omitted and deleting ones you think are less critical to your firm.

  The key is to make the choices difficult, so that people are forced to reflect on what characteristics a CEO or managing partner really requires.

  Mechanistically, I have also used other ways to “force” people to indicate preferences. Instead of allocating 100 points, respondents could be asked, for each pair of virtues, to choose one point on a four-point scale:

  1 = the leader should possess the first quality MUCH more than the second quality;

  2 = the leader should possess the first quality a LITTLE more than the second quality;

  3 = the leader should possess the second quality a LITTLE more than the first quality;

  4 = the leader should possess the second quality MUCH more than the first quality.

  Because we are trying to ask what people would choose if it really came to a choice between the two qualities, there would be no “middle – equal balance” option in this version. In this way, true priorities are more likely to be revealed.

  Using the Tool

  Begin by circulating the questionnaire among the relevant participants (partners, shareholders or senior vice-presidents.) When everyone has contributed their views, charts should be prepared showing both the weighted average view and (this is important) the distribution of views, so that it is clear where the shareholders, partners or senior executives are of similar minds, and where they have divided views.

  The results thus obtained should then be used for an open debate which tries to reconcile the differing views, and thus can serve an important educational, bonding and strategy-setting function.

  The point of the polling is not to suppress debate, but to identify the subjects most worthy of debate. Areas of consensus can be quickly noted, and discussion focused on topics where there is a disparity of views.

  For example, some participants may enter the process thinking that the CEO or managing partner should be a primary business-getter, while others think differently. Through debate, a better, healthier consensus may be forged about what the priorities are, not only for the CEO, but for the firm.

  There are built-in flaws in any discussion of desirable leadership characteristics. For example, when asking people for their views about what they look for in a leader, (using this approach or any other) there always exists a tendency for “regression toward the mean.” People tend to express preferences in comparison to the existing (or recently departed) leader, rather than absolute ones.

  For example, if a previous leader has been noted for tilting the balance toward decisiveness rather than extensive consultation, there will be a tendency for people to vote for the new leader to be more consultative. And, of course, vice versa.

  Once you have completed a first-round survey using these “paired characteristics,” you will probably still have a lengthy, multi-item list of desired traits. It will usually be necessary to conduct a second round of the survey by creating new “either / or” choices from the surviving criteria.

  Repeated rounds of “forced choices” may sound onerous, but eventually you will emerge with a clearer focus on what kind of leader is desired, and more support for any new leader chosen in line with the carefully debated, unambiguous, non-contradictory criteria.

  To facilitate the ability to hone in on the few key descriptors that summarize the group’s preferences, I often run meetings on this topic using “audience response systems” where each person has a (wireless, electronic) keypad and can quickly vote (anonymously) with the group results being shown instantaneously on a screen in front of the whole group.

  The virtues of this system are many, but three stand out. First, there is no requirement to pre-program the questions, and the time from phrasing the question to seeing the views of the group is only a few seconds. Because of this, if a vote is ambiguous, or seen to be poorly phrased, a re-vote is possible immediately.

  Second, the ability to conduct sequential “rounds” of voting enables the group to really test its key criteria. For example, if a list of ten criteria “survive” as the most desirable (or consensus) characteristics, it is easy to reduce the list to the most important five or six by repeating the pairing process instantaneously, asking “If you could only have one of these, which would it be?”

  Finally, the fact that audience response systems are based on computers means that the group is able to “capture” the expressions of views that were made, and use them in future deliberations and decisions. What used to be called “a paper trail” is automatically created, which can be referred to long after to remind people of views expressed at the meeting.

  Summary

  If you are like other firms with whom I have used this exercise, you will find that it will force many participants to really reflect in depth (many of them for the first time) what kind of leader they truly think is best for the firm and, perhaps more importantly, what kind of leader they are prepared to accept and be guided by.

  By the way, even if you do not have a broad group with whom you are required to be consultative, the “forced-choice” questionnaire can still be a helpful tool. I have used it with relatively small corporate Boards of Directors where there can also be a need for clarification and choice among competing criteria when appointing top corporate officers.

  You may be surprised that, when faced with competing virtues, some of your colleagues will make surprising choices. You may also be surprised by the amount of unanimity that often exists in what people seek in a leader.

  Your firm will then be in a good position to examine your candidates, and choose the right leader, at the right time, for where your firm is today and where your organization is prepared to go.

  If you can clarify your criteria, it will be easier to recognize the best leader for you. If your criteria are confused, it will be very hard to make a sensible choice. The effort described here is as nothing compared to the benefits of making a better leadership choice.

  ]]> http://davidmaister.com/articles/1/102/ http://davidmaister.com/articles/1/102/ Sun, 01 Jan 2006 12:00:00 -0500 Managing Articles david@davidmaister.com (David Maister) http://davidmaister.com/articles/1/102/ http://davidmaister.com/articles/1/101/ http://davidmaister.com/articles/1/101/ Sun, 01 Jan 2006 12:00:00 -0500 Managing Articles david@davidmaister.com (David Maister & Jack Walker) http://davidmaister.com/articles/1/101/ In 1985, one of us (David Maister) wrote an article for the Sloan Management Review called “The One-Firm Firm.” It identified a strategy common to leading firms across a broad array of professions — creating institutional loyalty and team focus.

  The firms named in that article were McKinsey, Goldman Sachs, Arthur Andersen, Hewitt Associates, and Latham & Watkins, where Jack Walker became managing partner three years later.

  If one is prepared to accept the argument that Accenture (formerly Andersen Consulting) is the legacy firm of Arthur Andersen, and not the defunct audit-based business, then that 1985 list of one-firm firms stacks up remarkably well as a predictor of subsequent success. These are still preeminent and immensely successful firms.

  The marketplace for professional services has changed in ways that were unimaginable in 1985. Clients and client relationships have become dynamic at best and fickle at worst. Shortages and mobility of talent have affected every profession. As a result, the five named firms — and their main competitors — have adapted by making dramatic and often risky changes.

  For example, of those five firms, Goldman, Accenture, and Hewitt have become publicly held companies — most have acquired other firms with varying degrees of success, and all have grown, become global, and (except perhaps in the case of McKinsey) have profoundly diversified their service offerings. Yet each has maintained or improved its competitive position as one of the most admired and profitable firms in its industry or profession.

  In this article, we will address the issue of whether the one-firm firm principles identified in 1985 are still relevant to the continued, sustained success of these five firms. We will focus on what has been maintained, adapted, and abandoned in their management since 1985.

  As we shall see, one-firm firm principles do indeed continue to drive success for these firms, even as their specific practices have been adapted and modified for changing market conditions.

  What Is It?

  The one-firm firm approach is not simply a loose term to describe a “culture.” It refers to a set of concrete management practices consciously chosen to maximize the trust and loyalty that members of the firm feel both to the institution and to each other.

  In 1985, the elements of the one-firm firm approach were given as:

  • Highly selective recruitment;
  • A “grow your own” people strategy as opposed to heavy use of laterals, growing only as fast as people could be developed and assimilated;
  • Intensive use of training as a socialization process;
  • Rejection of a “star system” and related individualistic behavior;
  • Avoidance of mergers, in order to sustain the collaborative culture;
  • Selective choice of services and markets, so as to win through significant investments in focused areas rather than many small initiatives;
  • Active outplacement and alumni management, so that those who leave remain loyal to the firm;
  • Compensation based mostly on group performance, not individual performance;
  • High investments in research and development; and
  • Extensive intrafirm communication, with broad use of consensus-building approaches.

    The one-firm firm approach is similar in many ways to the U. S. Marine Corps (in which Jack Walker served). Both are designed to achieve the highest levels of internal collaboration and mutual commitment in pursuing ambitious goals.

    Loyalty in one-firm firms, and in the Marines, is based primarily on a strong culture and clear principles rather than on the personal relations or stature of individual members.

    The key relationship is that of the individual member to the organization, in the form of a set of reciprocal, value-based expectations. This, in turn, informs and supports relationships among members — who often do not know each other personally.

    Everyone knows the values they must live by and the code of behavior they must follow. Everyone is commonly and intensively trained in these values and protocols. Everyone also knows that if an individual is in trouble, the group will expend every effort to help him or her.

