The importance of management in
Effective client-adviser relationships 2012
Robert Sawhney
Regional Director
MPF HK
In conjunction with:
Objectives for today
• Very lofty – test your assumptions
about what leads to superior
performance and change your mind
set (mental models) forever!
• Explain the nature of effective client
adviser relationships and what you
must do to achieve them
2
An overview of the 2012 Study
Online poll and in-depth interviews with senior clients and advisers
64% management and fee earners at advisory firms
36% owners and senior /mid level execs at client businesses
(16%) were CEOs or chairman
569 Online
Responses
&
14 In-depth
Interviews
Road-show
Presentation
In conjunction with:
Respondents
45% from UK
26% from North America
18% from Asia Pac
3% elsewhere
Sectors
• Accountancy
• Law
• Property
• Consulting
Key Research Question: what makes for
effective client-advisor relationships?
Compare answers of advisors with clients
Written
Report
Campaign
Micro-site
Advisers acknowledge the need to become more commercial
Clients increasingly looking for more than technical expertise
87% of advisers say they
will need to develop a
more commercial skill-set
in addition to their
technical competencies.
Choosing a law firm in Asia (Source: Asian Legal Business,
In House Survey, 2008)
5
Clients want advisers to get under the skin of their business
Financial statements and deals are not enough
Which of the following do you think it is essential for professional advisers
to know about your organisation in order to deliver successful advice?
1. Business strategy / business plan 75%
2. Industry sector issues and trends 67%
3. Key client personnel / senior management
55%
4. Financial statements 45%
5. Recent deals – e.g. M&A, JVs 32%
6. Information about client competitors 29%
“The most important thing for me is
to develop a long-term relationship
with an adviser who understands
my business well, so that when I
need something doing I don’t have
to explain everything from the
beginning again. They should
understand the context of what I’m
doing, understand our history,
understand my style of doing
business, and understand me as a
person.”
- Managing Director, IT Company
7.
New product launches 16%
87% say they need to develop a more commercial skill-set
Yet only 18% of advisers are remunerated based on commerciality
Does your organisation provide you with training in any of the following areas? / Is competence in any of the following areas explicitly part of your formal appraisal process?
Is competence in any of the following areas explicitly linked to your remuneration?
Only 15% of clients rate management’s contribution as excellent
Accountancy
Legal
Property
Consulting
Client: excellent
Adviser: excellent
In general how would you rate the service you receive from your main adviser / provide your clients against the following criteria?
Management’s primary role is to embed consistent client service
But clients perceive management is not performing
% rating as ‘excellent’ against this criteria
Managing Partners
Client CEOs
65%
Defining the firm's specialist and sector focus
69%
Formal measurement of fee earner
performance and client satisfaction
12%
9%
44%
14%
15%
44%
23%
15%
32%
12%
21%
18%
19%
6%
47%
18%
Ensuring transparency of fee structures
41%
53%
Shaping internal attitudes towards clients
41%
Building the firm's brand, reputation and
mystique
50%
28%
Linking employee reward to personal and team
contribution
Client CEOs/Chairman/MD/President
9%
24%
Investing in technology and systems
Managing Partners / Senior Partners
32%
21%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Which of the following three aspects of management would you see as being the most important to the client-adviser relationship?
How would you rate the contribution of management at your main adviser to the client experience?
Priority actions
Where and how can management provide the most support?
Align your management, investment, training, appraisal and reward priorities with those
favoured by clients.
Encourage your fee earners to look over the horizon and to ask their clients about their business
plans, culture and politics.
Enhance internal sharing of knowledge about sector trends and client appointments.
Ensure that your people keep their promises to clients and to each other.
Improve external sharing of your firm’s composite know-how on best practice, your available
services to clients, and your sector expertise through ‘thought leadership’.
Invest in tools and frameworks for increased fee earner efficiency, and in resources that
diagnose and improve the performance of the management team.
Pay attention to client CEOs and review the agenda for your conversations with them.
Plot your firm’s relative management prowess and your personal performance in the eyes of
your clients and employees.
Leadership and competitiveness is dead! – the
wrong context
11
The right context!
• What do clients want??
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Client focus.
Commitment to help by suggesting strategies and demonstrating interest.
Understanding the client’s business.
Providing value
Responsiveness and pro-activeness
Advise on business issues.
Unprompted Communication
Keeping clients informed.
Show skill in expertise, experience and outcomes.
Quality work, show attention to detail.
Ability to deal with unexpected changes.
Handling problems quickly and effectively.
Meeting client-imposed scope of work and deadlines.
