Organizational Dysfunction’s Impact On Growth in Professional Services

by | Culture, Growth Strategy

organizational dysfunction in professional services

 

It really doesn’t matter which professional services industry you call home—consulting, law, accounting, IT, strategy—firms are driven by the desire for growth.

Growth provides opportunity and wealth—good things. Unfortunately, most firms never achieve their growth potential because they do not recognize nor address the fundamental issue limiting their growth.

Many blame brand awareness, marketing investment, marketing ineptness, lack of sales and marketing integration, CRM, cross-selling demands, website deficiencies, social media strategies, and even the absence of a brochure. But none of these are really the issue. These are just symptoms of a much larger issue lurking in the offices and cubicles.

The real issue is that, while professional firms provide a great model for the modern organization, they are plagued with organizational dysfunction. We call this imperfection “BS of PS.” And, until firms attack the right problem, they will always be underachieving.

Professional services firms attract some of the best minds in business. Why? The firms are savvy, global and progressive. In many ways, they’re the models for the modern knowledge-driven organization. Yet, in spite of their superior organizational structure, they’re far from perfect.

What makes professional services dysfunctional?

Dysfunction comes from a combination of attributes—human and structural. At the heart of firms are smart people who act, well, like people. They exhibit fear, laziness, intransigence, self-righteousness and a host of other human behaviors. All this humanness plays out daily as people try to protect their jobs, get on the partner track, and look good in front of clients. Each attribute by itself probably would go unnoticed, but combined with an organizational structure that rewards individual sales performance and utilization, it gets messy.

Here are the behaviors and structures that get in the way:

  • Limited resourcesthere are only so many billable hours and money to go around. Resources are usually allocated by partner power or line of business size, instead of strategic growth potential.
  • Cultures of “optionality.”— Firms allow partners to opt-in. “If it doesn’t cost me my job or threaten my path to partner, no need to focus on it.”
  • Path of least resistanceFirms are political and partners like to keep their powder dry. Most often growth initiatives take the path of least resistance and focus on “activities” that can be controlled by individual producers with bogey responsibilities.
  • Partnerspower, ambition, ego, greed. They became partner because of ambition, talent, and hard work. They paid their dues, demand the benefits forthcoming, do not intend on losing them, and are rewarded to behave accordingly.
  • P&L ownership swings like a pendulum—New managing partner, new P&L philosophy. Geographic responsibility get us more client focused, practice allows us to manage people, industry drives IC. (It reminds me of the practice of bloodletting.)

How does marketing play into organizational dysfunction?

Marketing often doesn’t understand business.

Marketing is seen as a partner productivity tool. As a result, marketing people aren’t given the time to understand the firm’s business. Expectations are too low and lead to under-hiring and utilization of marketing capability. Marketing is not seen as strategic (i.e. it throws parties and writes brochures).

Sales and marketing are disconnected.

In most firms, neither appreciates the value of the other, and from the most senior partner to the junior consultant, most cannot tell you the difference between the two.

No one measures marketing’s impact

Mainly because they don’t know how, don’t want to make investments to do so, or are afraid of shedding light on all that needs to be fixed. As a result, firms spend money haphazardly on growing the business.

Misaligned market opportunities, core capabilities, and brand’s relevance.

Firms target markets for which they do not have the right capabilities and they have no market permission in which to play. They simply go there because other firms are.

Take away

In reality, messiness is not necessarily a bad thing. There are no perfect organizations or people in any industry. What is bad is not having the awareness of the dysfunction and mindlessly going about business.

A firm that is aware of the messiness sees the connections between avoidance and unproductive actions. Are we writing a brochure because it adds client value, or is someone afraid to sell and needs a crutch? Do we invest resources and time into a practice that is clearly off strategy because we can’t say “no” to a powerful partner? Do we blame bad data on an impartial technology tool when we really have a culture that lacks the trust to share relationships? Are we realigning our P&Ls to better serve clients or because of a power play that we refuse to address? Did we fire the marketing leader because he was unable to execute or was our business strategy complete pie in the sky?

The real problem with messiness in firms is that it makes it much easier to blame someone else or passively ignore them, rather than deal with the real issue.  If you embrace the messiness, it is amazing how the humanness comes to the fore and the dysfunction falls away.

Be prudent.

 

About the Author

Jeff McKay
Founder & CEO
Prudent Pedal

Jeff helps firms set smart growth strategies in motion. He was the SVP of Marketing at Genworth Financial, the Global Marketing Leader at Hewitt Associates, and held senior roles at Towers Perrin and Andersen. Learn more.

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