    Marines have a special bond and a shared pride, built on shared values and a shared striving for excellence with integrity. Critical to the success of the organization is respect for both the past and the future. Every marine grasps the concept of stewardship — the organization, its reputation, and its very effectiveness have been inherited from previous generations and are held in trust for future generations.

    The Warlord Model

    A contrasting, and more common, approach to running a professional service firm is the “star-based” or “warlord” approach, which succeeds by emphasizing internal competition, individual entrepreneurialism, distinct profit centers, decentralized decision-making, and the strength that comes from stimulating many diverse initiatives driven by relatively autonomous operators.

    In extreme warlord firms, the productive senior members operate as chieftains presiding over their own territories, coordinating occasionally but fundamentally without a commitment to the institution or each other.

    Many prosperous firms are close to the warlord end of the spectrum. Such firms succeed by forgoing the energy that comes from institutional commitment and extremes of collaboration but achieve a powerful substitute through extreme levels of entrepreneurial energy exhibited by individual warlords.

    Warlord firms succeed when management keeps the “big hitters” happy and productive. The past and the future are not high agenda items. Consequently, the performance of extreme warlord firms often swings through peaks and valleys over time. The environment at these firms tends to be politically charged, and a great deal of management energy is expended in modulating that charge.

    Personal taste can play an important role in determining which path a firm takes. Some of the most effective professionals cannot abide by the one-firm firm model and thrive in the warlord model (and vice versa).

    We hasten to note that the great majority of firms are neither pure one-firm firms nor pure warlord firms. What the one-firm firm and warlord models have in common is high levels of energy. Firms in the middle may pay a price if they fail to fully engage either method of eliciting energy (high levels of internal collaboration or high levels of entrepreneurial individualism).

    Capturing the benefits of high institutional energy is not easy. The one-firm system (like that of the Marine Corps) depends upon a mutually reinforcing set of concrete policies and practices, and many firms may not be able to “get from here to there” in a short period of time. Indeed, part of our argument is that “true” one-firm firms were, are, and will likely remain statistical anomalies in each of their industries, albeit successful ones.

    Twenty-One Years On

    Looking at the range of their services and locations, the five one-firm firms are now almost unrecognizable compared to what they were in 1985. Goldman now emphasizes proprietary trading — a change from its predominantly advisory roots; Hewitt and Accenture have moved into business process outsourcing; and both McKinsey and Latham have expanded their service offerings and global coverage. As mentioned, Accenture, Hewitt, and Goldman have become public companies.

    According to most press reports, McKinsey experimented with some significant changes as the impact of technology on consulting was felt. An early countercultural attempt to acquire and integrate an IT firm was generally considered to be a failure.

    In the late 1990s, the technology bubble led the firm to expand at a faster pace, rapidly increasing the rate of hiring new juniors. It opened offices in many more locations around the world and reportedly cut back on training. As did other professional firms in that era, McKinsey stretched its compensation system to pay more to stars in order to keep them.

    Then, when the bubble burst, the relative economics dropped and the firm had to let a lot of people go. A “capital call” on the partners was issued. According to most reports, the new managing partner who took over in 2003 has reoriented the firm on a more values-driven, one-firm firm approach.

    Goldman Sachs has also been through significant policy and cultural changes, particularly during the late 1990s, leading up to the decision to go public. As with much of Wall Street, the traditional reliance on long-term relationships to build the firm has been significantly influenced by a move toward a “transactional” approach, pursuing fast-moving market opportunities.

    Most observers would concede that Goldman is still, by far, the most collaborative, team-based banking firm. But this may now be a relative rather than an absolute description.

    Latham has also stretched the boundaries of the one-firm firm approach. As we discuss below, it has relied, like most of the one-firm firms, on an increasing use of laterals. It has also introduced a greater individual component into its reward scheme. And it has acquired some sizable groups over the course of its expansion. (For example, it added a firm of more than 90 lawyers in France in 2001.)

    Hewitt has also experienced dramatic changes. A few years ago it acquired a large firm which it had some difficulty integrating. It has gone public and has shifted from mainly an advisory firm to primarily a human resources business processing outsourcer.

    Hewitt often acquires the client’s HR department in order to do this, which is contrary to the one-firm firm approach of stringent, selective recruiting from the bottom.

    Accenture has also migrated to the profoundly different business of outsourcing, along with the concomitant less stringent hiring practices.

    In spite of all these changes, something essential remains in most (if not all) of these firms. They are still, observably, institutions designed much more committed than most of their competitors to emphasizing teamwork and collaboration rather than individual entrepreneurialism.

    This is most clearly revealed in their special human resource practices, designed to enforce high standards of both teamwork and dynamism.

    The April 29, 2006 issue of The Economist magazine contains an article profiling Goldman Sachs, with rich details about its intensive and selective hiring process, tough promotion process, and enforcement of high standards even among the firm’s most senior people. The article says, “Often enough, someone important is asked to leave. This is one of Paulson’s most critical roles.” (Then CEO Hank Paulson is now US Treasury Secretary.)

    Paulson is quoted as saying: “Goldman is a hard place to be hired, a hard place to be promoted and a hard place to stay.” One of The Economist’s writers observes that, “if you want an explanation of how Goldman endures, that, perhaps, is the best explanation of all.”

    What these firms teach us is that the essence of the one-firm firm strategy (and what gives it its economic power) is not a superior ability to select markets and services, but a greater ability to achieve high standards through the consistent application and enforcement of espoused operating rules, philosophies, values and ideologies.

    The Role of Leadership

    A key component in a successful one-firm firm is the governance structure. Members of the firm must feel that they have approved the leaders and that the leaders are accountable to them. This is normally accomplished by having the members (or most of them) elect the head of the firm, who would then serve for a term, typically renewable by election.

    In most cases, the leader is supported by a small, elected term-limited management committee made up representatively of practicing professionals. This accountability is usually balanced by a structure that insulates the leadership from the wrath of colleagues, following tough decisions that may involve short-term unpleasantness for long-term gain.

    In one-firm firms, driven as they are by a commonly held ideology, once all viewpoints are aired and management makes its decision, the partners generally line up behind the decision. Partners or senior officers are willing to delegate managerial powers upward because they trust that those appointed to leadership will operate in accordance with the principles and values of the firm’s ideology. The existence of shared values underpins sustained management effectiveness.

    To maintain this environment takes active management effort and (usually) careful thought in the appointment of group leaders. Running on autopilot is not an option.

    In a previous article (Maister, Managing the Multidimensional Organization) Peter Friedes, the former CEO of Hewitt Associates, was quoted as saying: “I had 15 or so managers reporting to me. So I needed them to not be pulling the firm in different directions. One practice I had was to remind all those who reported to me that part of their role was to have my CEO perspective in managing their group. They were not to just be an advocate for their group or their people. They had to have a ‘whole entity’ view.”

    The payoff from this consensus, values-based management practice can be huge. It permits the firm to excel at getting things done as a firm. In warlord firms, partners typically continue to undermine decisions they dislike, since they feel that they have not delegated the power to management to make those decisions.

    This doesn’t mean that one-firm firm partners are shy about expressing themselves or opposing management as issues arise. They do, and indeed more safely and effectively than in warlord firms, where political risk and retribution are real issues.

    Size and Growth

    The good news, we believe, is that many (if not most) powerful professionals yearn to be part of a cohesive team (often in spite of their chest-thumping behavior). This yearning is something that can be leveraged.

    However, it is very difficult to sustain the one-firm firm, consensus-based governance system as the firm grows beyond the point where all members know each other.

    As clients and competitors change and as firms grow and expand, management must work harder to hold the firm together by, among other things, engendering a sense of reciprocal obligation both between the firm and individual members and among the members.

    While twenty years ago a firm could engage in broad consultation and give people a real sense of participation, today’s mega-one-firm firms cannot feasibly do this without great effort and creativity.

    Inevitably, the top person becomes more CEO-like. This has happened at each of the named firms. This inevitable transition from consensus-building to “consult then decide” can be successfully accomplished only where a strong philosophical base of shared values has been laid down over many years.

