Responding to Fee Pressure

Many professional firms are living in a world of ever-increasing fee pressure from clients. What is the appropriate response to deal with this?

Among the many things that can be done, big and small, the first and most obvious is to achieve a reputation for being worth more than your competition.

This is done through the excellence of your work (and service) for current clients. It's worthless for you to try and claim that you are worth more, but if you can get some existing clients to say it publicly, then prospective new clients can be influenced. Hence, you should strive to get strong endorsements as part of your marketing effort.

Second, you can improve the quality of your attempts to get hired. Most fee resistance is based on scepticism about the value that will be received, but there are many opportunities to be persuasive on value if you can find ways to demonstrate, not just assert, your capabilities.

For example, if during the courting process you look for ways to be substantively useful to the person you are trying to attract (sharing ideas; performing some free initial analysis; or providing education, insights, and facts into what your prospect's competitors are doing), then you will be more convincing on value. The challenge is to find ways to prove, before the project even starts, that you are worth what you charge.

Third, be sure you understand what your client is trying to buy. A great deal of fee resistance comes from the fact that the consulting firm is trying to sell, for example, the "thorough" or "permanent fix" version of the project, while the client is trying to buy the "quick impact" or "lowest up-front cost" version.

In the selling process, you should strip your "core work plan" down to its bare bones, and then present the client with options for "add-ons" that are available -- with a clear cost expounded for each. The client can then pick and choose. If the client wants extra analysis, he or she is the one to add to the budget. If the client wants more frequent communication and consultation, it's their decision.

Going through this process with the client (long before the final presentation) ensures that the client understands how the total fee was arrived at and that you are not including work activities that the client does not value.

Fourth, you can use your budgeting and reporting procedures to overcome fee resistance. The person inside the corporation who hires you will be responsible for the budget, and if you can give that person solid proof that they will retain control over your activities, they will be less nervous about the total cost. Showing the client your methods of "phase-by-phase" budgeting, cost tracking and reporting will move the client's attention away from the aggregate number and give them the comfort of knowing that there will be no waste in the project.

An even better idea is to guarantee that no activity will be performed by you without prior discussion with and approval by the client, thereby giving the client the needed control.

A related topic is to examine your productivity. Clients I have interviewed (around the world) tell me that one of the major reasons they are exerting fee pressure is that they are not convinced that the firms they hire are very efficient, and that they see little or no evidence that the firm is concerned about saving the client money. And they are right.

Professional firms traditionally do not spend much time and effort looking for ways to improve the productivity of their own efforts. As I have long argued, most firms have many senior professionals who are spending time doing things that could be done via less costly resources, through some training, organisation and (perhaps) technology. When there was little fee pressure, this relative inefficiency did not matter very much.

In a world of increasing fee pressure, any consulting firm that can out-perform its competitors in reducing the cost of doing a project will have a clear competitive advantage, whether or not it passes all the savings onto the client. Accordingly, a top priority is to study carefully how you do your projects and look for ways (including staffing, training, methodologies, tools, etc.) to lower your project costs.

Because of concerns over productivity (and the need for budgetary control) many clients are interested in "fixed-fee" pricing. I expect that more and more work will be done on a fixed-fee basis. However, it is clear that in a fixed-fee world the firm must be vigorous in ensuring that the terms and conditions of the contract state very precisely what is and what is not included in the job.

Another response that is gaining popularity in this fee-sensitive world is performance-based pricing. This comes in two forms: either the professional's fee is tied to the accomplishment of a specific result (how much cost is saved for the client, how much revenues will increase, etc.) or the fee is tied to the client's satisfaction.

In the latter case, the deal looks like this: The firm bills during the project at, say, 75 percent of its normal billing rate. At the end of the project the client determines its satisfaction with what was accomplished, and the client decides what "balloon payment" to make. If the client is disappointed, the end payment is zero; if the client is delighted, the end payment brings the consultant up to 100 percent of its normal fees (or possibly more). Note that it is the sole discretion of the client to determine the performance and the "bonus."

This form of pricing is less radical than it looks. In effect, it is nothing more than saying, "If you're not satisfied, don't pay," which is good business practice in any case for a professional firm.

When there is a traditional fee impasse, either the consulting firm must cut the fee to get the job or the client must accept the consultant's desired fee based on an act of faith that the firm is worth it. Performance-based pricing allows the firm to say, "We'll bet on ourselves that we can deliver what we promise. We don't ask you to believe this uncritically up front, but can we agree that if we do deliver value, you'll reward us?" Increasingly, clients are accepting such deals.

Finally, are there circumstances when you should cut your fees? Yes, but it's the opposite of when most firms do.

Most of the fee pressure occurs on low-end, familiar, "asset-milking" work, and this is where most consulting firms are "caving in" and giving discounts. This is strange.

If this is asset-milking work (not building-your-balance-sheet work) why would you want to exacerbate the problem by also hurting your income statement through lower fees?

You should be willing to cut your fees (that is, make an investment) if this particular piece of business will move you forward strategically (for example, if the work is at the frontier and you'll learn new things that you can sell to other clients later on, or if the work will help you to break into a new industry that you have been targeting).

In other words, you should be most willing to trim fees (if necessary) for high-end, asset-building work. Anything else, in my view, is foolish.

Making Multi-disciplinary Practices Work

Many, if not most, of the problems for which clients employ professional firms are inherently multi-disciplinary.

For example, if I am going to build a new electricity generating plant, I'll need advice on law, finance, economics, engineering, environmental considerations and a whole host of additional disciplines. If I am going to launch a new product, it makes sense to co-ordinate efforts across a variety of marketing disciplines such as advertising, public relations, brand identity, web marketing and so on.

If, as a client, I have a multi-disciplinary need, I face the decisions of how I am going to assemble my diverse team and how I am going to manage it.

One approach, of course, is to seek out specialists in each area at whatever institution they may be found and co-ordinate the joint effort myself.

However, it can be a pain to be my own "prime contractor," and I might prefer to deal with an organisation that can take responsibility for managing the whole project, providing a single point of accountability.

Note that none of this is about "cross-selling" or introducing separate disciplines to work on distinct projects. That's a different topic, with its own problems (see my article, Why Cross-Selling Hasn't Worked).

We are talking here about the situation where I, the client, don't want separate teams on separate projects: I want one team working simultaneously, and in harmony, on my complex, multi-disciplinary issue.

Many providers seek to gain a competitive advantage by stressing the range of disciplines they have in their firm (their "menu").

Stressing this too much can back-fire. When doing some construction work in my home, some contractors tried to win my trust and confidence by pointing out that I would need electricians, carpenters and plumbers for the job.

They went on to claim that, by the sheerest coincidence, the best plumber in Toowoomba (my home town) was in their firm; that they just happened to have the city's greatest electricians; and, of course, that their carpenters were head and shoulders above any other carpenters in the entire region.

The more they asserted the excellence of their own people, the more I came to doubt them. Rather than building trust and confidence by pointing out that they had everything in-house, they raised my level of concern that I would get what they had to offer, which was not necessarily the best for me.

This doesn't mean that there is no virtue in having many disciplines in-house. I might be persuaded that because your firm enforces a common culture, work ethic, values and high standards, those people in your firm can provide a guarantee of quality.

But, to be persuasive, you had better have some concrete evidence to back up such a claim. I, together with most clients, am aware that the majority of multi-disciplinary firms were put together through mergers and acquisitions, which doesn't usually help in the creation of common cultures and standards.

Yes, having things in-house should mean better co-ordination, but we've all been around long enough to know that it doesn't always happen that way.

When considering you as my prime contractor, I am most concerned about your ability to co-ordinate, integrate, supervise and manage the various disciplines I need for my project. From my point of view as a client, this is not about cross-selling different services for different phases of an assignment.

That's nice for you but does nothing for me. It's about your ability to deliver a truly integrated service designed to meet my inherently inter-twined, multi-disciplinary need.

A clue as to whether or not you are truly a prime contractor is given by how you are organised internally. If your firm is organised around separate disciplines, each in its own organisational unit (or worse, each with its own profit centre), then I will be sceptical about your ability to co-ordinate even your own people.

I am much more encouraged if you have people from various disciplines organised around client types (by industry) or, better yet, by problem types. Then I know your people are used to working in multi-disciplinary teams for a common cause.

So, do I care about whether your services are in-house or you use third parties? Not a lot.

I care that you demonstrate the ability to put together a custom-tailored team for me and that you have full operational control over everyone on the project. The fact that you share common ownership with other entities is a matter of complete indifference to me. Management, not ownership, is what affects me.

On the other hand, I will worry if you end up using people you have never worked with before, so at a minimum I expect you to have a well-developed network of contacts for every specialty need I might have. Someone you have an alliance with is just fine.

As noted, it's the operational experience I worry about, not the form of ownership. Alliances might represent the best of both worlds, giving me the comfort of knowing that you can work together and diminishing any fear that you are self-dealing.

All this is harder to pull off than it might appear. For decades, marketing communications firms that centred on advertising agencies have tried to market themselves as advisors for their clients' total marketing needs. A few clients have gone for this approach, but the majority has not.

In part this is because many so-called marketing integrators have failed to shake off the perception that advertising is their core. When the multi-disciplinary team is seen to be led by advertising agency people, the client may be sceptical as to whether they will get "objective" advice on the best way to come to market.

