Integration Or Disintegration, That Is The QuestionLeon Sacks
The objective here is not to be alarmist or suggest that there is a binary choice between life or death, as in Shakespeare’s allusion. It is, however, meant to draw attention to the need for continuous focus on what keeps a professional services firm, and more particularly a partnership, ticking and successful, namely the integration and collective behavior of its partners.
Integration means that partners are working in the same direction towards a shared goal, that that they are aligned in managing their teams and representing the firm and that their capabilities, knowledge, experience and relationships complement each other.
Disintegration is a danger when there are conflicting priorities amongst the partners and divergent opinions about the way business should be conducted and individualistic rather than collective behavior becomes prevalent. The partners or groups of partners become isolated and unhappy and the firm may become a composite of fiefdoms rather than a homogenous unit.
The current reality of disruption with rapid changes in demand and supply chains is challenging leaders and management in the corporate world. In a partnership such challenges are often magnified by the fact that partners consider themselves co-owners of the business, desire to have a say in how business is conducted and wish to share the benefits.
While overseeing the quality of work, client relations, finances, talent, business development and efficient operations, management needs to be attuned to the concerns, motivation and behavior of partners that, untreated, might be detrimental to the achievement of goals in all those areas. Just as a relationship of a married couple needs to be managed so does a partnership, except that in the latter case the marriage counsellor has to deal with multiple people!
Clearly management deals with partner issues on a daily basis and often this means putting out fires and/or spending a great deal of time in managing people’s expectations or explaining why a certain decision makes sense. Issues will always arise but would it not be more efficient to have integration as a permanent item on the agenda knowing that it will require continuous action as the firm grows and changes and as its partners’ careers advance and ambitions change?
Conditions that might indicate the need for greater integration efforts include:
- partner grievances or departures
- extensive partner discussions on strategy, structure or processes
- incompatibility between partners
- doubts raised by partners about contributions of others
- reduced partner performance or motivation
- unsuccessful lateral integration
- reduced retention rates of attorneys
- individual v institutional behavior
- offices or practice groups working autonomously
- different approaches to service delivery and client management
- little or no sharing of information
- “my clients” attitude prevails rather than “our clients”
- partner compensation system not perceived as fair
- complaints of excessive centralization or lack of flexibility
- inconsistent quality of service perceived by clients
These conditions might not have been a common trait but as a firm grows, the partner ranks grow, the number of offices/practices grow and the firm adapts to market conditions, they may develop quickly. If they are not isolated and become a pattern, management needs to evaluate the causes and adopt a remedial action plan.
As suggested earlier, it is preferable that this be done on an ongoing basis taking the temperature of the organization and the status of the partnership on a regular basis and adjusting accordingly – what we might call the integration “agenda”.
The integration agenda should aim to ensure:
a) Partners are “supporting sponsors”
The alignment of partners with the vision and strategy of the firm and their consistent adherence to common and agreed-upon principles is key to leading the firm in the right direction. They should all be supporting sponsors of the firm’s direction and communicate a consistent message in that regard. Partners are largely the face of the firm to clients and its professionals and their behavior weighs heavily on the way the firm is perceived.
b) Strategy drives structure
Whatever the message for integration, if a firm’s structure drives behaviors that are not aligned to that strategy, it will not succeed. As the Harvard Business Review once stated “leaders can no longer afford to follow the common practice of letting structure drive strategy”.
A crude example: if two offices of a firm are organized as two business units with their own local management and the partners in each office are compensated largely based on the results of their own office, a strategy of sharing resources and cross-selling might be prejudiced or, at a minimum, not incentivized.
c) A collaborative environment
Collaboration generates internal synergies (e.g. sharing talent and knowledge) and external benefits (e.g. client development) while allowing partners to feel more connected to each other, reduce their levels of stress (hopefully!) and enjoy more work freedom. Incentives and support for collaboration that reflects a more institutional approach to conducting business are to be encouraged. This is by no means inconsistent with an entrepreneurial approach to business or rewarding individuals for extraordinary performance.