    In a sense, the trust given to the firm-wide (often global) CEO is a residual habit left over from times when the individual could be known to all and could interact with all. Perhaps paradoxically, choosing a CEO (or managing partner) based on character, values, and principles becomes even more important if the CEO is to enjoy the same latitude to manage as in the past. And, of course, he or she must continue to deliver. Shared values go only so far.

    The Role of Selective Recruiting

    A core characteristic of the one-firm firm, in 1985 as well as 2006, is the careful hiring, training, and indoctrination of new talent. The one-firm firms described in Maister’s 1985 article relied almost exclusively on hiring “from the bottom.” They resisted lateral hiring as unnecessary and risky to the firm’s “fabric.” But, as mentioned, things have changed dramatically.

    One key feature still common to most one-firm firms is that the core (if no longer exclusive) strategy is to “grow its own” young talent. Professionals hired directly from school invariably have the strongest emotional ties to each other and to the firm, and they are the ones who find it hardest to abandon ship. Focusing on young hires has the added virtue of creating a nimble, energetic army of people who are generally more willing to embrace the core teamwork culture and core values than are older lateral hires.

    Many warlord firms have reduced or eliminated entry-level recruiting, purportedly because of the (short-term) cost of hiring and training such people. They prefer to hire laterally from other firms, to avoid the costs of investing in junior people.

    We believe these firms are sending two uncongenial messages: the people we hire are fungible, and there is nothing special about us. As a result, they are not developing sufficient loyalty and glue to survive the coming down periods, much less to take them to the upper reaches of their respective industry or profession.

    Alumni Management

    One of the keys to the one-firm firm model has been the vigorous enforcement of high standards for progression within the firm. This means that a relatively small percentage of those hired are actually promoted through the ranks. For that reason, one-firm firms may not have different nominal turnover rates than other firms. However, one of the hallmarks of the model is that people who leave one-firm firms do so with great pride and loyalty, often becoming a source of business referrals for the firm.

    Turnover among junior (and even senior) people has become a fact of life in all professions. In the 1980s, Latham learned that it made all the difference in the world whether people left feeling, on the one hand, neglected or badly treated or, on the other hand, as proud advocates of the firm.

    Up to that point in time, Latham had ferociously concentrated on hiring, training, indoctrinating, and holding on to talent. In that environment, when a lawyer left the firm to do something else, it was regarded as a failure rather than an opportunity. The pejorative term “attrition” was applied to these sad events. As a result, the firm often treated the departing lawyer neglectfully or even badly, as if he or she was a defector. This is an example of a one-firm firm principle run wild.

    In retrospect, the firm lost millions of dollars in potential business because it mismanaged relationships with those who left. As Latham matured as an organization, it changed its practices to honor people who leave the firm and to cultivate their friendship.

    In the mid-1990s, Latham made a calculation about how much of then current business came directly or indirectly from alums. The figure was approaching 50 percent. And it was great business — name-brand clients, often premium rates, quicker bill collection, pleasant dealings, and so on. Moreover, the clients benefited because the alums had a special feel for the firm, including knowledge of strengths and weaknesses. In some cases, alternative risk/reward billing arrangements could be worked out because of the built-in trust factor.

    At all of the one-firm firms, the loyalty of alumni is a key competitive weapon. A one-firm firm leader told us, “One of the managing partners of a competing firm once told me, ‘The thing that strikes fear in our hearts is when one of your alums ends up at one of our clients — the loyalty is beyond our understanding and usually means it’s just a matter of time before you guys have your nose under the tent.’”

    The Role of Lateral Hiring

    Prior to the 1980s, firms entered new markets cautiously by redeploying existing talent. But affairs and clients began to move quickly and markets have shifted much more rapidly in the years since then. Accordingly, most of the one-firm firms have expanded their use of lateral (experienced senior) hires. To wait for inside talent to develop was to risk missing the boat.

    In addition, firms in every profession started to open offices in new geographic markets. Early attempts to staff new offices solely with partners from existing offices were unsuccessful. As a result, expanding firms began to cherry-pick talented experienced people from outside the firm.

    Most firms moved cautiously, bringing in only individuals and small groups and avoiding large-scale mergers. The key has been to make sure that when new laterals join the firm, they know what they are buying into. The lateral must understand that he or she is joining a firm with an established ideology. “If you don’t like this ideology,” the clear message is sent, “don’t think of joining us.”

    Surprisingly to many outsiders, one-firm firms have found that many laterals come to the firm to benefit from good management; that is, to be managed. They know about the firm’s reputation for effective management and team-based approaches, and they often come from poorly-run firms. Often — not always — they are the most fervent supporters of teamwork, management, and cohesive action in their new organization.

    Lateral hiring, now a competitive necessity, remains a double-edged sword for a one-firm firm. On the one hand, careful lateral hiring provides rich work opportunities for the “home-growns.” Also, laterals can help the firm challenge its settled view of itself. Done well, laterals can bring a new air of dynamism and creativity to a firm.

    On the other hand, lateral hiring is management-intensive. The bottom line is that a disciplined lateral program, anathema not very long ago, can strengthen a one-firm firm. A poorly managed program will tend to pull the firm apart.

    The Role of Compensation Schemes

    The one-firm firms have largely avoided the stampede toward individual-based (or profit-center-based) reward schemes. However, since 1985 most one-firm firms have gradually expanded the individual component of their reward scheme (in fact if not in rhetoric) and have increased the total compensation ratio between the highest-paid members and the lowest-paid members.

    At Latham, until 1993 the long-term compensation element (known as units) was essentially lockstep, with seniority as the main driver. Under cover of the early 1990s recession, this system was changed. Management’s considered view was that the firm could not operate successfully in the emerging marketplace without providing more incentive for short- and long-term individual performance, particularly on the business development front.

    Walker reports that this was the hardest decision he had to make during his tenure because of the obvious risk to the firm’s “fabric.” But because the change was sold and accepted as fundamentally respectful of the firm’s ideology and shared values — not as a scuttling of them — it turned out to be a successful move. Since that change, the percentage of Latham partners hustling and producing business of substance has dramatically grown.

    Most one-firm firms run judgment-based compensation schemes (with a studied avoidance of formulas). As always, the key to successful functioning of the system is agreement on values and ideology. This is because a successful compensation system requires trust: the members must believe that the compensation decisions are made by colleagues who have the firm’s best interest as their only agenda.

    Review: The Importance of Trust and Loyalty

    There are many reasons why institutional trust and loyalty are important in a professional business, but three are worth stressing immediately.

    First, clients of a one-firm firms have, as a practical matter, access to all the resources of the firm. Individual members, rewarded through the overall success of the enterprise, are more comfortable bringing in other parts of the firm to both win and serve clients with complex multidisciplinary or multi-jurisdictional matters.

    Clients are generally better served than they would be by a firm of solos or silos. Clients respond positively when individual members support (and, especially, do not undermine) their colleagues. One-firm firms are good at relationships, internally and externally.

    In firms that emphasize the use of credit and compensation systems to motivate (and placate) individual members, client service across disciplines and geography will often suffer. Sophisticated clients may cherry-pick great individual professionals or small practice teams from such firms but will rarely depend on them for complex work across boundaries. Warlord firms tend to excel at transactions, not relationships across boundaries.

    Second, as we have seen, the stewardship approach that one-firm firms take toward their recruits (selectivity, training, high standards), when done well, can lead to great alumni loyalty. One-firm firms do not necessarily have lower levels of turnover, but former employees often leave as loyal advocates of the firm, based on the way they were treated when they were there. Employees of warlord firms do not always feel this way. This can have a significant impact on future revenues.

    Third, trust and loyalty give a professional service firm a better chance of surviving market downturns. The test of a firm is not how it does in good times, but rather how it responds to roadblocks, stumbles, and problems, minor and major.

    On such (inevitable) occasions, members of a loyalty-based firm will pull together, and they will take pride and pleasure in doing so.

    In professional businesses with a free-agent climate, seemingly successful firms can disintegrate (and have disintegrated) almost overnight. At the first sign of weakness, the strongest members often feel that the sensible personal strategy is to build and cling to a client base and a personal reputation.