Clients are also sceptical about whether the lead co-ordinating agencies actually do have operational and quality control over the other disciplines, which are usually housed in separate companies under a holding company umbrella or, at best, in distinct profit centres.

Whether the sub-contractor services are provided in-house or through a third party, there is one key thing that clients want to know from their prime contractor: Whose side are you on?

Your task as prime contractor is to manage the project and all the sub-contractors on my behalf. Accordingly, I expect you to act as my representative in dealing with everyone on the project, that being the main reason I need a prime contractor rather than performing the role myself.

If I have the slightest suspicion that you are more interested in generating incremental revenues for your firm (or protecting your relationship with third-party sub-contractors) than in serving my interests, then you have disregarded a key element of your prime contractor status, and I will begin to treat you like any other vendor -- with grave caution.

How do you prove that you are on my side? You keep me informed at all times as to what is going on, both with good news and bad (none of the "let's not bother the client with this problem" behaviour). You involve me in all decision making, giving me real options and not just conclusions already arrived at. You consult me before doing anything of any significance.

You document everything so that I feel empowered and in control of everything that is going on. You create opportunities for me to ask questions (no matter how dumb) and provide reassurance about my fears and insecurities. In short, you act as a trusted advisor, not as a technical expert.

Since you are my representative toward the rest of the project team, I expect you to get to know me and my business in great depth. You need to be sensitive to how I like to do things, how I like to be communicated with and what my preferences are (logical or not).

You are my agent in the world of the project and I expect you to represent me accurately to everyone involved. If I tell you something once (provided it is not explicitly in confidence), then I don't expect to have to repeat myself to others on the team. Your internal communications (about me as well as about the project) need to be both speedy and accurate.

Since the job of the prime contractor is to understand the totality of the project, I require you to demonstrate both a big-picture perspective (understanding the true goals of the project and where they fit in with other things going on in my business) and, at the other extreme, an obsessive attention to detail.

The most important aspect of any project is the one that goes wrong. And, as Phil Crosby pointed out in Quality Is Free, "When you solve your number one problem, number two gets a promotion." It's your job to worry about these things so that I can sleep peacefully at night. Your key role is to absorb all the hassle for me.

Obviously, absorbing hassle doesn't mean keeping things from me. If there's a problem or a missed delivery or an unforeseen complication (and, of course, there will be all these things) then let me know what's happened, what my options are and what you recommend that we do about it. I won't hold you to a standard of perfection, but I expect you to keep me informed.

Develop a sense of when to bother me and when not to. And you can only do that if you have taken a lot of time to listen to me and understand me. And keep listening.

There probably has never been a complex project where the client's needs and preferences did not evolve during the life of the project. (That's what "change orders" are all about!) Stay tuned in. I need wise counsel, not only at the beginning of a project, but all the way through.

I will be particularly impressed if you have project management software that not only schedules all the work and keeps track of finances and costs, but also serves as a common communications vehicle between you, me and everyone working on the project. (Such software is now fairly common in the engineering and construction professions, though relatively scarce elsewhere.)

When trying to win my business, show me the systems you have for communication, control and cost management. Give me the comfort that you truly are ready to manage complex assignments. Don't promise me that you'll develop a system just for me. I need the confidence that you've done this before, and your having systems in place already is reassuring evidence. I expect you to be immensely well organised.

Discuss with me what kind of reporting I like to have. Don't just tell me "your firm's methodology" for this. Let me decide if I want a lot or a little and in what form. And make sure that I can obtain extra documentation at any time. If something goes wrong, I want to get my hands on a complete history of who said they'd do what by when. I don't want to waste energy and time recreating history.

While I want you to "run interference" for me in dealing with the technical sub-contractors, I reserve the right to deal with them directly and personally if I choose. Who knows? I might have a future need for just a plumber, and I might want to judge for myself whether your plumber (or other technical sub-contractor) is someone who I would consider using.

Absorb my hassle, but don't try and act as a barrier between me and others on the project. If I want to communicate directly, I will.

Do I care which of the various disciplines on the project plays the role of prime contractor? Phrased another way, do I care about what the prime contractor's "home" discipline is?

Not really. Being a prime contractor is not about any technical discipline but is about management, communication, organisation and negotiation skills (on my behalf), along with trustworthiness and understanding of my business.

I'd be just as happy if you didn't have a home discipline, as long as you have the ability to understand my needs better than anyone else and manage an multi-disciplinary team. I don't care about what field you got your technical training in -- I want to know that you can manage.

All this is very demanding. So why should you bother? Apart from the fulfillment of playing a leading role within interesting, complex and challenging projects, there is one great benefit in being the prime contractor rather than a technical sub-contractor: money.

Technical sub-contractors are not hard to find, and while they may be paid well, they will receive market rates for their discipline. But finding a good prime contractor is difficult, and therefore such a person or organisation is invaluable.

If clients are going to pay premiums, accept value-based billing or be less than completely fee sensitive, it is the prime contractor who is going to benefit. That's where the money is now and where it will increasingly be.

There is nothing more worth paying a premium for than the peace of mind that comes from knowing someone you trust is absorbing all the hassle for you.

A Discussion About Fees

from American Lawyer, 2002

Is it time for large law firms to raise their hourly rates? Why or why not?

RW: It's always important for law firms to be looking for ways to earn and deserve higher fees (it's clearly the most powerful way to improve profitability), but it isn't as simple as just raising rates. The questions are these: In what ways have we changed the way we practice to be more valuable to our clients? Would THEY agree that we are now more valuable to them than we were two or three years ago? If the answer to these questions is "no," then raising rates would be crazy.

Bear in mind that in a capitalist economy, prices are a reflection of relative scarcity (i.e., the balance of supply and demand.) It's all very well that you can do wonderfully valuable things for clients, but if 20 other firms can credibly achieve the same thing, the price you will command won't be high. The key to raising rates successfully is to work with clients in ways they both value and do not commonly find among law firms.

Is it time for large law firms to increase their equity partners' capital contributions and/or take on debt? Why or why not?

RW: Law firms don't need a lot of capital, except to fund working capital, and this is best done through partner capital contributions. I can't imagine why any firm would want to increase its debt. Success in law firms is not about financial engineering; it is about creating gains in efficiency, value, innovation, teamwork and people development. Remember, chasing money is not what makes you money.

Is this an opportune time for large law firms to seek mergers and/or go hunting for big-name laterals? Why or why not?

RW: Most mergers fail to deliver any positive impact on profits per partner, and are huge diversions of management attention from the things you do need to do to win, e.g., manage the law firm and the people within it. On the other hand, a firm should always be on the lookout for selective laterals who can help get the firm into new areas and disciplines. However, just looking for big names isn't sufficient. A lateral only helps if he or she is able to help the firm build a practice area, and that takes someone who is prepared to act as a team player, invest in the future and coach others. Too many big-name laterals are, in fact, lone wolves who just want to get paid more for their book of business and have no interest in sharing or institutionalising their skills.

Is it time for large law firms to roll back or freeze associate salaries? Why or why not?

RW: The underlying people crisis (or war for talent) is still there. There remains a shortage of young knowledge workers, and as soon as this recession goes away (12 months), we'll be back in the same mode we were 18 months ago, bemoaning the lack of talent available to fill the demand. As noted above, prices (including salaries) are determined by relative scarcity, and demand is now off, so associate salaries are down. But the supply hasn't changed, and when demand comes back, we'll be right back where we started. (And associates will be paying close attention to how firms handled themselves in the down market.)

Is it time for large law firms to reduce the size of their equity partnerships? Why or why not? And if so, how best can this be achieved?

RW: It's certainly time for firms to ensure that all partners with equity are making a contribution commensurate with that reward, but the first step should be to try to help people contribute (through guidance, coaching, support, practice group management, etc.). A firm would be much healthier if it could get a high percentage of its people to the point where they earn and deserve equity. A knee-jerk policy of "you're either a superstar or we're going to take your equity away; you figure it out!" is not exactly a sophisticated approach to management, yet it's increasingly common. Law firms should be great at helping people succeed, not just demanding that they succeed. Yet few firms pass this test.

Tips on Managing People

The Right Way to Give a Critique

The worst thing you can do if you want to get somebody to listen to you is to criticise him or her.

As human beings, we hate being criticised. When attacked we attack back.

And we attack even when we are in the wrong. Right or wrong has nothing to do with it.

Many of us fall into the trap of thinking, "I know I am right, so I'm going to tell the others how silly they are!" It's tempting, but it doesn't work.

If you have the self-control and the presence of mind to put aside the needs of your own ego and say, "I've got a problem. Will you help me?" you are much more likely to get co-operation from the other person.

The Only Way to Get Anybody to Do Anything

If you want to get something from another human being, you must first do something for them. In other words, you can't win influence unless you first invest in the relationship.

So before you need something from someone, make it your business to at least get to know them without making any demands. This doesn't mean invading their privacy but it does mean making the relationship personal. For example, I have learned that I should take my assistant out to lunch occasionally.

This is not something I am naturally disposed to do, but unless I show an interest in her as a human being the relationship won't work. (I still don't do it as often as I should!)

If the only time she hears from me is when I want something, then she will form a kind of resistance.

