Friday, October 17, 2008

Loyalty to Whom?

Another reader question:

A partner of a large firm specialising in training and development asks how to make sure that the clients develop loyalty to the firm, as opposed to the individual trainer?

When the firm gets a contract to train managers of a company X, the firm assigns a trainer (who is, most commonly, an independent contractor) to the company. If the company likes the results of the training, they would most likely invite the same training firm again and again, most commonly asking for the same trainer. Over time, the relationship between the trainer and the client company flourishes to the degree that the company starts offering training assignments directly to the trainer, without even notifying the firm.

How can the training company protect itself from such an unfortunate turn of events? I realise that there are some "half-baked" solutions like, for instance, try not to send the same trainers to the same company, but there should be something else.

***

There are two dimensions along which this can be examined. There is a triangle formed by the individual consultant (or trainer), the client and the consulting (or training) firm. The question makes clear the strength of the link between the individual and the client. But what strengthens the link between (a) the client and the firm and (b) the individual and the firm?

In both cases, we are asking how the firm "adds value" above and beyond the talents of the individual service provider. Some possibilities:

  1. On-going enhancement of the consulting / training product or service
  2. Access for both the individual consultant and the client to proprietary tools owned by the firm
  3. Access for both the individual consultant and the client to research conducted by the firm
  4. Access for both the individual consultant and the client firm to regular "solons", discussion groups, seminars and other learning opportunities, so that there is Value in belonging to the network.

Does anyone else have other ideas?

9 comments:

Anonymous said...

As someone who works both with my own clients and as an associate for larger consultancies, I think the key thing here is developing a relationship with each party (trainer and client) that is based on trust and honesty.

The ideas you have Richard about developing value for each party should certainly aid that.

I think it is also critical to be upfront about this at the start of the relationship.

The consultancies I work through have contracts with clauses about not "poaching" clients.

I particularly like though, the culture of one of these consultancies which is "come and talk to us if you think there might be an issue".

And they even provide suggested ways to handle the client if the issue arises.

It might also be that should such a conflict arise, some negotiation around a one-off transfer fee, or similar could be agreed.

If as a consultancy you treat me well, help me feel part of the organisation, help me out if I have an issue and give me opportunities to learn from you, then I will feel loyal to you.

If on the other hand you treat me as expendable, don't help to ensure that I get paid, hardly ever contact me other than around specific work, etc., then I might not feel so inclined to fulfill my side of the bargain.

Hope that helps.

Alison

Anonymous said...

Good question -- intriguing.

I used to think of this as the barber shop problem (perhaps I should expand to hairdresser)

If you have a favourite barber and you go to the shop, are you willing to wait for him rather than going to the next open chair?

The analogy soon breaks down, but you get the idea.

Sometimes driven by commissions and utilisation rates, etc., a consultant may knowingly put themselves before their employer (their team).

On the other hand with an appropriate "team" commission structure, etc., a consultant (in this case a trainer) can bring his/ her team in -- even when they're not involved in the current engagement.

For example,

"I developed this part of the training with help of one of my colleagues, Jane Doe, who's really a whiz in this domain. Jane says ...."

This sets Jane Doe up as (1) a high value or equal value "replacement" for a future engagement and/ or (2) as a specialist who can come in for specialised follow-on work.

On the other hand, if the customer only want a specific barber then they'll likely wait until he or she is available.

Anonymous said...

Perhaps a different way to look at this is in terms of who is managing the customer relationship.

The consultant in this type of transaction adds value by working with the client to identify the problem(s) to be solved, determining whether the solution is training and, if so, designing the training solution with the client and sourcing the appropriate 1099 trainer to deliver it.

By sourcing the training provider, the consultant assures the client that the right individual is selected for delivery and maintains responsibility for quality assurance.

The consultant adds value to the trainer by doing the marketing and sales portion of the assignment -- the trainer thereby minimises his/ her role in marketing and sales (expense) and maximises delivery (revenue).

The consultant then moves to a customer management role to make sure delivery is as expected and the client is happy with the result, then maintains ongoing contact so future sales can be realized.

The consultant also provides billing and collection services on behalf of the trainer which relieves the trainer of this administrative chore and keeps the consultant at the centre of the transaction.

Anonymous said...

What value is the firm adding (apart from what you've mentioned)?

Here are some thoughts:

Brand -- a promise (by the firm) of a certain, consistent client experience.

[How often that actually happens is a separate matter and is probably a reason why the "firm" often isn't that valuable].