    At the very time when leadership is most needed, it is difficult to get the best people to work for the good of the firm. As firms grow weaker, the key members clutch ever more tightly to their client work and the firm flounders. Those who can, run for the door. It is not easy to reverse this spiral.

    In our view, many professional service firms are currently engaging in activities that undermine loyalty and create fault lines, including:

  • Growing for growth’s sake, by incoherently adding laterals and merging;
  • Expanding into unconnected practice areas and markets;
  • Hiring primarily semi-experienced lateral associates rather than hiring and training entry-level applicants;
  • Eliminating social and partner/officer meetings as a cost-cutting measure;
  • “Pulling up the ladder” to partner or owner status and establishing complex membership hierarchies, including nonequity levels, not to serve clients but rather to relieve inside pain; and
  • Obsessing about the short-term bottom line: treating financial success as the goal rather than as a byproduct of a well-run firm.

    Joseph Heyison of Citigroup, in a private communication, offers an interesting explanation of why such actions are common. Consider, he suggests, looking at the issue from the perspective of a powerful rainmaker in a professional service firm.

    The bottom-line question is whether a rainmaker is better off supporting a warlord model and developing a strong portable practice that can be moved to another firm if the current firm suddenly gets into trouble. Heyison’s special insight is that firms compete not only for clients and junior staff, but also for rainmakers, and much of what we can see in the evolution of firms can best be understood in terms of that competition.

    He notes that, while many firms have gone under in downturns, few rainmakers have. This reasoning may indeed explain why some warlord firms (if staffed with truly skilled warlords) do well, at least in the short run.

    The Stress of Boom Times on One-Firm Firms

    Brian Sommers, a former Accenture partner, points out on his blog, in a posting called “The Lessons of Andersen,” that too much individual incentive can lead firms into trouble in boom times as well as bad times. He observes:

    “Great firms don’t let their partners sell inappropriate work. They have a quality control process that prevents this. They utilize partners from different geographies, industries, etc., to do these quality control checks so that no one, in a position of career determination, can influence whether the work is sold and how it is structured.

    “Great firms have a formalized approval process. Great firms protect their reputation as they realize that their brand is their number one asset. Great firms also pay all people in a relatively uniform way.

    “Lone wolf selling and delivery, to get the biggest pile of money at the end of the year, drives way too many bad deals.”

    Jonathan Knee, in a review of his experiences working in investment banking (The Accidental Investment Banker, Oxford, 2006), also points out that temptations can exist when a boom market allows firms to achieve rapid volume increases by relaxing their hiring or other quality standards. Management must be disciplined — must know how to say no — in prosperous times as well as in down times.

    Our observation from watching one-firm firms over twenty years confirms that the one-firm firm principles are as fragile in prosperous times at they are in troubled times. In highly prosperous periods, productive partners grow impatient with management’s reluctance, for example, to hire willy-nilly in order to staff all of their new production, or to promote their favorite — and very busy — partner candidates.

    Also, in busy times there is a temptation to let investments such as training take a back seat to getting the work out the door. Only adherence to the firm’s principles and values prevents opportunistic behavior that may have short-term benefits but long-term adverse consequences.

    Rainmakers — always stressed but even more so in boom times — often have little patience with the one-firm firm business disciplines. They are characteristically insecure about whether it will rain tomorrow for them. This insecurity is why they are compelled to hustle for new business.

    They are also likely to compare their compensation with those of the leading rainmakers in the warlord firms. When they feel that they are not at the very top of their peer group, they often find it hard to trust in the future. This is especially so with members who did not “grow up” with the firm. Loyalty and the long view require time to accrue.

    It is during these times that managers of one-firm firms earn their money. It is tempting to relax the disciplines in boom times, but boom times always recede and the bad calls always bite.

    Summary

    As we have tried to report, the five named one-firm firms are both similar to and different from what they were in 1985. Changes have happened in these firms, but they have been managed within a (mostly) coherent ideological framework.

    Some specific one-firm firm practices have changed with positive effect, and some experimental moves away from the one-firm firm system have proven to be mistakes.

    While they may not seem as pure in their commitment to the ideals described in 1985, these firms are still distinguished by their deep commitment to a teamwork approach.

    So it might be fair to say that Maister left out one important item when he listed the one-firm firm attributes in his 1985 article: flexibility, and the willingness to experiment and change within the firm’s value system.

    One-firm firms are known for their attention to what warlord firms would pejoratively characterize as “soft values.”

    If our experience since 1985 tells us anything, it is that this attention, balanced of course with high standards, can really pay off in terms of producing the kind of internal loyalties — and energy — necessary for long-term success.

    ]]> http://davidmaister.com/articles/1/100/ http://davidmaister.com/articles/1/100/ Sun, 01 Jan 2006 12:00:00 -0500 Managing Articles david@davidmaister.com (David Maister and Patrick J. McKenna) http://davidmaister.com/articles/1/100/ Professional businesses today are structurally complex organizations with many senior people overburdened by time-consuming and often conflicting roles.

    Professional businesses often have some combination of

    • Business unit
    • Geographic markets or offices
    • Division or department
    • Product line/service offering
    • Industry group
    • Key account team
    • Committees (recruitment, training)
    • Task force or project team (service innovation, new offerings)

      Each of these organizational groupings can, and does, intersect with duplicated missions, overlapping membership, and common resource pools to draw upon.

      We frequently hear comments like this from members of management:

      “It’s not at all clear what each of these groupings should be responsible for and how their activities should be coordinated and evaluated. If you are a key player in this organization, you can spend an inordinate amount of time in meetings. There has got to be a better way to organize for effective operations!”

      There is a better way, but the way professional businesses organize and manage has not kept up with their increasing complexity. Eventually — we think sooner rather than later — this will significantly impede their continuing success.

      Not only do modern companies have more “types” of organizational groupings than in the past, but these groups now have broader responsibilities than the simple “generate and serve clients” goals of the past. To survive and flourish, individual groups within today’s organizations must be accountable for client loyalty, knowledge transfer, development of their people (junior and senior), and many other “balanced scorecard” items.

      To make it all worse, many of these groups are composed of people who, because of geographic dispersion, do not see each other regularly face-to-face. They have to operate as members of a “virtual” organization. Many would not even recognize some of the people in their own operating groups, with whom they have to interact regularly.

      As Marcel Goldstein, of the global public relations firm Ogilvy, wrote to us:

      “The modern-day professional business lacks much formal structure, at least when compared with manufacturers, government agencies, and other organizations. This is a great asset, as it allows the flexibility, creativity, and autonomy necessary to adapt to client needs. It can have a darker side though: inefficiency, confusion, and process breakdowns.

      “In many professions, clients are demanding cross-practice cooperation. But do we have the right structures and personal skill sets to successfully manage the integration of specialty expertise?

      “The highly matrixed professional business turns downright chaotic during times of great change: acquisitions/mergers; technology disruptions; and transitions to integrated, cross-functional service delivery.

      “Many professional businesses engage in acquisitions of great fanfare, only to have their value left unrealized by political undermining. In my experience, traditional manufacturers with structured, hierarchical management execute acquisitions with far less confusion and resulting paralysis.

      “We need structures that don’t squash flexibility and creativity but minimize inefficiency and confusion. We need help building the personal skill sets needed to manage ourselves and each other in these environments, especially during times of great change.”

      We certainly would not profess to have answers to all these complex issues. However, we believe that there are five perspectives that must guide any review of a firm’s or company’s structure.

      Imperative 1: Examine Structure, Process, and People

      The solution for an individual firm must always address three perspectives in any organizational review:

      1. structure (how we are formally organized);
      2. processes (how different types of decisions are to be made and how conflicts and trade-offs are to be resolved);
  1. and people (appointing the right individuals to play the complex roles that will make it all work).

     No one dimension will solve the problem: all three must be examined. However, we suspect that the importance of these three elements in the solution may be first, people; then processes; then structure.

     Imperative 2: Choose the Right Group Leaders

     Many organizations believe, as we do, that selecting the right leaders (and having enough of them) is more important than structure or process.