You Are There to Help

If someone comes in to criticise us or get us to raise our game, under what circumstances would we accept that person's critique?

That's easy. If I think someone is really trying to help me then I'll listen, I'll engage. On the other hand, if I think someone is just trying to get the job done or make himself or herself look good, I may listen because I need to keep my job, but my heart won't be in it. My creative energies will be depleted.

So the bad news is that you will only have influence over people to the extent that they think you are sincerely trying to help them. It's not a moral point. It's simply how human beings work.

The most influential managers are those who can be convincing to other people that they care about them as people.

Team Players

The most common prima donnas are people who don't want to be team players at all. If they throw a fit about something, they are not really talking about anything specific: they just don't want to have to fit in with others.

If one person won't fit in, the minute you are seen to tolerate their behaviour, to tolerate an exception, you as the leader have just given permission to everybody else to do things their own way, too.

You are better off without a prima donna if their actions ruin the teamwork of the whole group. If you want the benefits of collaboration you cannot afford to make exceptions.

Getting the Task Done

Each time you have an interaction with someone there are two things going on: one deals with the immediate topic, getting the task done, and the second is the way in which every interaction affects your relationship with your colleague. It will be advanced, ruined or left neutral.

Bear in mind that you should not sacrifice the task to the relationship. Similarly, just winning on the task is not good if you have ruined your relationship. You've got to do well on both counts.

There is a certain way of saying things. Instead of saying, "You are wrong," you must learn to say, "Might there be another way of looking at this?"

It's about helping the other person save face. And the only way to get anybody to do anything is to make them want to do it. Some people are naturally good at these diplomatic human relations. Sadly, many of us have to learn these skills.

I have pretty much the best business degree that the country has to offer, but no one ever taught me about managing people. That skill I had to learn by trial and error. So for many of us it's a good idea to mentally rehearse our phraseology before we go into a meeting.

Don't Be Paternal/Maternal

There is another trap to avoid. When you are giving feedback to an employee, it is easy to come across as paternal or maternal. Nothing will raise someone's hackles more than being treated like a child.

So, as an exercise, imagine you are going in to give the same critique to your mother or father. Turn it around and respectfully help "Dad" arrive at the right conclusion for himself.

The Domineering Boss

There is a natural temptation for people in charge to say, "This is how I deal with people -- like it or lump it." But if you want to influence others, then it's about what turns them on, not what turns you on.

On the other hand, there are bad managers who are so good at relating to people that they never actually get the job done. They are too soft and caring to inspire hard work and positive energy.

No Two People Are the Same

You don't influence everybody the same way. People do things for their own reasons -- not for yours. So if you want to inspire someone, you don't give him or her some wonderful company vision.

Instead, you help them see what's in it for them. That varies from person to person. Some people are motivated by challenge, some by money and some by the social opportunities afforded by a project.

It's about reading the other person, finding their hot button, not yours.

Interest in People

To be a good manager or team leader you have to have an above-average interest in people. If you are not very interested in people that doesn't make you a bad person, but you are going to have to work hard to overcome that if you want to be a successful manager.

It's also about laying down challenges, getting people to stretch themselves creatively and getting people excited about your ideas rather than seeing those ideas as stressful demands.

The best group leaders see themselves as catalysts. They like to accomplish a great deal but understand that they can do little without the combined efforts of others.

A good manager does not see himself as the "people's boss" but as the leader of a cohesive team of autonomous, creative individuals.

Restoring Optimism in a Down Period

PERSONAL AND CONFIDENTIAL

Dear Jimmy,

You may recall that I asked you what you'd like me to write my next article on, and you said something to the effect of "restoring optimism after a rough period."

I haven't written the article but have put down a few thoughts. I haven't edited myself but just put down some initial thoughts.

You'll disagree with some of these things and you'll be doing others, but maybe there's also something here that you agree with and are not yet doing. At worst, it will stimulate your own thinking. Anyway, here goes!

My first thought is that little can be done "in the mass." (Remember the "raspberry jam" principle: the wider you spread it, the thinner it gets!) That means ratcheting up the level of individualised attention. You can't manage emotions by numbers; you can only do it face to face and preferably one on one.

I would guess that given the current rough times, people feel a little "helpless" -- not sure about what to do. Therefore there is a need for help.

In tough economic times there's a tendency for firm managers to edge away from the coach role and become more like policemen, administrators and bosses (watching the numbers like a hawk). Obviously this is necessary, but so is coaching: offering suggestions, being supportive, being a source of creative ideas, helping people think through their roles and helping them make the best use of their time. I know you believe in this but there's a question: How much of this is really going on? How much are you doing? Everyone knows you want results but what are you doing to help them (particularly the average Joe or Jane on the front lines) get results?

How about this idea? Are you conducting a series of office visits, not to give a speech but to be available to answer questions and offer ideas about their local practice issues? You're a smart guy who's been there. You're a really valuable resource to anyone who can get your time. Call these visits "mini planning sessions for the office," with you as a creative resource.

The reason I believe this will work is that you'll be able to break the (local) logjam of, "We can't do anything. It's rough out there." Help your people come up with action plans. I realise that you can't visit them all but the grapevine works well.

Maybe you can form a visiting committee of senior people to do some of this. Remember, I'm talking about helping. You already do planning, budgeting and visits from senior folks; but I'd guess that the typical partner doesn't see this as a vehicle for help but as an oversight exercise.

I'm making two points: The "depressed" (non-optimistic) professional needs help (now!) and ideas. Asking (or telling) the person they should work harder or do more isn't inspiring. What they want is ideas about ways to do something different. They're probably doing what they know how to do, and if they aren't it's because of the depression. There's a barrier there.

Newness is at a premium when people are down: They often can't get themselves up to do the same old stuff, but give them a new task to perform and they may discover renewed energy, interest, etc. Hence, you should take every opportunity to find new roles for people. I'm not talking about major reassignments, but new marketing tasks, etc.

Which leads me to my next point, the key to all this being non-billable time: How do people spend it? What are they doing? What should they be doing? In most firms, billable time is carefully managed but non-billable time is a sink-hole. A lot of professionals waste a lot of it sitting around, wringing their hands, hiding out in their offices. No one knows or cares and certainly doesn't monitor the non-billable efforts.

I would advocate a "new" program of "non-billable time budgeting." It's really nothing more than an individualised, personalised career planning system, but it is different from what's being done. It's not performance appraisal, and it's not goal setting. It's action planning.

Goals are ephemeral and made up of a wish list. An action plan is concrete, specific, understandable and much more motivating to a depressed (non-optimistic) person. "Tell me what I should/can do," is the normal cry. So�

The practice leaders sit down with each partner and say, "Looking at the next three months, how much non-billable time do you have available? Right, let's talk about what you're going to do with it. What activities make sense for you and the office/firm? Whose help do you need?"

"Let's not talk about annual goals; instead, we'll take it a step at a time. Let's only worry about the next three months; come to an agreement on actions, teams, etc.; and develop a "contract" for doing X things. We'll meet again in three months to see how they went (or earlier if you need my help)."

This sounds simple -- and it is -- but there's not a lot of it going on. It works because you can't be depressed when you're busy and active. You turn people's emotions around by getting them doing something, anything. The short term is achievable; the long term is terrifying.

Pygmalion is relevant here. If you treat people like winners they'll turn out to be winners. Unfortunately, being micro-managed doesn't feel like you're being treated as a winner.

There's also the Hawthorne effect: People perform better when they think someone cares and notices what they're doing. The trouble with the professions today is that the average partner isn't very energised and excited at the best of times, let alone in a recession. The vast bulk of them feel like cogs in the machinery. Hence, my emphasis on designing "individualised" management processes is the key to restoring an upbeat mode.

I've already said this but you have to get out and about to the offices. One way to influence mood is to be the role model (a key point), but you can't be an effective role model unless you're face to face.

"Off-line" sessions such as conferences and meetings don't count as much. It's way more powerful to visit them where they live. You've got to be seen to be involved in the nuts and bolts of the business.

Leaders must be seen as making their own sacrifices if others are to do so as well. What (visible) sacrifices have you made? What sacrifices do your partners think you've made? Apart from tighter financial controls, what has HQ done that's different?

They (the partners) want to know what you're going to do to turn the situation around. Where's the positive action that comes across as new, creative, a smart idea or a clever response to the situation? (You've probably got answers to all this.)

In any event, if people see the firm acting in a positive, "optimistic" way, they'll be positive, too. But in many firms, all the partners see from firm management is a bunch of tactics that come across as scared, nervous, panicky and down-beat (tighten controls, fire partners, cut support costs).

I'm not saying these actions are wrong, merely pointing out that they do not convey optimism.

People don't want inspirational speeches or grand strategies when they're depressed. This is not the time for "rah, rah, rah." In fact, it backfires. People say, "We're in pain and he's so out of it with his unrealistic visions." All your speeches should begin, "If I were you, here are the four or five things I'd do differently than in the past."

I'd focus people even more on their own local practice. If they start thinking and worrying about where the firm is going or the state of the nation as a whole, they just get distracted. I'd try to keep people focused on what's going on in their area and back off talking about the firm.

Obviously, I'm not saying to hide anything but just don't push it. As an example, line partners hear too much about mega-clients, international activities, technology and other grand strategies, which can be demotivating if they interpret this information as, "Those guys don't care about me and my practice. They live in a different world."