It is not uncommon to find firms consisting of different groups or individuals that are somewhat autonomous, take different approaches to service delivery and client development and work largely in isolation from others (the “composite of fiefdoms” mentioned earlier). This is rarely a pre-meditated or deliberate action but rather derives from different cultures and work habits (resulting from previous experience in other organizations) and behaviors driven by the firm’s governance and partner compensation system (i.e. what is my decision-making authority and how is my compensation determined).
To be an “integrated” firm, a firm that is effective in providing solutions for clients and is efficient in its use of resources, it is imperative to create a unified culture and adopt governance and compensation models that motivate a one firm approach. Consequently, principles that typically underpin integration may be summarized under three headings:
- the governance and decision-making structure be clear and understandable
- the management structure reflects diversity of practices and offices, but with all decisions aligned to the firm’s strategy and to the best interests of the firm as a whole
- the governance structure reflects the importance of practice and industry groups as natural integrators across offices and jurisdictions
- authority and policies for decision-making be delegated as appropriate to avoid shackling the organization while allowing for risk mitigation
- Committees and task forces with appropriate partner representation deal with ongoing issues (e.g. Compensation Committee, Talent Management) and specific projects (e.g. Strategy Review, Remote Working), respectively
- a partner communication structure that allows partners to be continually informed and feel they are being consulted on issues of relevance to the business
- the compensation system provides clarity on expectations of contributions from partners and aligns compensation with such contributions
- adopt the right mix of compensation criteria to motivate and reward both behavior that drives the firm strategy (revenues, originations) as well as collaborative behavior that encourages teamwork and partner investment in the growth of the pie, rather than a struggle for a larger share (cross-selling, training initiatives)
- couple the collection of objective data with subjective inquiries to adequately measure partner contributions and allow for appropriate discretion in applying compensation criteria to promote fair and equitable results
- consistent partner feedback process
- build and support a culture with a shared mission, joint long-term goals and shared risks and rewards
- align structure to strategy, clarify roles and responsibilities and enforce accountability
- promote transparency and open communication and be inclusive
- build trust and confidence facilitating interaction between partners and creating a healthy dose of interdependence amongst them
Firms can easily lose the focus on integration, an intangible asset, while they are busy dealing with the tangible issues of day to day operations, developing business, serving clients and controlling finances. It is better to manage integration than recover from disintegration.
Forget Systems and Structures – “Getting the Job Done” Is the KeySean Larkan
Successful businesses and law firms succeed because they get the right things done.
They determine a vision, identify strategic key objectives, strategies to achieve those, make decisions around these and then make sure they are implemented. This gets results – the real test of everything.
Too often I think firms and even my consulting colleagues around the world don’t put enough emphasis on this simple but challenging concept and need. This is possibly because “getting the job done” is so hard. How often have you heard of firms, possibly even your own, making important decisions or bringing in advisers to develop new systems and processes, only to find they get patchy or no real buy-in or results? This costs time; it costs money. It can also give some really important initiatives a bad name, from which they might never recover.
Somehow it is assumed that putting in a new system or structure will, in itself, provide results. What we forget is that it is people within firms who implement stuff, do things and ultimately ensure the firm gets results and achieves success. We need those same people to naturally coalesce around and support things we are trying to do, rather than micro-management to get them across the line.
Sure, some firms do just this via draconian checks, balances, disciplinary systems and ‘punishments,’ but fortunately these are in the minority. Such approaches also usually only get short-term results.
Far more attention and thought needs to be given to making sure there is an approach or philosophy and culture in place in a firm which will more or less guarantee that decisions taken by firm leadership, or strategies determined by a firm, will have a good chance of getting implemented and supported by people throughout the firm.
To me this is the real, non-sexy, X-factor around achieving success. It is also the most difficult aspect of law firm management and leadership, mainly because it usually involves people changing their thinking, behaviours and styles of interaction. There is always a need for some supporting systems and structures, but these must always be the supportive means rather than the end.
Most of my work involves helping firms solve major problems or build strength and success when they have hit a brick wall, or can’t work out why they aren’t getting there. Invariably in such cases I find there are some acceptable systems and processes in place, and some good people, but the real problem is the missing link, the X-factor – getting folk in the firm, as a natural part of their everyday work, to help achieve implementation, results and success.