     Peter Kalis, managing partner of law firm Kirkpatrick & Lockhart, states the view forcefully:

     “Structure and process — while as essential to a law firm as a skeleton and a nervous system are to a human — are prone to ossification and thus are fundamentally at war with the dynamism of the marketplace. People, on the other hand, are not. We try to elevate the empowerment of our people over the organizational niceties of structure and process except to the extent that those structural and process features work to empower our people.”

     Choosing the right people for leadership positions was always important, but is even more critical in complex organizations. Consider just some of the (newly important?) skills that today’s group leader probably must have:

     • The ability (and interest) to motivate and influence people they never see in person
     • The ability to delegate and trust others to manage important relationships
     • The ability to play a “linking-pin” role, simultaneously thinking about the overall good of the firm while taking care of the needs of the units they are responsible for
  • The ability to manage people who have core disciplines other than the one in which the leader was specifically trained

    It has always been true that effective management required a complex mix of social, interpersonal, psychological, political, and emotional skills on top of the high intelligence and technical skills necessary to rise to the top. We believe that as organizations become more complex, possession (and development) of these so-called soft skills must play an ever-more-important role in influencing who is selected to perform managerial or leadership roles.

    Unfortunately, such considerations do not always play a dominant role in selecting group leaders. It is a common syndrome that all initiatives (client team, industry, geographic, functional, etc.) are seen as important, so the same senior people always end up on all the committees, often based on considerations other than managerial aptitude or even orientation.

    As a result, it is somewhat hit-and-miss as to whether the right people get selected for these roles, their mandate is clear, their performance as leaders gets discussed and evaluated, and whether they receive any assistance or guidance in learning how to perform their roles.

    Not only does this hurt the organization by (possibly) leading to less effective team leadership, but it’s not clear that it is wise to consume the limited time of valuable people by asking them to manage and/or get involved in everything. This is simple economics — a valuable resource should always be focused on its highest and best use.

    Imperative 3: Establish Mandates for Each Group

    Even if you have an ideal structure, there will always be problems with coordinating cross-boundary resources and dealing with conflicting priorities. You cannot make all cross-boundary issues go away by simply redesigning the boundaries.

    Beyond structure, companies must ensure that each group has a clear mission (or mandate) that is understood by those inside and outside the group.

    In our experience, many firms launch new business units, various committees, or project teams with ambiguous charters and then leave it to powerful (or not-so-powerful) group leaders to determine through negotiations over time precisely how the groups will interact.

    The case for doing this rests on the idea that internal competition is the inevitable result of shifting external market forces influencing each of the organization’s groups differently and that a flexible approach to the responsibilities and interactions of groups is an efficient way of responding to these external market forces.

    However, we believe that failing to discuss and resolve the issues of group responsibilities (and how groups will interact and resolve conflicts and trade-offs) rarely results in optimal outcomes.

    Under such an approach, power rather than principle determines group goals and how groups will interact, and this leads to lesser performance. Resolution of conflicting goals and clear, agreed-upon guidelines for decision making over trade-off situations must be determined in advance.

    We also believe that organizations must stop treating all groups alike, which many unfortunately do, for administrative convenience. It is possible to use different types of groups for different things: lots of little teams for client-level relationships or one large central group for financial and administrative services.

    A large, growing, and complex firm doesn’t have to be (in fact, can’t be) made up of units that have similar roles, look alike, have the same targets, and are managed in the same way. We discussed specific procedures for setting group goals and mandates in our book First Among Equals (Free Press, 2002).

    In making all this work, it is almost better to stop thinking of permanent or semi-permanent “departments” and to begin to use the language of “teams.” There is a great deal of evidence that organizations work better when people feel that they are volunteers self-selected to small mission-oriented teams.

    This is not just a matter of making people “feel good.” It has always been true that winning professional service firms succeed most by designing their organizations from the bottom up — through the voluntary enthusiasm of individuals. You’ll be better off with a messy set of teams filled with enthusiasts than you will with a logically correct set of groups filled with good citizens.

    As Ben Johnson of law firm Alston & Bird remarked:

    “One problem is that too many ‘leaders’ are afraid to create more energy than they can control. I tell people I’d rather have created more energy than I could control than not created any energy at all. Here’s to structural complexity! Here’s to dispersed leadership!”

    On the other hand, it is also important that firms clarify the roles and responsibilities of group leaders and avoid the balkanization of the organization that can come from letting group leaders think that they are responsible only for their groups.

    Peter Friedes, the former CEO of human-resources consulting firm Hewitt Associates, had this to say:

    “I had 15 or so managers reporting to me. So I needed them to not be pulling the firm in different directions. One practice I had was to remind all those who reported to me that part of their role was to have my CEO perspective in managing their group. They were not to just be an advocate for their group or their people. They had to have a ‘whole entity’ view.”

    Imperative 4: Clarify Agreements Within the Groups

    Whether you are managing a division, a key client team, or a limited-scope task force, every group needs to have a very clear understanding of what “team membership” implies. As a matter of practicality (although not, alas, reality in some firms) there also needs to be a limit on the number of teams one person can join (and the number of roles one person can play).

    For teams to work, there need to be clear, explicit guidelines (even rules of engagement) that team members have agreed to observe. Clarifying team members’ rights and obligations can go a long way toward becoming more efficient and effective. (Even as simple a rule as “You must do what you said you were going to do” would transform some organizations and save a lot of wasted meeting and planning time.)

    The need for such agreements, while always wise, has become ever more critical in a virtual world. As Harry Truehart, chairman of law firm Nixon Peabody, observed, “Getting people and procedures that facilitate effective ‘management at a distance’ is the biggest challenge in making groups work.”

    We believe that if far-flung groups made up of many autonomous individuals are to make cohesive decisions over time, then it is necessary that the group members agree in advance the principles on which they will base their decisions — the guidelines the group members agree to follow. Only with such an agreement in place can a decentralized organization make consistent decisions.

    Part of the solution, may involve thinking of (and formalizing) different levels of team membership. For example, levels of “team membership” might include (i) full decision rights — possible called Team Leadership, or (ii) right to be consulted — called team membership or (iii) right to be kept informed — called team affiliation. (These are examples only.)

    Imperative 5: Recognize Shifting Priorities in Structural Design

    Structural changes alone will not resolve conflicting priorities and competing demands for resources, but structure does nevertheless matter. The evolution of professional-service firms over time suggests that some structural approaches do work better than others. Most successful global firms, in a broad array of professions, have tilted the importance of their different organizational “axes.”

    For some time, there has been a general trend to make the target client industry the most important (and organizationally powerful) grouping. This has been driven by clients repeatedly telling their vendors and providers that they had better get to know and understand the client’s business.

    Next in authority and emphasis comes the specifically targeted client (or key account) team. Well-orchestrated client teams are the only answer to making seamless service across geography and product/service offerings a reality. Don Lents of law firm Bryan, Cave notes, “It is my sense that there is a growing focus on client teams and the need for such teams to be front and center in the thinking of firms.”

    Third, and with increasingly less power and responsibility inside most organizations, are the traditional product or service-line groups built around a focused technical specialty or discipline. Companies need to have highly focused and skilled technical people, but few are still primarily organized that way.

    Finally (and this is a huge revolution from the past), the trend has been to make geography the least important and powerful dimension of the complex matrix.

    In the past, the office head (or country head in mega firms) was the source of all resources and the arbiter of last resort. Today, in many organizations, a geographic head may preside over a location whose people all belong to groups headed and “controlled” by a powerful leader located elsewhere.

    This is not meant to denigrate the role of the geographic leader. As Bob Dell of law firm Latham & Watkins points out:

    “Having the right leader in an office can be extremely effective in facilitating the success of all the other groups therein. There seems to be something about physical presence combined with a leader who is perceived as less biased toward any group that can be very powerful in resolving competing demands.”

    Moving Forward

    We believe that there is a distinct process that firms need to go through to find their own customized solutions to managing a complex organization.

    The steps are these:

    First, assess the perception of “pain and difficulties” felt by the current organization, to determine people’s appetite for considering changes. This will usually require a process of interviewing key players across the firm. No change can be made unless there is a keenly felt sense of either pressure or opportunity.