People need an opportunity to bitch. (I call this "squeezing the stress sponge.")

People can only absorb so much hassle. After a while, the sponge is saturated and it starts to "weep." If you give people a chance to vent their feelings, you empty the sponge and create the capacity for them to absorb more stress.

But they need to talk about THEIR work and THEIR lives. What mechanisms are in place for this to happen? (It's dangerous in the typical professional firm to show your stress: bitch too much in an environment where people are being laid off and you may be committing suicide!)

Obviously, to create optimism you must reward early successes and small triumphs. There's a need to increase the number of celebrations, formal and informal. In the past you celebrated the big things -- now you must celebrate the small.

And you must learn to use more "currencies." In tight straits you can't be generous with cash, but there are other rewards, including the following:

• Approval
• Gratitude
• Autonomy
• Participation/Involvement
• Personal Interest/Support
• Recognition
• Visibility (inside and outside the office)
• Contacts
• Access to Information ("insider")
• Access to Additional Resources
• Rapid Response (access to manager)
• Task Support
• Titles (official and "unofficial")
• Special Roles or Assignments
• Challenges
• Meaning

I wonder how many of your managers know how to use these tools?

Anyway, that's enough rambling for now. All the best and good luck!

Richard

Are All Consultants Corrupt?

by Alan M. Webber 2002

from Fast Company, May 2002

That's one possible conclusion in the wake of the Enron scandal. Enron's monumental bankruptcy, Global Crossing's questionable accounting practices, and Wall Street's complicity -- if there is a common thread in the scandals of the day, it is the central role played by the nation's elite professional-services firms. McKinsey & Co., the bluest of blue-chip consulting firms, gave Enron its strategy -- and even its former CEO. Jeffrey Skilling's model for Enron was to pattern it after a professional-services firm, to elevate the company above the lesser status of an energy company to the more rarified air of a knowledge-based, asset-light company. Andersen, among the most respected accounting firms, vouched for Enron's books. Enron was chockfull of MBAs and refugees from accounting and consulting firms. A few column inches away from Enron is Global Crossing and its founder and chairman, Gary Winnick, who is an alumnus of Drexel Burnham Lambert. The fingerprints of Wall Street's elite firms appear on some of the questionable transactions that are now under congressional scrutiny. And the world of professional-services firms -- a world to which most high-flying MBAs readily aspire -- is suddenly under intense review.

In that world, Richard Wood is the recognised expert. For more than six years, he has been studying professional-services firms. He has written about them, spoken to them, and consulted for them. A native of Australia, Wood holds degrees from the University of Southern Queensland, and the Queensland University of Technology. He studied at QUT for seven years before striking out on his own.

Fast Company sat down with Wood in his home in Toowoomba to gain insight into the state of professional-services firms, their role in the current scandals, and the right way to be a professional.

What's your take on the business scandals that we're seeing today?

RW: The car wreck that we're reading about in the newspapers was inevitable. It was going to happen, because professional-services firms don't practice what they preach. They're filled with smart people who understand what they should do to win. Those people talk about having a strategy with a longer term view, but the operational reality is vastly different. They want the money right now. In practice, cash is everything.

That's how most professional-services firms operate. But are there fabulous accountants, lawyers, consultants, and investment bankers who do it right?

RW: Absolutely. What's missing are whole firms that are built on discipline and strategy. With one or two exceptions, cash is everything for a firm. It's also important to mention that the current scandals are not that special. They're special in size, but not in nature.

Is the problem with professional services due to a lapse in ethics?

RW: The real problem is that people do what they're told. They're simply in compliance mode. What's even more interesting is that there's so much going on that's stupid. People are making the wrong calls on stuff that doesn't even come close to ethics. But that's just common practice. It's what happens inside firms, because that's how people have been raised in business. Before they even get to an ethical issue, they've been taught that if there's cash to be made, then make it. So it's not as if they were wonderful to begin with and then suddenly there was an ethical challenge and they lost their way. The message has always been that nothing trades off against cash. Too many professional-services firms have never met a dollar they didn't like. The question that they need to ask themselves is, Do we believe in our own strategy and our own standards, even when we're tempted by cash? Good business is about having the guts to stick to a strategy. You can count on the fingers of a single maimed hand the number of professional-services firms that have the courage to stick to their strategy.

So what's wrong with the professional-services firms of today?

RW: The problem is that they've been taught to act like businesses. But they've learned all the worst lessons of business and missed all the best ones. Tom Peters used to tell the story of McDonald's founder Ray Kroc. Someone asked Kroc what his secret of success was, and he answered, You have to be able to see the beauty in a hamburger bun. You might laugh at first, but when you think about it, that's got to be right.

What most professional-services firms don't understand is that to make the most money, you actually have to believe in the product or service that you offer and care for the customers or clients whom you serve. That isn't a religious argument; it's a business lesson. You can't dominate an industry unless you care passionately about what you do and the people you do it for.

Why don't these firms change?

RW: Why don't they change? Let me give you an analogy from my own life. My uncle is a fat smoker. He doesn't need another speech to tell him that he should stop smoking and lose weight. Clear lungs, a longer life, a better sex life -- he accepts that it's a fabulous strategy. But please, no more speeches. Now, people in professional services have heard all the speeches before too: Give great customer service, be a team player, manage your people. It's not that they don't believe the strategy.

The problem is, whether it's my uncle giving up smoking or them starting to give great customer service, any kind of improvement requires short-term sacrifice and short-term pain in the name of a better long-term future. There are very few businesses that are truly interested in maximising their future income stream.

Professional-services firms need to have an ideology. They need to know what they stand for. They need to have non-negotiable, minimum standards. They need to be able to say, We will not accept work that goes against our standards, because that's not who we are. The problem in professional services is that because the environment is so bountiful, you can get everything wrong and still have a nice income.

I'm not picking on any one profession. They're all equally bad. They treat people poorly. They don't train well. They have no quality assurance. They don't collaborate with one another. They don't show any interest in their clients. You would think that this would kill them. But they're only competing against each other. So as long as nobody wakes up, they can all make money doing this shit. Why are there so many bad professional-services firms out there? For the same reason that there are so many fat smokers.

But don't most firms know that they're not measuring up?

RW: Here's a little quiz that I've been giving professional-services audiences for the past six years. First I give them three categories to classify how they feel about their work. Category one is, "I love this stuff! I just love doing it." Category two is, "I can tolerate it, but that's why they call it work. I do my job, but I have no emotional investment in it." Category three is, "How the hell did I end up doing this junk?"

The results are always the same in all professions around the world. You get about 20% who say, "I love this work"; 60% to 70% who say, "I can tolerate it"; and 10% to 20% who say that what they do is junk. Then I give them a second question. I say, "You've told me about your work. Now tell me how you feel about your clients." Again, I give them three categories to classify how they feel. Category one is, "I really like these people. I enjoy serving them." Category two is, "I can tolerate them. I'm responsible and I give good service, but there is no real difference between today's client and tomorrow's client." Category three is, "These people are idiots who work in a boring industry."

The results for the second question are pretty much the same as for the first.

About 20% love their customers, 60% to 70% can tolerate them, and 10% to 20% can't stand them. What the numbers say is that most professionals like their jobs one day a week or less, and the rest of the time, they just tolerate what they do. Then I ask them, "Do you think your clients can tell?" To which everybody says, "Yes!" Well, what are the business implications of that? For most professional services firms, the answer lies in their mission statement: We won't screw up, but we're nothing special.

I tell them, If that were me, I'd slit my wrists! That's true for one very simple reason: I don't want my tombstone to read, "He did tolerable stuff for tolerable people because they paid him." I'm not that much of a whore. Do I do it occasionally? Sure. I'm no more noble than anyone else. But that's not the issue. The issue is, Is that your life? Why would you want to spend your life doing stuff that you can just tolerate, working for people you don't like?

Especially when you realise that you can make more money doing work that engages your passions. The only sensible business rule is, Life is too short to work for idiots. So if you're working with people who are shady or crooked, get out!

Alan M. Webber is a Fast Company founding editor.

Creating Value Through People

Executive summary

The financial performance of a business is not something you can or should directly control. It is achieved by providing superior value to the market-place.

Market-place value is a consequence of energising and focusing employees to create and deliver value.

To make money, managers should not spend all their time managing money, but should instead devote their efforts to the things that produce the money: the enthusiasm, commitment, and drive of the labour force. Don't manage money. Manage people.

Introduction

Which of the following does your firm report on, monitor, and react to most frequently? Which consume the most management time?

• Client satisfaction levels.
• The strength of key client relationships.
• Employee motivation and energy.
• Levels of collaboration among staff.
• Financial results.

If you're like the overwhelming majority of businesses you will focus primarily on financial results. Consequently, you're making less money than you could.

Why? Because managing a business by looking at financial results is like trying to win a game by keeping your eye firmly fixed on the scoreboard. Financial results are just that: results. They are the outcome of excellence (or the lack of it) in the key processes that produce the value that your customers and clients pay for. What you must manage are the things that produce value: energised employees who deliver outstanding quality and service to the marketplace.