Scale -- the ability to roll out the consistent client experience with an alternative person when the current client-contact is too busy to do the job well, or the job is too big.

Anonymous said...

The most sure fire way to protect the relationship is to expand.

That could take the form of more services, more geographies or more capacity.

If you can find additional services or peak load work that requires more than one person, you turn any form of training relationship from liability to asset.

Should the client be too small to present an opportunity to expand, by definition you have limited downside.

Anonymous said...

Hmmm ...

I really have to challenge the assumption by your reader that there is a problem here, or at least that he's got the right problem.

His problem statement is:

the company starts offering training assignments directly to the trainer, without even notifying the firm. How can the training company protect itself from such an unfortunate turn of events?

Unfortunate?

Protect?

Hold on a minute.

Think about Carl's barber shop analogy.

Any great barber shop -- or hairdresser -- should be delighted to have barbers who form great relationships.

And as long as the barber/ hairdresser is getting value added from the organisation, everyone benefits.

The barbers and hairdressers not doing so well get the chance of learning first-hand by example from someone who's good at it.

The knee-jerk attempt to depersonalise consultative services, I find, is to some extent like trying to legislate love.

Trust is (and this is directly from The Trusted Advisor) primarily a personal, not an institutional phenomenon.

Richard's relationship metaphors over the years have rung true because of this basic insight.

Embrace it, don't reject it.

Notice that relationships are personal -- benefit from it, don't fight it.

In fact, let me step out further on the limb.

The kinds of specific values mentioned by Duncan and Joel above are quite right, and interestingly don't require much mention by the firm.

Those firm benefits make their value felt quietly.

But Joel and Duncan's (very right) answers, I'm afraid, may not satisfy the original question as put to Richard.

My (purely un-databased) assumption is that the original question was also grounded in some sort of fear that the individual trainer is benefitting disproportionately from the client (relative to the firm); in fact, that the trainer's behaviour may in some way be harming the firm.

That kind of thinking very quickly leads to non-compete clauses, and other forms of more contractual relationships between trainer/ consultant and the firm.

Such clauses are nothing more than an attempt to legal-ise a relationship.

And legal-ising a relationship is, again, like legislating love.

The act of legislation tends to diminish the love; the act of signing non-compete agreements tends to reduce trust, and -- ironically -- increase the thought of competing in the mind of the employee.

There is a real mindset issue here.

Is the employer/ employee relationship built on trust and mutual benefit?

Or is it built on competitive distrust, and zero-sum mentality?

In my experience, firms that worry about the fact that their consultants' client relationships are "too good" are firms that are sowing their own seeds of destruction by their negative assumptions.

They need to encourage the personal relationships, continue to add value in ways like Duncan and Joel point out, and learn from the successful people they have hired.

Unfortunate turn of events?

Not the way I see it.

Anonymous said...

Charlie -- great points, as always.

I totally agree with you that it is not an unfortunate turn in events at all for clients to build strong relationships with the professional.

(I was answering Richard's question, not the one asked by his reader).

The (rare) firms that realise this and enhance the ability for these relationships to grow will flourish.

In the context of that, though -- how does the firm make itself valuable?

Perhaps we should add "relationship enhancer" to the role of the firm.

Imagine a situation in which both the client and the professional want to keep the firm in the triangle because it is so good at enhancing their relationship.

Anonymous said...

After all, training firms are professional service firms, aren't they?

What do professional service firms do to gain the loyalty and commitment from their high potentials and high achievers (and if you directly attract direct business from a client, chances are that you belong to one of them)?

They offer them a chance to become partner.

But partnership opportunities are missing in most training organisations, and that's why this kind of loyalty problem is typical of training organisations more than law firms or consulting firms.

Most of the training organisations I know are based on a freelance business model, and that's what them vulnerable.

If you are a talented, ambitious, alpha individual, your vision of your professional accomplishment is certainly larger than delivering training sessions on a freelance basis for the rest of your life.

But if the training organisation you are affiliated with does not offer you any other career prospect, the only way to achieve your legitimate ambitions is to start developing your own business, which means developing client relationships for your own benefit.

This is why most freelance trainers eventually start their own practice and will keep doing so.

So, what's needed is a credible and consistent career path leading to partnership for those who deserve it.

If you want to gain the loyalty of your trainers, transform your firm into a place where their entrepreneurship flair and business development skills are actively supported and is rewarded beyond what their wildest expectations as solo training practitioners.

Anonymous said...

Great ideas and very practical.