    Next, it will be necessary to collect and assess the evidence as to how well the organization and its components are currently performing and interacting. In a recent issue of The McKinsey Quarterly (2006, number 3), Cross, Martin, and Weiss described a detailed and powerful methodology for “mapping the value of … collaboration.”

    Even if the approach is not this thorough, there will need to be an investigation of current organizational functioning, including not only an in-depth view of financials, analyzed according to numerous perspectives, but also an analysis of external evidence (including, perhaps, input from selected clients) and internal structural frustrations and performance inhibitors.

    It will be necessary to examine whether reward systems are in line with organizational objectives and whether profit-center accounting systems are contributing to a balkanization of the organization.

    At the other extreme, it would be worth examining whether the organization is currently being held together and energized by sharing in what is sometimes referred to as an “overarching purpose” or shared values. This is an approach to organization that is often fervently preached but rarely achieved.

    Next, in any organizational review, would be the need to design and implement a process to generate commitment to re-examine organizational structures and processes and explore the major alternatives (including possibly re-constituting key groups). Any redesign, must, of course, ensure continuity of strategy formulation and implementation through the organization.

    Finally, it will be necessary to examine, consider, and implement methods for the development of special managerial skills and competencies as well as new metrics that may give better indications of the organization’s functioning and response to external forces or internal pressures.

    It may also be necessary to design a process to get the organization to recommit to a clarified sense of purpose, values, and “rules of membership”: — the principles and practices that people must follow to remain members in good standing of the organization.

    Of course, to make any of this work, there is a need for key players to be willing to let other people decide some things even when they’re not there — a situation which does not exist in many companies and firms!

    We do not mean this to be a throwaway line. To effect real change, organizations must not try to establish “theoretically correct” structures and processes but must have honest discussions among powerful players about the types and nature of the firm’s group processes that would, in fact, be honored.

    We have seen too many firms go through the motions of putting in place what appear to be sensible organizations, when everyone knows that certain key players will not adhere to the policies that have been adopted.

    We’re not idealists here — we recognize the realities of the need to accommodate personalities and special situations. But we also do not believe that progress is made by pretending or obtaining “false consent.” That is why organizational solutions must be custom-designed for each firm and need to be the result of a comprehensive review, not, as is so frequently the case, the net result of an accumulation of a series of incremental changes driven by short-run pressures.

    ]]> http://davidmaister.com/articles/1/96/ http://davidmaister.com/articles/1/96/ Sun, 01 Jan 2006 12:00:00 -0500 Managing Articles david@davidmaister.com (David Maister) http://davidmaister.com/articles/1/96/ For much of my professional life, I have been paid to do training. It has been very well received in the sense that I have (usually) obtained high ratings, and clients not only paid their bills, but invited me back to do it again and again.

    However, I now believe that the majority of business training, by me and by everyone else, is a waste of money and time, because only a microscopic fraction of training is ever put into practice and the hoped-for benefits obtained.

    Unfortunately, training and other kinds of meetings and conferences are too often organized as stand-alone events, with a life of their own, disconnected from the firm’s progress.

    What companies don’t seem to understand is that, as I shall discuss later in this article, training is a wonderful last step in bringing about changed organizational and personal behavior, but a pathetically useless first step.

    Companies train people in new areas but then send them back to their operating groups, subject to the same measures and management approaches as before.

    People can detect immediately a lack of alignment between what they are being trained in and how they are being managed. When they do detect it, little, if any, of what has been discussed or ‘trained’ ever gets implemented.

    A good example of ill-conceived (and premature) training approaches is seen in the many calls I get to put on training programs to help people become better managers. I put my callers through a standard set of questions:

    • Did you choose people for managerial roles because they were the type of people who could get their fulfillment and satisfaction out of helping other people shine rather than having the ego-need to shine themselves? (No!)
    • Did you select them because they had a prior history of being able to give a critique to someone in such a way that the other person says: “Wow, that was really helpful, I’m glad you helped me see all that.” (No!)
    • Do you reward these people for how well their group has done, or do you reward them for their own personal accomplishments in generating business and serving clients? (Both, with an emphasis on their personal numbers!)

      So, let’s summarize, I say. You’ve chosen people who don’t want to do the job, who haven’t demonstrated any prior aptitude for the job, and you are rewarding them for things other than doing the job?

      Thanks, but I’ll pass on the wonderful privilege of training them!

      A good test for the timing of training would be as follows. If the training was entirely optional and elective, and only available in a remote village accessible only by a mule, but people still came to the training because they were saying to themselves, “I have got to learn this — it’s going to be critical for my future,” then, and ONLY then, you will know you have timed your training well. Anything less than that, and you are doing the training too soon.

      The Keynote Speech

      Most of the calls I receive about speaking at in-house company events are from companies that want a speech that is entertaining, informative, stimulating, or motivating. What they don’t seem to want is anything that specifically addresses the way they run their firms or the real-world changes they are really trying to make.

      For example, I recently received an enquiry asking me to convey to the audience the importance of living up to the organization’s “sacred values” (including the need for collaboration). They wanted me to be inspiring.

      However, when I asked if I could take votes at the meeting as to how well everyone thought the organization was currently performing on collaboration and what the current barriers to collaboration were, the organizers were terrified at the potential for disruption. I was not hired for that speech.

      Very frequently, the person who calls me to discuss a speech or a training course is a conference planner or someone in administration — someone who is often the least empowered to engage in a discussion about how to bring about the changes that management desires.

      Their role is frequently unenviable. Such people are often (perhaps even usually) given an impossible task: put on a development program that will change things around here, but leave management out of it!

      The connection between management and potential speaker can be even more remote. For a few months I experimented with working through a speakers’ bureau. I met with their agents to explain the type of work I was willing to take on. I was astonished to discover that this was a relatively unusual request for them — most speakers and most clients operated on the principle that if the date was available and the date was free, then a booking was made.

      There was no norm, it appeared, on either the client or the speaker side, whether an extensive discussion should take place to see if the speaker could be used to further the organization’s goals and fit in with other changes that management wanted to bring about.

      Business versus Management

      Another problem contributes to the minimal impact of much business training: the fact that it’s about “business!”

      “Business,” as a subject, is about things of the logical, rational, analytical mind: concepts such as ‘the value chain’ or the numerous P’s of marketing. Even when it’s analyzing and discussing people, business is often treated as an intellectual process of analysis and discussion: Maslow’s hierarchy of needs, the characteristics of great leaders, etc., etc. Business, at least as it is taught in our business schools and most training programs, is about understanding and knowledge.

      These are, of course, both very important. However, managing is a skill, and (as it transpires) has nothing to do with rationality, logic, IQ, or intelligence. Whether you can manage is a simple question of whether or not you can influence individuals or organizations to accomplish something. It’s about influencing people, singly, in groups, or in hordes.

      No amount of understanding, knowledge or intelligence will help if you are not able to interact with people and get the response you desire. I know a lot about management from my education. That doesn’t necessarily mean I’m any good at doing it.

      The same tension between knowledge versus skill, and rational versus emotional development, exists in many other developmental areas.

      Consider the topics of marketing, cross selling, building client relationships, earning trust, and providing client service. It has not been unusual for one of my clients to use all of these terms in outlining their needs for a seminar.

      Yet what a mixture of varying attitudes, understanding, knowledge, and skill needs are hidden behind that collection of words!

      Becoming good at dealing with people (inside or outside the organization) is not accomplished by taking a college course in psychology, sociology, anthropology, or any other ”-ology” where people sit around and intellectualize about “human resources” or “market segmentation” but never have to actually deal with a real, live human being.

      The same, alas, is true of schools dedicated to the study of business. Business school faculties around the world tend to be made up of men and women whose backgrounds (and inclinations and temperament) are based in things of the logical, rational mind. They are well equipped to teach business, but are not structured to develop skills.

      If, however, we really want to help people develop skills, we must view “training” the way an exercise instructor would use that word — designing a planned set of activities that engage the right “muscles” and slowly build them up through the experience of doing.

      To help people develop as managers doesn’t mean discussing management (or, even worse, leadership) but rather requires putting people through a set of processes where they have to experience it, try it out, and develop their emotional self-control and interactive styles.

      As Bill Peper, a facilitator within General Motors’ Standards for Excellence process, reports on my blog: “Businesses often use training as a surrogate for the hard work of true skill development.”