Does this mean that you don't monitor financials in great detail? Of course not. Financial discipline is the bedrock of business success, but it's not all of it, and maybe not even the greater part of it. The real key is the ability to get your people sufficiently focused so that they eagerly and willingly strive for high standards.

Challenges and Opportunities

Over the years, I've been trusted to see the strategic plans of many direct competitors. Remarkably, they are almost always identical. Everyone figures out correctly which client sectors are growing, which services are in rising demand, and which dimensions of competition, such as client service or innovation, clients are looking for. The strategy documents are the same because everyone's smart! Everyone knows what needs to be done.

If this is so, then what is competition really about? It's about who can best complete the work that needs to get done. And this in turn is determined by the following set of closely related concepts:

• energy
• drive
• enthusiasm
• excitement
• commitment
• passion
• ambition

Where these exist the discipline can be found to engage in diligent execution and thereby outperform the competition. The role of the manager is to be a net creator of enthusiasm, excitement, passion, and ambition. Alas, all too often managers are destroyers of excitement. If all they ever talk about is finances (How are your billings? What's happening to receivables?), it can deaden the spirit.

That doesn't mean they don't need to talk about these things -- they do. But they shouldn't talk only about these things. It's the manager's job to inspire, cajole, exhort, nag, support, critique, praise, encourage, confront, and comfort, as individual people (and groups of people) struggle to live their work lives according to high standards.

All strategies, at some time or the other, involve a trade-off between short-term cash and executing the strategy. If you're going to get the benefits of a strategy, you need to be willing to make hard choices and act as if you truly believe it. You must be willing to practice what you preach, both when it's convenient and, most important, when it is not.

Many people don't believe that their leaders truly want them to act strategically. Whenever a choice needs to be made between strategy and short-term cash -- and it always does -- most people feel under significant, if not irresistible, pressure from management to go for the cash. Usually the message from the firm's leadership is clear: strategy can wait for tomorrow (if we can get paid for competence, why strive for excellence?). Rather than leaders being a source of encouragement to execute the strategy, they're all too often the biggest obstacles to the implementation of strategy.

If you want to be known as excellent at something, you have to be reliably, consistently excellent at it. Business life is filled with daily temptations, short-term expediencies, and wonderful excuses for why we can't afford to stick to high standards today. We take in work that's off-strategy (after all, it's cash!), we defer training until some more convenient time (often never), we postpone investments until the ever-escalating profit goals are met, and the marketing principle is: we never met a dollar of revenue we didn't like!

There is nothing inherently wrong about making these choices, but you shouldn't fool yourself. If you're willing to sacrifice value to earn short-term cash, you won't create a market reputation for superior quality. It takes courage to believe that a reputation for excellence is worth more in the long run than incremental cash. In their vision, mission, and strategy documents, firms say that they are aiming for excellence, but that's not how they operate.

Managers must have the courage of the convictions they espouse, maintain a long-term focus, and intervene personally whenever there are departures from the values and vision that create excellence. The problem with the implementation of strategies is the absence of certain and recognisable consequences for non-compliance. If the manager doesn't have the courage to tackle individuals who aren't behaving in accordance with the strategy, others will quickly realise that the new strategy is not something they have to do. They'll quickly cease striving to comply, and the benefits of the strategy will never be attained.

Great managers give their people individually and collectively the confidence that greater success, fulfillment, accomplishment, and profits are indeed attainable. They give their people the courage to try. Change is threatening, however, and many, if not most, people operate well within their comfort zone, reluctant to abandon the old habits that brought them to their current success. If managers are often demanding, they must also be supportive. They must manage with a positive, supportive style.

Just as management involves a delicate balance between being supportive and being demanding, it also requires a style of insistent patience; it's the difference between saying Rome wasn't built in a day and insisting that we are building Rome. People must believe that the manager has the courage to believe in something and, more important, will stick with it. There's no greater condemnation of managers than to say that they're expedient, and no greater commendation than to say that a manager truly lives and acts in accordance with what he or she practices.

Being Effective -- and Successful

An effective manager must be:

• articulate and vocal about his or her personal beliefs;
• disciplined about standards;
• even-handed and even-tempered;
• genuine and sincere;
• able to read people's characters and skill levels effectively;
• honourable, with high integrity.

What do the most successful managers believe?

• First you build your people, and the rest will come.
• Fun and discipline combined get the job done.
• It's important how people treat each other; monitor it and manage it.
• People have to trust management and trust each other.
• Success is about character, respect, integrity, trust, honesty, empowerment, confidence, loyalty, and keeping promises.
• You must bet on the long term and not get stampeded by short-term pressures.
• You need to balance your focus on people, clients, and finances.
• You should live up to your values every day.
• Your agenda as a manager is to create a great place to work, not to work at making your own star rise.

Finally, here are the rules on which the most successful managers model their behaviour:

• Act as if not trying is the only sin.
• Act as if you want everyone to succeed.
• Actively help people with their personal development.
• Always do what you say you are going to do.
• Do what's right over the long term for clients and for your people.
• Don't regard yourself as separate and distinct from your people.
• Facilitate, don't dictate.
• Let people know you as a human being, not just as their manager.
• Show enthusiasm and drive; they're infectious and addictive.
• Speak regularly about your vision and philosophy so that people know where you stand.
• Take work seriously, but don't take yourself seriously.
• Understand what drives individuals.
• Know all your people as individuals.

Making it Happen

To get started, take out the documents that describe your company's mission, vision, values, and strategy. Turn them into a questionnaire and ask your people how well they think you're currently living up to the things you espouse.

If you find out that there are some things that you're not doing so well, either fix them or drop them from your declarations: there's no point lying, pretending to advocate things you're not willing to live up to. Practice what you preach! Make it the short-term immediate priority to make the firm live up to its over-arching vision.

Another vital step is to involve as many people as possible in the process of implementing, if not actually setting, strategy. The task of energising, mobilising, and motivating action is easier with people feeling involved, rather than being imposed on from above.

Conclusion

A person doesn't build a business. A person builds an organisation that builds a business. Many managers are appointed because of their financial skills, their business development skills, or their technical excellence. However, there comes a point where the central question is, Can you manage? Are you a net creator of energy, drive, and ambition in others? Can you cause others to strive to achieve high standards?

The Key to Merger Integration: Managers Who Can Manag

Everyone knows that most mergers fail to deliver the benefits sought, but what most people don't know is that the key element in making them work is not systems, procedures, processes or even strategy. The key is putting managers in place who know how to manage.

One of the first set of decisions that has to be made in a merger is who is going to head each department, group, location and division. In other words, the most crucial decision, the appointment of managers, comes earliest in the process.

Unlike what they taught most of us in business school, getting the best out of people (and getting them to collaborate effectively) has almost nothing to with logic, rationality, professional skill and intelligence. It's all about interpersonal, social and emotional skills. And these talents are never more important than during the tense political drama of a merger. In a merger, where you have to get many people to take on new roles and also get strangers (and erstwhile competitors) to collaborate, the demand for these skills rapidly outstrips the supply.

Compounding the problem is the fact that managers have historically been selected for all the wrong reasons. They are often chosen because they are the best technician or the best business getter or the most financially oriented. These are all important things, but none of them has to do with managing.

Managing is about the ability to get bright, energetic, mobile, autonomous people to accept your influence. Above all, it's about the ability to win trust (an especially scarce commodity in the state of flux that exists in post-merger situations).

Managers must act more like coaches than bosses. Their people must believe in their hearts that the coach is trying to help them win (and is not just trying to make the corporation look good). If I'm an employee and I accept that you're trying to help me, then I'll listen to your critique and engage in the dialogue with passion.

If I think you're not trying to help me but just trying to make yourself look good, then I'll comply to keep my job but I'm not really going to be engaged. On such subtle differences is business success built.

Yet look how hard this is post-merger. For better or for worse, before the merger I had a history with my manager and whatever trust existed at least could be based on experience.

Post-merger, vast numbers of employees are going to suddenly have a manager they don't know, who might have come from a different company and certainly doesn't know how things are done around here. You want me to trust this person?

Well, yes. If your people don't, then they aren't going to be enthusiastic participants. Few people (certainly not professional people) are motivated by grand visions, inspiring strategies and mission or value statements. They are inspired by individual managers who know how to get the best out of them.

Yet where's the training in how to manage people? Even those few professional firms that provide training in business actually provide training in managing.

Few are taught how to give a critique in such a way that it leaves the recipient energised rather than resentful. Few are taught how to get a bunch of prima donnas to sing like a choir. Most of us have had to learn it the hard way, through bitter experience. That luxury is not available during a merger integration. You need to pick your managers -- carefully -- and train them -- quickly!

The Role of Trust in Business

by Tom Brown 2002

from FT Dynamo, 2002

Over the last two decades, Richard Wood has become recognised as one of the country's leading authorities on the management of professional service firms. In 1997, Wood challenged the commitment to excellence, self-improvement and service/dedication of many professionals with his article True Professionalism.

Last year, Wood authored an equally provocative article, which found that the core of advisor-client relationships is not simply technical proficiency. Rather, trust plays a critical role in advising, negotiating and managing satisfaction in business.

A native of Australia, Wood holds degrees from the University of Southern Queensland, and the Queensland University of Technology, where he was a student for seven years. From his Toowoomba office, Wood talked to U.S.-based FTdynamo contributing editor Tom Brown about where he has been and where he's heading.