Most of these people are what I call ‘bums up, heads down, working on files’ people, only interested in their immediate work challenges. You have to break them out of that mode and their cocoons and get their buy-in to come along for the ride.
In some thirty years working in or helping law firms try to achieve success I have found that only when we ensured we built these types of philosophies and culture into firms did we achieve lasting foundational strength, well-being and success.
There is no ‘one size fits all’ for such approaches; they need to fit the firm and its circumstances. This can be quite challenging, as it is not as simple as talking about, say, a new ‘Succession Planning System’ or ‘Strategy’. It is far subtler than that. It also takes winning trust and support from oft-skeptical colleagues, but earn that you must.
Successful Strategy: The Essential Supporting Acts (Part Two)Sean Larkan
In Part One of this article, I focused on some important pre-strategy initiatives which should be tackled to lay a sound foundation for successful strategy implementation.
Here are some others:
Key governance structures
Fundamental to strategy success is a cohesive partner effort and involvement. It is not something that can simply be done and driven at EXCO/Board or MANCO level. But there are still many firms that have not yet tackled fundamental structures like clarifying what is expected of partners – contribution and performance criteria, and how feedback around meeting those criteria should be gathered and fed back to partners. In some cases this may come with consequences, depending on the basis of your partner equity structures – meritocracy, lock-step or managed lockstep and so on. Depending on the culture of the partnership this will usually flow into partner performance management or feedback, support and development systems.
Get these in place and there is a much greater likelihood you will get your partners focused on assisting to implement firm strategy – after all, it will be a key contribution requirement and criterion for partners and they will be measured on this.
In some cases you may need to streamline decision-making structures in the firm. There are still firms, and quite large ones, who go through a laborious process of having partners review and agree upon virtually every decision of consequence about to be taken by a leader or management executive. Strategy requires decisions being taken, and decisiveness. It usually calls for partners to relinquish some control and decision-making powers to their managing partner/director.
Key information systems and management structures
Once you embark on a strategy exercise, and finalise partner performance management or feedback and development systems for partners, your information and support service management structures and personnel should, and will, be tested to the full. Where possible (in the time available), it is wise to vigorously review these at this early stage to ensure they are adequate and ready to support your strategic initiatives. Otherwise shortcomings here can in themselves cause strategy implementation to stumble or even fail.
The strategy document itself
As noted in Part One to this article, keep the document “lean and mean.” I would suggest limiting this to a short summary of your Core Purpose (however you decide to constitute that), your strategic key objectives (or call them “key result areas”) and key strategies.
Don’t bog it down with too much detail or layers of actions, time-lines and responsibilities for all and sundry in the firm. The detail can come later in the form of implementation plans by task force Leaders, practice/industry group heads, senior support service managers or even partners in their individual business plans.
The reason for this is that you want your strategy walking around in the heads of every partner and manager in the firm. This will only happen if it is short and punchy.
Too often the process of finalising the strategy is dragged out for far too long. As a result partners are lost along the way and interest in and support for the strategy initiative slips. Keeping the document short and focused on truly strategic issues assists greatly. You can test all your strategic key objectives by asking “Will success in achieving this objective have a massive impact on our firm?” If not, it is not strategic and shouldn’t be in your strategy. You will need to be vigilant as partners and managers will invariably try to bring in non-strategic albeit important items on to the list for attention.
Strategy is good strategy when it works and gets results. You will need to spend most of your time on post-strategy exercises, which is contrary to what happens in most firms. By this point many are too often “tired of strategy”!
I find the simple structure of a very small task force (not a committee) headed up by one driven, energetic partner or support service manager can work wonders. They should report directly to the managing partner on implementation. Where appropriate, short implementation plans can be useful, provided they don’t become bigger than Ben Hur.
Bear in mind that successful firm strategy often runs into or requires other sub-strategies for success. These may include a People Strategy, Finance Strategy or even a Brand Strategy. It is important these follow the same principles and are carefully aligned with the main strategy.
Partner feedback and performance-management systems
This is where these systems come into their own, post-strategy. Partners should receive feedback on and sometimes be measured (depending on the natures of your partner structures) against how they contribute to the strategy-implementation phase.