      The Hard Business of Making Change

      The truth is that most firms go about training entirely the wrong way. They decide what they wished their people were good at, allocate a budget to a training director and ask that training director to come up with a good program.

      As Ted Harro commented on my blog: “Training is too often used as a (personally) inexpensive way to look like you’re doing something if you’re a manager. As typically done, it requires little time and little personal change.”

      Bringing about change is immensely difficult. It requires that managers address questions in four key areas:

    • Systems: Does the company actually monitor, encourage, and reward this (new) behavior?
    • Attitude: Do people want to do this? Do they buy in to its importance?
    • Knowledge: Do they know how to do it?
    • Skills: Are they any good at implementing and executing what they know?

      Issues that exist at each of these levels require a different intervention. But note that skills development, as important as it is, is the last step, not the first.

      There is no point putting on skills training if there is no incentive for the behavior; the people don’t believe in it and they don’t yet know exactly what it is they are supposed to be good at!

      The importance of the attitude questions is often underestimated. It is management’s job to make people want to learn things by managing the “why” — helping them understand why this is important, why it is exciting and fulfilling, why people should sacrifice their time and attention to get involved.

      If you can be convincing on the why, the training itself can often be trivially easy. When people understand and “own” the importance of a topic, recognizing its purpose, meaning and value, and its role in their own careers, they often seek out (and find) the books, the videos, the on-line materials, and the college courses, without the company needing to make any provisions for these things.

      In fact, when I do training-like sessions, that’s what I focus on — primarily trying to get people excited about the topic, so they will leave the session actively seeking out the new learning for themselves. However, this only works if they believe that their company’s management also believes this is important, not just that I do!

      The Right Approach

      The correct process in thinking about training would be to sit top management down and ask: “What are people not doing that we want them to be doing? And do we really know why they aren’t doing them?”

      Then it will be necessary to figure out a complete sequence of actions to address each of these questions:

    • What behaviors by top management need to change to convince people that the new behaviors are really required, not just encouraged? If the behavior is going to be optional, then so should the training be.
    • What measurements need to change?
    • What has to happen before the training sessions occur in order to bring about the change?
    • What has to be in place the very day they finish?

      A full change program would include, at least, an examination of the following:

      1. Scorecards (new, permanent measures of performance being trained)
      2. Coaching (continuous monitoring and follow-up on the new metrics)
      3. Tools (to help implement the training, in place before the training)
      4. Training
      5. Rewards and/or recognition for achievement

      On my blog, David G. said: “No manager should ever be given a training budget until they show which business metric that training will impact — they should set a goal for that impact and review performance against that goal before allocating more training budget to that manager.”

      For maximum effectiveness, it is usually better to train people in their regular operating groups, so that the training can be action- and decision-oriented, with collective, “monitor-able” commitments. Training classes that are drawn from different parts of the firm force the program to be “educational” only.

      Large training sessions may be more efficient, in the sense that they expose a large number of people to the same set of thoughts simultaneously, but they are markedly less effective in bringing about change, and hence, are much less economic.

      Training should only be scheduled on topics that can be applied straightaway. Too often, companies give people tools and techniques days, weeks, months, or even years before they’ll need them and then hope they will somehow recall them (and perform them!) flawlessly when needed. This is wishful thinking at best.

      The best training is usually done by the firm’s own practitioners. Although often seen as an expensive use of high-priced practitioners’ time, the greater credibility obtained when the firm’s own people do the training results in much higher acceptance and subsequent application of the training. Outsiders should be used only to help develop programs and “train-the-trainers.”

      Too often junior people are sent off to be trained and they continue to speculate whether their seniors or leaders are really committed and serious about the topics being discussed. As previously noted, they often are not.

      I was counseling one training firm, which was preparing to bid on a training job. As part of the request for information, its client company had asked the training firm: “What are you going to do to ensure that our managers apply the lessons you teach?” It may have seemed a reasonable question to the client company, but it only revealed the common abdication of responsibility that firms bring to training.

      Even if the group leader is not conducting the training, it really helps if the operating group leader attends the training as a participant. In fact, it should be mandatory. This ensures an action-orientation to the discussion and credible public commitment built in to the closing of the program (“We’re going to do this!”).

      Even if the group leader has been through the training many times before, it’s good for him or her to be there, because only the leader’s presence can lend the sessions the seriousness they need and make the action commitments both practical and monitorable.

      To ensure discipline, training programs should have mandatory prereading and pretesting (whereby attendees can’t participate if they don’t pass). Yes, this sounds like a tough rule, especially when training senior people, but I have seen numerous examples of firms that invested in highly customized programs, designed to bring about corporate consensus and change, where one-half of the participants prepared, and one-half did not. The ensuing discussion was a waste of everyone’s time, annoying both sides.

      As Cem Kaner pointed out: “Rather than distracting from people’s ongoing work, training should be structured to help them improve the quality or efficiency of what they are doing today.” As such, participation and preparation should not be optional.

      The litany is simple: if it’s worth doing training, it’s worth doing in a way that’s going to make a difference. That means using session time wisely, and that means preparation. If someone doesn’t want to prepare, they should not be allowed in the room, no matter how senior. And if your training program doesn’t warrant this degree of rigor, then you are almost certainly dabbling and wasting a significant percentage of your time and money.

      In 1994, I wrote an article entitled Meeting Goals which tried to make clear that, to be effective, a meeting must not only have an agenda, but must have a limited set of clear goals. Many seminars, keynote speeches and training programs suffer from misunderstanding this issue. Too many companies know the agenda topics they wish to cover, but have thought through insufficiently well the goals they have, and how these goals are going to be met.

      The summary is this: If the training has been in regular operating groups, in carefully chosen topics, right when the group can use the training, and with the group’s leader in the room, they can immediately begin a discussion of how they plan to integrate the training’s ideas into their practices. With the right preparation and follow-up, training can be immensely powerful.

      Without all this, it can be (and usually is) an immensely wasted opportunity.

      ]]> http://davidmaister.com/blog/361/ http://davidmaister.com/blog/361/ Fri, 23 Mar 2007 12:00:00 -0500 Managing Blog posts david@davidmaister.com (David Maister) http://davidmaister.com/blog/361/ If you don’t subscribe to my (free) articles, then you won’t know that I have just published a new article on my website entitled Selecting A Leader: Do We Know What We Want? (downloadabe in pdf form, as all my articles are.)

      The article points out that many of the desired characteristics that firms say they want in a CEO or Managing Partner are inherently contradictory: for example, firms often say they want someone who is both decisive and consultative. It’s tough to be both.

      Some other trade-offs include choosing someone who:

      • Focuses on working inside firm versus focuses on a high profile with clients and marketplace
      • Is good with numbers versus good with people
      • Leads in accordance with a strong personal ideology of his or her own, versus is the kind of person who tolerates different views, values and approaches

      In the article, I describe a simple approach to debating “forced choices” between a large number of these “paired virtues", as a way of getting firms to clarify what they really want in a leader.

      What contradictory or conflicting things do you see people include when they enumerate the desirable characteristics of a leader?

      ]]> http://davidmaister.com/blog/357/ http://davidmaister.com/blog/357/ Mon, 19 Mar 2007 12:00:00 -0500 Managing Blog posts david@davidmaister.com (David Maister) http://davidmaister.com/blog/357/ Bruce MacEwan (blogging as Adam Smith, Esq.) reports on and discusses a article by Guy Beringer, a senior partner at Allen & Overy, the major UK law firm, on the inadequacies (and unfortunate consequences) of using PROFIT PER EQUITY PARTNER (PEP) as a measure (or, perhaps more significantly) THE measure of firm performance.

      This is not a new debate, in the law or in industry generally. The weaknesses of  PEP are largely the same as the weaknesses of return on shareholders’ equity measures. As Messrs Beringer and MacEwan point out, many games can be played with both the numerator and denominator of PEP, but it’s not exactly news that companies can and do play games with both reported profits and invested equity, in order to bolster earnings per share numbers.

      Welcome, leaders of professional firms, to the wonderful world and revered tradition of managed earnings and media games!