Any new works coming soon?

RW: Practice What You Preach is due midyear. In that article, I'm revealing what I learned from studying the correlation between employee attitudes and financial performance in 139 professional firm offices.

What have you learned so far?

RW: Of all things that professional firms do, managing people is consistently rated lowest on the list; however, the most financially successful offices consistently do better at all aspects of managing people.

A kind of "science" is emerging in the field of professionalism. Curiously, differences in performance are predominantly due to the character and skills of individual managers, not the systems of the firm. More than that, the performance of successful managers is mostly due to their character and their belief systems, not individual tactics.

Aren't most business relationships fairly up-front?

RW: Most business relationships are satisfactory, but real "trusted advisor" relationships are scarcer. Perhaps a test of the need is the reaction of many people to even thinking about this topic. They think that even talking about earning trust is New Age or touchy-feely.

They would prefer either to remain in the logical realm ("I'll earn my client's confidence by the brilliance of my ideas") or to remain intuitive ("I don't need to think about this; I'll just do the right thing when it happens").

But business isn't just logical, it's emotional and personal, and not all of us have trained reflexes to do and say the right thing, in the right way, at the right time.

Then something like trust can be managed?

RW: There are concrete things you can do to earn trust in business, and many things you can do to lose it. So, yes, it can be managed if you're willing to be self-aware about what you do and what you say when dealing with other people.

Trust is an essential ingredient in all relationships, business and personal, and it's possible to be thoughtful about it and not just intuitive.

But you do admit that trust is complex -- even ultracomplex?

RW: Absolutely. Someone can trust your competence and reliability but have severe reservations about your motives, that is, whether you will treat them fairly, live up to your promises and look after them.

The act of hiring anyone requires you to hand over your affairs to a stranger and trust that they will look after you responsibly. It's not just about "Can they do it?" It's a very complex, emotional process. But that argues for trying to understand its components, not for giving up all thought about it.

To what extent do leaders succeed or fail based on whom they pick to advise them?

RW: It depends on how people use advisors -- and many do it badly. Some seek out an "expert" and place their affairs in that expert's hands, relying on the expert's judgment and technical expertise. That's unwise. In our view, what leaders (and all of us) need is someone who will help us solve our own problems ("be an advisor") and not just provide answers.

We need someone who will help us understand our options, give us an education on those options, provide a recommendation based on their experience, and then help us reason through to our own conclusion. That's what we mean by being an advisor, and it takes a completely distinct set of skills in addition to knowing your field. Too many busy leaders become a hostage to fortune by hiring experts and not skilled advisors.

Is this also true for leaders in other fields besides business?

RW: There are many people inside organisations of all kinds who are professional advisors even though they do not charge fees for their services. All organisations are stocked with people whose job it is to give advice, and they are faced with exactly the same issues as those of us on the "outside." How do I win influence? How do I get people to accept my judgment? How do I get permission to try something new? In summary, how do I get people to trust me?

One senses that, in your own career, you've been burned a time or two by a bad relationship.

RW: Haven't we all? But it wasn't the unethical, fundamentally untrustworthy person who caused me to feel burned. It was an otherwise well-meaning person who lost my trust and confidence by neglecting silly things.

I know problems occur, but can't you just keep me informed and play straight with me? This isn't about ethics; most people's intentions are good but their skills and behaviours are often pathetic and annoying.

How does one keep from becoming so cynical about people's motives that no relationship seems safe, reliable or trustworthy?

RW: Make clear, right at the start of a relationship with any provider or advisor, exactly how you like be treated, and how you want to work together.

We tend to assume (eternal optimists that we are) that this time it will be different. This new public relations counsellor will be attentive, this ad agency will respect us and involve us in the decision-making, this engineer will explain things in plain English. But we rarely ask for it up front, and we should. We should ask new suppliers to describe not only how they will approach the work but, specifically, how they work with their clients.

The good news is that, by and large, the troublesome problem is not motives but skills and behaviours. No one ever teaches us how to build and maintain a relationship, and we could all improve a lot, very quickly, by beginning to think about it.

Best Practices in Business Development

1. Manage total marketing time as one aggregate time budget, reviewed monthly, so that the overall balance between competing marketing activities can be monitored. Don't fragment it among many decision-makers.
2. Require that all staff contribute some time to organised marketing efforts.
3. Establish regularly reported metrics to assess the calibre/ quality/strategic value of new revenues, and not just their volume.
4. Have an organised, regular program of inviting clients in to talk to your people.
5. Establish research department to keep delivery staff informed on a regular basis as to trends, developments and latest news in each client's industry (monthly updates.)
6. Have one of our people attend every client industry meeting that exists, and have our person write up what they heard, both in formal sessions and at breaks.
7. Train all client contact staff in client counselling skills, how to earn trust and how to deal with difficult situations. Shut down "Sales" training programs.
8. Develop (constantly updated) workbook of tips and tactics for how to render greater perceived value (give the client a better experience with us) at all stages of an assignment.
9. Top management follow-up with clients on all client feedback that is less than "all top scores." React to anything that is less than excellent.
10. Use results of systematic client feedback in setting bonuses at all levels.
11. Offer an unconditional satisfaction guarantee.
12. Ask satisfied existing clients to give endorsements on video (put on website).
13. Have an organised program for all clients to be visited regularly by senior officers.
14. Inviolable, explicit non-billable investment budgets established and planned in advance to invest in individual client relationships by doing something for the client (not selling.) Monitor the execution.
15. Systematic program to offer to attend internal client meetings, critique their internal studies, put on free internal seminars for their staff.
16. Establish a program of seconding your staff to work in the clients' organisation.
17. Organise a regular program of proprietary research, surveying clients and their views and concerns, so you can regularly tell you audience what their peers are thinking about and doing. Use surveys to publish articles, give seminars and speeches with proprietary business (not technical) content. Be THE source of new information and ideas for your clients.
18. Develop screening form to evaluate new client pursuit opportunities. Turn away junk work. Stick to it.
19. Pursue fewer targets with greater level of effort each.
20. Sales process designed to give value, be generous with ideas and earn trust.
21. Make your website full of content useful to clients (and little else.)

A Matter of Trust

Whether dealing with clients, colleagues or associates, the success of working relationships depends crucially on how much trust exists. Yet levels of trust are often surprisingly low in all of these contexts.

Trust Among Partners

In spite of firms' efforts to promote cross-boundary co-operation, many partners do not trust their colleagues in other departments, and they avoid bringing them into their client relationships. As (short-term) merit-based compensation systems have spread, and as firms have grown through mergers and lateral hires, partners in different departments or offices know each other only marginally and are less inclined to do favours for, or work well with, each other. They don't trust each other to "do the right thing."

There is less sharing going on, more hoarding of work and clients and less willingness to do things for the general well-being of the client or the firm. Partners are afraid to abandon their own self-interest in order to do things for the benefit of the firm as a whole because they do not trust that others will do the same.

Firm management is frequently mistrusted by partners. For example, partnerships frequently discuss the benefits of investing in various non-billable activities for the long-run health of the firm. Yet implementation is usually poor to non-existent.

Again and again I hear partners say that while they see the wisdom of these activities, they do not trust the firm's management or compensation committee to treat them appropriately if they engage in such activities.

"They say they want us to do these things, but the rewards continue to flow in the same old directions. We don't believe what they say, only what they do."

Practice group leaders often choose to retain their full book of business (that is, serving clients) rather than spending some of their time coaching and helping other people in the practice group succeed.

When asked why they do this, one of the most common replies is, "But if I reduce my personal practice in order to have the time to manage, how will I re-enter the practice when my time as leader finishes? I don't trust my partners to help me rebuild my practice or to protect my income when I go through the rebuilding phase."

If practice group leaders distrust their partners, the feeling is often reciprocated. When considering whether they would accept a coaching system whereby one partner would be responsible for the success of the group and spend more time managing, the feelings of many partners are captured by the individual who said, "I'll accept coaching from someone I trust, but that's not every one of my partners. In fact, it's a very limited set. For many of my partners, I'll never believe that they are acting predominantly in the interests of the practice group as a whole, rather than for their own interests."

The cost of such lack of trust is high. It leads to diminished teamwork, ineffective management and under-investment in those activities that benefit the firm. Clearly, a highly trusting society would accomplish more, both for the firm and the individuals within it.

Trust Among Junior Professionals

The level of trust among junior professionals is also desperately low. In many firms, juniors used to believe that if they worked hard the firm would make sincere efforts to train them and help them develop. They believed that the firm cared about them and wanted them to succeed. Few juniors now trust partners to do this, and they think (accurately, in many cases) that the firm views them as fungible production machines.

Typical are comments such as these:

"It wouldn't take a huge effort to get the most out of us, but they treat us so badly [that] you just give up. I'd be prepared to make a bigger effort, but I can't see what it would get me. It's all take and no give. They regularly preach about their commitment to our development, but it's all lies."

"It truly is sink or swim here. There's no feedback, no training, minimal supervision and no help in building your career. Partners care about themselves and their income, with the client's interests a distant second. We don't even get on the list. They visibly don't care about us, so you can imagine how much we trust them."