Keep your strategy alive – stress-testing
Most of the benefits of strategy come not in formulation but in stress-testing and fine-tuning it along the way. Be sure to do this at regular intervals – annually or at most twice annually is usually enough.
There are many reasons for this – reporting successes or problem areas, keeping partners interested and motivated and adapting to changing market conditions. Strategy is a living animal, a journey rather than a destination, and one which never really ends, as firms adapt, strategise further and move on to new things to compete effectively – and ideally, to dominate.
Strategy on its own does not achieve success. It is rather everything that goes with strategy to ensure its success.
I hope these ideas will prompt readers to consider what these things may be in the case of your firm. Each firm will be different – as to culture, structures, stage of development, strategic prerogatives – and these will determine how you tackle and support your strategy to successful implementation and results.
Successful Strategy: The Essential Supporting Acts (Part One)Sean Larkan
Behind successful firms is some form of successfully executed strategy. It can be short, punchy, even informal and, at a push, in someone’s head! The test is implementation and results, which always separates success from failure.
Strategy is not simply about ‘doing things better’; it is about achieving serious competitive advantage. It is high level, not operational or administrative.
The strategic plan itself is a relatively small part. It must be reinforced with many other supporting acts.
In this series of articles, aimed at small to medium firms starting out or wanting to upgrade their strategy process, I will outline some of these supporting exercises. If they are not undertaken it will seriously undermine a firm’s chance of getting results from strategy. Leaders will be challenged here – professionals like to jump straight into ‘doing stuff’: i.e. implementation.
The Strategy Document
The plan itself is often viewed as ‘the strategy’. In fact it is only a concise summation of key things that are sought, and, at a high level, how they will be achieved. Keep this document short and punchy. The strategy document must also be kept alive; it must be regularly updated.
But let’s consider some essential steps, ‘pre-strategy’.
Get your Partners Involved – from Inception
Get the partners involved upfront. This gets their support, shows them respect, generates ideas, identifies issues dear to them and improves chances of success and involvement down the line.
You must maintain their interest over a sustained period. They need to know how their role and contribution is valued and will make a difference. This is no easy task, but must be done. It requires real persistence. Keep your partners involved and interested but do not use too much of their time or bore them. This is a real test of leadership, as strategy is a journey not a destination and always a fine balancing act. It never truly has an ‘end’ and takes many twists and turns along the way.
Start by asking some searching open-ended questions based around the tried and tested SWOT (strengths, weaknesses, opportunities or threats) framework but also covering ‘core purpose’ items mentioned below. Also ask ‘What is going well?’ and ‘What could we do better?’ Challenge the partners to think about what in the firm:
- it should ‘stop doing’ (e.g. a loss-leading practice area);
- exhibits unrealised potential (e.g. taking advantage of existing client relationships);
- are substantial hidden expenses (e.g. less than full utilisation of expensive legal or support staff).
Do this ‘one on one’ or via a survey, but keep it short, punchy and relevant. Be sure to revert with survey outcomes or at least a summation of key points. Your job is to keep them interested and involved. By consulting, communicating and showing respect you do this.
Core Purpose or Strategic Intent
There is no single way to deal with concepts such as ‘core purpose’ but there should be a structure to it. I like to think of core purpose as clarifying your vision (what you want to be or where you want to go), what kind of firm you will be (e.g. ‘managed’ lockstep), your key cultural attributes (how we do things around here), your values (beliefs and understandings of what you will tolerate and not tolerate), what legal practices you will undertake or industry sectors you will focus on and the locations where you will choose to do this. Get these clear up-front and you will have set a very nice foundation for what is to come.
This is yet another test of leadership as this is arguably the most difficult thing around which to maintain interest. You will be met with all the usual scepticism, cynicism and sometimes downright objection. You will have to work your way through this.
Another thing I like to do early on is combine the values and cultural attributes exercise into ‘guiding principles,’ an idea I got from Norton Rose. Guiding Principles is a simple concept everyone can understand and it simply seems to make sense to professionals, which is half the battle. Otherwise, you will forever find partners or staff confused by concepts such as values and cultural attributes and what they mean. It is another little step in trying to keep things simple.
I look forward to communicating further in subsequent articles on this important topic!