      The problem with PEP is not that it's a bad financial measure. ALL measures, especially financial ones, can be gamed. As a lot of people have pointed out over the last two decades, the problem arises when financial measures are not used as part of a "balanced scorecard." It's always been true that a firm needs to serve three constituencies to flourish: clients, people and owners.

      Industry makes the same mistake that Mr. Beringer cautions us against: focusing on financials to please Wall Street, hoping that no-one will notice that (initially) degrees of client satisfaction and employee morale are allowed to slip. He’s absolutely right to propose the broader use of client and employee satisfaction measures.

      One of the things that may cause this to actually happen would be if someone REALLY developed and put up on the web a "JD Powers-like" evaluation system which basically  said: “evaluate your law firm and your lawyer here,” allowing ready access for furue clients and people to check out prospective firms (and individual practices) they might consider working with.

      There are beginnings of this out there: Vault.com tries to rate the employee experience, and Chambers (in the UK) has print and on-line versions reporting firm’s and people’s reputations. But it could get a LOT more explicit, and high profile. I suspect there's a great business available for anyone who wanted to develop that "Rate your law firm" web site.

      Of course, I'd be nervous about a "rate your consultant" website, but that's coming too, of course! Someday soon, we're ALL going to be held accountable to a balanced scorecard, whether we like it or not.

      ]]> http://davidmaister.com/blog/350/ http://davidmaister.com/blog/350/ Fri, 09 Mar 2007 12:00:00 -0500 Managing Blog posts david@davidmaister.com (David Maister) http://davidmaister.com/blog/350/ As I reported inmy book PRACTICE WHAT YOU PREACH, one of the hallmarks of the most successful professional businesses is that they recognize that, for long-run success, you must not only delight your clients but also provide interesting, challenging work experiences for your people.

      That seems simple enough, but too few firms understand (and implement) the logical consequence: that you must say “no” to clients who treat you or your people badly. Not only must you not employ jerks (as Bob Sutton keeps reminding in his new book), but you must also not accept them as clients.

      Richard Ennis, the co-founder and Chairman of the Board of Ennis Knupp Associates (a 100-person consulting firm which provides advice to pension funds and other major investors on how to invest their assets) reports that the key to his organization’s success is that they have been very selective as to which clients they will take on. (They pursue only about 50 percent of the requests to propose that they receive.)

      “Let’s face it” he says. “Some clients are nasty. And you can’t expect to hold on to good people, at junior or senior levels, if you bring in work where they are not going to be treated properly.”

      Oh, if only more CEOs and managing partners understood that simple principle. 

      Does your boss? 

      When you’re the boss, do you always live by that principle?

      ]]> http://davidmaister.com/blog/349/ http://davidmaister.com/blog/349/ Thu, 08 Mar 2007 12:00:00 -0500 Managing Blog posts david@davidmaister.com (David Maister) http://davidmaister.com/blog/349/ Plans and reviews ought to be conducted on a once-every-three-month cycle.

      Once a year is, of course, too infrequent. Saying I’ll accomplish something in the next twelve months is like setting New Years’ Resolutions – the pressure for accountability is too little at the beginning of the year, and too intense at the end. Examining whether I did what I promised only after 12 months of effort is unlikely to ensure that I stay on the diligent execution path.

      On the other hand, meeting with me and reviewing plans and activities once every month is micromanaging and doesn’t allow for unforeseen circumstances. I can’t ABSOLUTELY promise I’ll get something done in the next 30 days. Who knows what existing client demands will change, what new client opportunities will arise, what staff emergencies and ill-health will affect output? Or (to be honest) how the ups and downs of personal intensity will flow – as my clients keep telling me, you can’t be a dynamo, learning new skills, every month.

      But three months is ideal. It’s long enough to work around the world’s unpredictabilities both at work and in people’s personal lives. It’s a long enough leash to make me feel that I have a lot of autonomy in allocating my time, while still keeping me accountable in a period of time that won’t let me go off the rails.

      On the other hand, to make it work, the three month-review system mustn’t slip. It must be scheduled, planned for, actionable commitments made and the review actually held. If you want to treat me like a true professional, hold really thorough reviews with strict accountability for action promises made every 3 months – and get off my back in the intervening time period.

      Ban monthly budgets!

      Abolish annual performance appraisals.

      Manage to a 3-month cycle!

      (By the way, this rule works on client relationships , too.)

      ***

      Agree, disagree?

      ]]> http://davidmaister.com/blog/349/ http://davidmaister.com/blog/349/ Thu, 08 Mar 2007 12:00:00 -0500 Managing Blog posts david@davidmaister.com (David Maister) http://davidmaister.com/blog/349/ Plans and reviews ought to be conducted on a once-every-three-month cycle.

      Once a year is, of course, too infrequent. Saying I’ll accomplish something in the next twelve months is like setting New Years’ Resolutions – the pressure for accountability is too little at the beginning of the year, and too intense at the end. Examining whether I did what I promised only after 12 months of effort is unlikely to ensure that I stay on the diligent execution path.

      On the other hand, meeting with me and reviewing plans and activities once every month is micromanaging and doesn’t allow for unforeseen circumstances. I can’t ABSOLUTELY promise I’ll get something done in the next 30 days. Who knows what existing client demands will change, what new client opportunities will arise, what staff emergencies and ill-health will affect output? Or (to be honest) how the ups and downs of personal intensity will flow – as my clients keep telling me, you can’t be a dynamo, learning new skills, every month.

      But three months is ideal. It’s long enough to work around the world’s unpredictabilities both at work and in people’s personal lives. It’s a long enough leash to make me feel that I have a lot of autonomy in allocating my time, while still keeping me accountable in a period of time that won’t let me go off the rails.

      On the other hand, to make it work, the three month-review system mustn’t slip. It must be scheduled, planned for, actionable commitments made and the review actually held. If you want to treat me like a true professional, hold really thorough reviews with strict accountability for action promises made every 3 months – and get off my back in the intervening time period.

      Ban monthly budgets!

      Abolish annual performance appraisals.

      Manage to a 3-month cycle!

      (By the way, this rule works on client relationships , too.)

      ***

      Agree, disagree?

      ]]> http://davidmaister.com/podcasts/77/ http://davidmaister.com/podcasts/77/ Mon, 18 Jun 2007 12:00:00 -0500 Managing Podcasts david@davidmaister.com (David Maister) http://davidmaister.com/podcasts/77/ In order for the employees of an organization to raise their performance, those in managerial roles must first be held accountable for their own performance. We will discuss one way that this accountability could be installed inside an organization.
      ]]> http://davidmaister.com/podcasts/76/ http://davidmaister.com/podcasts/76/ Mon, 11 Jun 2007 12:00:00 -0500 Managing Podcasts david@davidmaister.com (David Maister) http://davidmaister.com/podcasts/76/ Commonly used tactics in management such as performance appraisals, go against every rule of family life. In this episode, you will learn how the interpersonal, emotional, and psychological skills implemented in family interactions are the very same th
      ]]> http://davidmaister.com/podcasts/75/ http://davidmaister.com/podcasts/75/ Mon, 04 Jun 2007 12:00:00 -0500 Managing Podcasts david@davidmaister.com (David Maister) http://davidmaister.com/podcasts/75/ Careful attention to language and an understanding of the best way to present issues are key interpersonal skills. Listen to and learn from an example of phenomenal use of language.
      ]]> http://davidmaister.com/podcasts/74/ http://davidmaister.com/podcasts/74/ Mon, 28 May 2007 12:00:00 -0500 Managing Podcasts david@davidmaister.com (David Maister) http://davidmaister.com/podcasts/74/ Getting another human being to fulfill their potential is a general process akin to the process of parenting or coaching. What are the steps to unleashing the true potential within an individual?
      ]]> http://davidmaister.com/podcasts/73/ http://davidmaister.com/podcasts/73/ Mon, 21 May 2007 12:00:00 -0500 Managing Podcasts david@davidmaister.com (David Maister) http://davidmaister.com/podcasts/73/ Everything you want in life must be given to you by others. The key question in getting what you want is whether you engage with others as “them”, people you want something from, or as “us”, people who are part of a relationship with you.
      ]]>