Sadly, these quotes are not rare exceptions, but the norm in many professions. Many firms are aware of these attitudes, but few have done much to address the situations described. Apparently, the fact that their juniors almost uniformly distrust them is a situation that many otherwise excellent firms accept.

Does all this matter? It certainly does. A lack of trust creates problems in retention and turnover, and (since the word spreads quickly) it also affects recruiting. Low trust breeds lessened motivation and commitment, and this leads to lower productivity, efficiency and quality.

Notice that it does not necessarily lead to less production because the brute force of targeted billable hours can ensure compliance with the quota of sausages to be made. While short-term profits can be protected by micro-managing the amount of production, it is efficiency and quality that ensure long-term success.

Trust and Clients

The need for trust in dealings with clients should be obvious. Consider your own purchases of professional services. Whether you are hiring someone to look after your legal affairs, your taxes, your child or your Porsche, the act of retaining a professional requires you to put your affairs in someone else's hands. You are forced into an act of faith, and you can only hope that they will deal with you appropriately. You can research their background, check their technical skills and attempt to examine their past performance. In spite of all this, when it comes down to making the final decision on whom to hire you must ultimately decide to trust someone with your baby -- which is never a comfortable thing to have to do.

What you and I (and all clients) want when retaining a professional is someone who will put the client's interests ahead of their own. We want someone who will care. We want someone we can trust to do the right thing by us. Getting hired is about earning and deserving that trust.

Yet signs that trust is declining among clients are everywhere. With ever-increasing frequency, clients conduct a microscopic examination of their professional provider's bills, challenging expenses, questioning how projects were staffed and how much time various tasks required. They force even long-term suppliers to compete for new work through beauty contests and other proposal activities, and they mandate increasingly detailed reporting from their firms so that they can monitor what is going on.

What a change this represents! There was a time when clients trusted professionals automatically, based solely on their honourable calling. Sound character and reputation were assumed, and business was conducted with confidence on a handshake. Great firms and institutions were born out of the natural expectation of trust.

That world has gone, but the need for trust has not gone away. What has taken its place is the necessity to earn it (and re-earn it) throughout a professional's career.

How to Win Trust

If trust is so important, how does one go about winning it? How do you get somebody to trust you? It is clear that this is not accomplished by asserting, "Trust me!" Nothing is more likely to get the listener to put up his or her defences!

The key point is that trust must be earned and deserved. You must do something for the other person to give them the evidence on which they can base their decision to choose to trust you. You must be willing to give in order to get.

A perfect illustration was given when I had to find a lawyer to process a relative's will. The first few lawyers I talked to tried to win my business by telling me about when their firm was founded, how many offices they had and how much they would charge me. None of this inspired much confidence. Finally I encountered a lawyer who, during my initial phone call, asked how much I knew about what was involved in processing a will.

My reply was, "Nothing!" He then suggested that he would fax to me a comprehensive outline of the steps involved: what I needed to do immediately and what I should forget about for a while because it was not urgent. The fax also provided the phone numbers of all the governmental bodies I needed to notify, even though this had nothing to do with his legal work (or fees).

All of this (immensely helpful) information was provided freely, before I had retained him. Naturally, he got my business. He had earned my trust by being generous with his knowledge and proving that he was willing to earn my confidence.

Trust can be earned by the simplest of gestures. I have a dentist who frequently recommends that I permit him to perform various procedures on my teeth. Like many buyers, I'm never sure whether he is recommending additional procedures because I really need them or because he is just trying to increase his revenues (through cross-selling).

However, my view of him has been significantly affected by the fact that after every office visit he always calls me at home that evening to inquire whether I am in pain, whether I need a prescription and so on. I will confess to being very impressed by this. He is acting as if he cares. I don't know if he really does care or not (I do prefer real caring) but in a world where finding someone you can trust is becoming harder and harder, I'll even accept "as if" he cares. I usually accept his recommendations for additional work.

For me to trust you requires that I believe you will do what you say you will do -- that your actions will match your words. This is a simple-sounding notion, but as noted above, partners often do not believe it of firm management, clients often do not believe it of partners and associates long ago gave up believing it of partners and firms.

How do you make employees think that you can be trusted? A perfect illustration is given by the professional who, together with his team, conducted an assignment for a client that wasn't as good as it should have been (and everyone on the team knew it). It was competent rather than excellent. Rather than deliver the work to the client, the professional turned to his team and said: "Look, you'll all make mistakes in the future and so will I. But let's not send out something that is less than we are capable of. I'll absorb the losses on this project, but let's work on it until it really meets our standards."

Is this some kind of crazy, un-businesslike behaviour? Not at all. This single act energised the whole team and made them believe that this professional stood by his principles (his frequently espoused commitment to quality). Thereafter, they trusted him. They knew what principles he believed in, and they knew he would stick by his principles. He put his money where his mouth was.

He was more than repaid in the ensuing years by the profits generated through the juniors' energy, commitment and dedication to the quality for which he stood.

This simple story teaches some important lessons. People will trust you, be they client, colleague or employee, to the extent that they know what your principles (or deeply held values) are, and to the extent that they know you can be relied on to act in accordance with your principles. If people don't know what your values are, or worse, suspect that you have none beyond your own short-term self-interest, they will not trust you with their business, their loyalty or their co-operation.

Trust is about relationships. I will trust you if I believe that you're in this for the long haul, that you're not just trying to maximise your own short-term benefits of our interactions. Trust is about reciprocity: You help me and I'll help you. But I need to know that I can rely on you to do your part and that our relationship is built on shared values and principles.

Alas, values and principles are scarce in today's world, and the consequent decline of trust is all too visible. That this should be so is truly a paradox, since the more you are trusted by your clients, colleagues and subordinates, the more you will get from them and the more you will thrive professionally and personally.

How much are you trusted by those you deal with?

The Courage to Manage

In my experience, the single biggest barrier to implementing strategy is courage. What makes superstar managers so impressive is not what they are doing but the fact that they are doing it all.

Many people (and firms) lack the guts to stick with the plans and goals they have set for themselves. They lack the courage of their own convictions.

I first learned how hard it was to stick to one's own strategy some time ago, when I set for myself the goal of trying to become a strategic advisor to international professional firms. Shortly thereafter a firm asked me to accept a project conducting sales and marketing training courses for their people.

The assignment was very attractive: a large volume of familiar, comfortable, enjoyable work that would provide a significant portion of my revenue target for the year. However, it was obvious that spending most of my year doing sales-skills training would do nothing to help me achieve my strategic goal. Rather than becoming a strategic advisor, I would, by the end of that year, be a sales trainer.

Neither you nor I can build a reputation for being one thing if we visibly spend our time in the market doing something else.

Taking the easy path (accepting the sales job and postponing my efforts to develop my career) would not have been immoral, but it would have meant that I would not have obtained the benefits of my declared strategy. In fact, if I kept making the choice the same way every time, I would never get around to my strategy.

Obviously, resisting the expedient path is hard. You have to really bet on yourself and believe in your own vision. You have to have the courage of your own convictions.

Believing in the benefits of your aspirational goals is one thing; living by the diets that are necessary to achieve those goals is another.

So which did I want? Easy cash or an ambitious strategy that would require hard work to create? Did I want a comfortable, well-paid year or one where I had to accept the burden of generating an equivalent number of days of "real" work that would move me toward my strategic goal as well as generate income?

I decided to stick with my strategy and pass on the "easy money" opportunity. I arranged for a friend to look after my client and worked hard (and successfully) to bring in the kind of work that was "on strategy."

Situations like these are not unusual. In fact, they are inevitable. All strategies, at sometime or the other, involve a trade-off between short-term cash (doing what's expedient) and executing the strategy (living the vision of excellence you have set for yourself.) If you're going to pursue a strategy, you must be willing to make hard choices and act as if you truly believe in your own strategy.

In short, executing a strategy takes courage. You must be willing to practice what you preach, when it is convenient and (most important) when it is not.

Most firms do a good job of figuring out what needs to be done to improve their own success. Drawers and shelves are stuffed with clever plans, strategies and action items that, if implemented, would significantly improve the firm's success. However, the hard part of strategy is not coming up with clever ideas. Rather, the difficult part is finding the discipline, the will and the determination to act as if you were serious when you outlined your strategy.

Business life is filled with daily temptations, short-term expediencies and wonderful excuses why we can't afford to execute our strategy today. Accordingly, that new article never gets written, work is delegated only when it must be (not when it can be), the junior staff remains only "adequately" supervised and the marketing principle is "We never met a dollar of revenue we didn't like!"

There is absolutely nothing wrong about making this choice, but you must not fool yourself. If you are willing to sacrifice a few degrees of quality to earn more cash, you will not create the market reputation for superior quality that you say you seek. It takes courage to believe that a reputation for excellence is worth more in the long run than incremental current cash. In their vision, mission and strategy documents, firms say that they are aiming for excellence, but that's not how they operate.

In describing this trade-off in one firm, a person asked, "Are you really saying we should turn down new business?" "Only if you don't have the capacity to do it to high standards," I replied. "But does anyone ever do that?" she inquired.

"Only the most profitable firms," I replied. "We wouldn't have the courage to do that," she said. "Precisely," I replied, "You don't actually have the courage to believe your own mission, vision and strategy." "Oh, I do," she said, "but I don't believe that our firm management does."

There lies the real difference between the average firm and the super-achieving businesses reported in Jim Collins' Good to Great (Harper Business, 2001).

In the book, hard evidence revealed that successful companies, firms and individuals don't preach standards that are different from those preached by others; they just live those standards.

And the reason they do is not found in clever business systems but in the strength of the convictions of the individual managers who run those offices.

In many firms, people do not believe that their leaders truly want them to act strategically. Whenever there is a choice to be made between strategy and short-term cash (and there always is), most people feel under significant (if not irresistible) pressure from management to go for the cash.

They believe that the message from firm leadership is clear: strategy can wait for tomorrow. Rather than firm leadership being a source of encouragement to stay the course and pull off the strategy, it is all too often the biggest obstacle to the implementation of strategy. The courage to bet on the articulated strategy, even when it is management's own strategy, is almost entirely lacking.

The principle of courage is not meant to be an inspirational point but simple logic. You reap the benefits of what you actually do, not what you hope to get around to doing some day if it is convenient and you're not too busy. If you want to be known as excellent at something then you have to be reliably, consistently excellent at that thing.

One could argue that you don't have to be "slavish" about your strategy. For example, couldn't you occasionally take in too much work, as long as overall you were excellent?

This is a tempting argument, but in the real world it fails for two reasons. First, once you start forgiving yourself a little ("just this once") it is remarkable how easy it is to find reasons to forgive yourself for being expedient the next time (and the next, and the next...). Before you know it, your standards are no longer standards but are just aspirations.

Second, the harsh reality of market-places is that it is very hard to develop a reputation for excellence for something that you do "most of the time." Even if you depart from excellence only a few times, you quickly become known as inconsistent or unreliable. If you can't be depended upon, few buyers will single you out as special.

Many people believe that you can rely on reward systems to encourage the implementation of strategy. This is rarely true. Take, for example, the strategy of excellence in managing people, an approach to doing business that is ardently preached in most firms and is rarely enforced.

"Well, we pay attention to it; it's one of our key strategies," one of my clients said. "We reward those people who do it well." "And what do you do to those people who don't do it well?" I asked. "We just don't reward them," he replied.

"In other words, you allow them to carry on as before?" I commented. "Well, yes," he said. "In other words, they don't have to do it, if they don't want to?" I queried. "I suppose not," he said. "Then how many do it?" I asked. "A few," he admitted. "So you're not achieving firmwide excellence in this area?" I concluded. "Not really, I suppose," he said.

The lesson is clear. To make something happen, it's not enough to reward those who choose to participate. You must tackle those who do not. As long as it's optional (even if rewarded), it isn't going to be done at the level at which the commercial benefits will kick in. "Are you really saying that I need to speak with all those who aren't doing it?" he asked. "Only if you want the benefits of your declared strategy," I replied.

"I'm not suggesting that you play boss, cop, Attila the Hun or dictator. Go remind them of why you chose that strategy. Help them. Encourage them. Give them some tools to make it easier. Set targets for small improvements that will at least get them on the virtuous path. But whatever you do, don't ignore them or leave them alone. It's not a standard in your firm if there are no consequences for noncompliance."

"But it would take an enormous amount of emotional energy to do all that," he said. "Welcome to the wonderful world of managing," I said.

Managerial Courage

Many managers believe that they add their greatest value when they ensure that a strategy (or vision or mission or direction) is developed. However, this is patently false. The greatest value of a leader is in ensuring that the strategy is implemented. This is revealed by the very origin of the word "manage," which derives from Old French and, literally translated, means "the holder of horses." The manager's key role is to ensure that all the horses are moving in the agreed-upon direction at approximately the same pace.

Over the years, I have been trusted to see the strategic plans of many direct competitors. Remarkably, they are almost always identical. Everyone figures out correctly which client sectors are growing; which services are in rising demand; and which dimensions of competition (client service, innovation, etc.) the clients are looking for. The strategy documents are the same not because people are being dumb but for precisely the opposite reason: everyone's smart! Everyone knows what needs to be done.

If this is so, then what is competition really all about? In my experience, it is about who can best get done the (obvious) things that need to get done. And this, in turn, is determined by the following set of closely related concepts:

• Energy
• Drive
• Enthusiasm
• Excitement
• Passion
• Ambition

Where these exist, the discipline can be found to engage in diligent execution and thereby outperform the competition.

The role of the manager, then, is to be a net creator of enthusiasm, excitement, passion and ambition. Any manager who can create these things will launch the "service-profit chain" that Heskett (et al.) wrote about so convincingly in the book of that name.

Alas, all too often, managers are net destroyers of excitement. If all they ever talk about is finances ("How are your billings, what's happening to receivables?"), it can be deadening to the spirit. Which doesn't mean they don't need to talk about these things. They do. However, they must not talk only about these things. Financial discipline is the bedrock of business success. It is not all of it.

It is the manager's job not only to manage financials but to inspire, cajole, exhort, nag, support, critique, praise, encourage, confront and comfort as individual people (and groups of people) struggle to live their work lives according to this new structure, the strategy.

Of all the qualities required of managers, the most essential is courage -- the courage to actually manage and enforce the standards that are preached.

Managers must have the courage to maintain a long-term focus, the courage of the convictions they espouse and the courage to intervene personally whenever there are departures from the values and vision that create excellence.

The single biggest problem in the implementation of strategies is the absence of consequences for non-compliance. If the manager doesn't have the courage to tackle the individual who is not behaving in accordance with the strategy, then all the other people will quickly realise that the new strategy is not something you have to do. They will quickly cease striving to comply. And thus the benefits of the strategy will never be attained.

The single question remains: "What is the manager going to do about non-compliance?" Hundreds, if not thousands, of eyes are watching closely to see if the announced strategies are real or are discretionary.

What is often underestimated is that the problem of the non-conforming person is not his or her own nonparticipation in the strategy but the adverse effect that he or she has on the motivation of others to participate in the new initiatives.

Afraid to intervene, many managers wait until the problems become serious -- until they have to deal with them. It is, after all, emotionally easier to deal with problems only when you must. This is, however, insufficient. Managing is not about dealing with problems once they have become unavoidable. Rather, managing is about uncovering issues and dealing with them before they become problems.

To make a new strategy work, the manager needs to demonstrate visibly that he or she is prepared to be intolerant about departures from the strategy.

The earlier you deal with problems, the easier it is to tackle them and the more options you have. The most obvious "consequence for non-compliance" should be an informal, unscheduled, private office visit from the manager. "Mary, it's come to my attention that you're not participating in the team meetings that we agreed to have. Is this accurate? Is there a problem? Is there something I can help you with?" (As always in managing, the best strategy is to describe the situation and ask for an explanation first.)

If the person is reluctant to go along, it is possible to ask for help: "Fred, I know this isn't something that you enjoy or that someone with your skills needs, but I really want to help and encourage others in this area, and your participation would carry enormous weight. Would you do it as a favor for me?"

Having these conversations is never easy and takes significant interpersonal skill, particularly when the problem is not yet a serious one. But that's what managing is! While skill is involved, courage is even more essential.

More managers have the skill to conduct these conversations than have the courage to actually engage in them. The manager is never adding as much value as when he or she is influencing individuals to adhere to agreed-upon actions. Managing is less about figuring what should happen than it is about actually making it happen.

It should be clear that the more the word gets out that non-compliance will result in an office visit from the manager, the less often the manager will need to make those visits. People will stay in compliance just to keep you out of their offices!

A successful manager must not only have the courage to manage; he or she must also have the ability to instill courage in others. The central problem in most firms is that things are "pretty good so far." Few firms are hurting badly. And, as the old saying goes, the good is the enemy of the best. Why bother stretching for excellence when things are (at least) acceptable as they are. Do I really want to suffer the rigours of a new diet in order to achieve the (uncertain) benefits of a new goal? Or, in summary, do we really have to do this?

It is often said that only two things motivate people: fear and greed. The best managers make use of a third motivating force, the glamorous dream. They are able to convince their colleagues that life could indeed be significantly better, that greater accomplishment is possible and that, yes, they can do it.

Great managers give their people the confidence that, individually and collectively, great(er) success, fulfillment, accomplishment and profits are, indeed, attainable. They give their team members the courage to try.

Change is threatening, and many if not most people operate well within their comfort zone. They are understandably reluctant to abandon the old habits that brought them to their current success. If managers are often demanding, they must also be supportive. They must manage with a style that sends the signal, "Come on, you can do it; I will help you!"

While the first part of this ("Come on") is common enough, the second two, personal encouragement and personal support, are often absent in the styles of many managers. Again, it is necessary to note that doing this kind of one-on-one management (the only form of management worthy of the name) takes not only skill but also the courage to actually do it.

Just as management involves a delicate balance between being supportive and being demanding, it also requires a style of insistent patience: patience that "Rome doesn't get built in a day" and insistence that "We are building Rome."

To find the courage to keep trying to attain new levels of performance, people must believe in their heart of hearts that the manager actually does believe what he or she says about the firm’s standards, mission, vision and strategies.

People must believe that the manager has the courage to believe in something and, more important, the guts to stick with it. There is no greater condemnation of a manager than to say that he or she is expedient, and no greater commendation than to say that he or she truly lives and acts in accordance with what he or she preaches.