Anticipating client needs..
Firms and professionals which are empathetic, reliable, and flexible
12
What stops this?
• Hourly billing that does not recognize value and creates conflict of interest
between client and firm
• Focus on billable time, leverage, and utilization
• Professionals trained in technical skills but not in management
• Professionals with high IQ but perhaps lacking in EQ
• Firm structure that inhibits cross functional sharing of information
• Senior partners with high resistance to alternative ways of working
• Fixation on practice areas as opposed to client problems
• Focus on cross selling without understanding client needs
• Lack of understanding of the true drivers of competitiveness through
people and the ability to leverage intellectual capital
13
Separate these into 2 lists (6 each side)
1.
We have an uncompromising determination to achieve excellence in
everything we do
2. We have a real commitment to high levels of client service, and tolerate
nothing else
3. We set and enforce very high standards for performance
4. Client satisfaction is a top priority at our firm
5. We listen well to what the client has to say
6. We keep clients informed on issues affecting their business
7. We have a strong culture, if you don't fit in, you wont make it here
8. This is a very demanding place to work
9. I can generally decide for myself the best way to get work done
10. People here enjoy interacting with clients, we’re not just interested in
the work we do for them
11. People within our office always treat others with respect
12. Management shows by their actions that staff training is important
14
Moving in this direction? (Source: RSG Consulting)
15
So??
• If all this is correct, how do we move a firm and its
management in the right direction to achieve what clients
want and be able to respond to market changes in the future?
• It tends to be more holistic than most firms think and involves
the key disciplines which most PSFs think of as support
functions which have little impact on firm performance.
16
Causes of failure and poor performance
• From: Why Smart Executives Fail (2003), Sydney Finkelstein
(Tuck Business School)
1. Executive mind set failure
2. Protective mechanisms and delusional attitudes
3. Informational breakdowns
17
Hence leadership and mind set is the first link in the
profitability equation!
Leadership
• Values
• Management
Performance
• Financial
• Non financial
18
Maisters Model
19
The next links in profitability
• Productivity and profitability (AmLaw 100)
Profit
Productivity
Source: Nanda, A
(2004) Profitability
drivers in
professional
service firms, HBS
case 9-904-064
20
4 ways to increase productivity
• 1. Raise rates, provided that raising rates does not result in
loss of work.
• 2. Work harder on production, provided that work is available
and more work does not come at the expense of lowered
rates.
• 3. Work harder on client development, building strong client
relationships that will generate high quality work.
• 4. Reduce professional staffing, if not enough high-quality
work can be generated and delivered.
21
So what other factors do shape success?
Answer: it’s the cultural orientation of the firm
– but not how you think
• These are (and they explain up to 70% of the variance
between firm performance)
• Knowledge orientation and learning
• Marketing (a market orientation)
22
Marketing!!!
Did you know: Marketing has the most significant impact on firm
performance???...but not the way you think!
• Marketing is a business philosophy that puts creating and
delivering customer value at the heart of all that an
organization does
• It is an organization culture that acquires and disseminates
information-cross functionally and across hierarchies, and acts
upon that information
• This sharing and information coordination tolerates no
functional silos
• Strategy, marketing, leadership, and knowledge - interlinked
23
Bed rock of firm performance-a market orientation
Client value, satisfaction and firm
performance
Market based strategy and strategy
implementation (based around value
factors)
Client orientation
Competitor
orientation
Inter-functional
coordination
24
Multiple Cases-high vs low performing PSFs on MO
practices (Business Horizons, 53, pp371, 2010)
• Significantly greater numbers of high performing firms
have/do:
Measure client satisfaction
Formal market research
Customer information systems
Benchmarking
Improve product and service quality
Cross functional teams and internal knowledge sharing
Adopt new technology and respond to market needs
Empower people
Manage alliances and partnerships
Market oriented pricing
25
The Ultimate Strategy
• If you are going to be able to understand the needs of clients
and deliver those needs in a way demanded by clients that
effectively leverages the intellectual capital of your firm, you
need to build a marketing culture
• A culture that builds a market driven firm which is client
focused and knowledge based
• Such a firm is both culture and process driven which does not
rely on the ‘rainmaking’ abilities of a select few
• It means that marketing capability becomes embedded within
the firm and is a firm wide effort
26
A learning and knowledge orientation
• Do you question the assumptions, beliefs, practices and ways
of operating in your firm on a continual basis?
• Do you question what clients value in terms of what you think
they need and what they really need?
• Do you have sufficient ‘slack’ within your firm and at what
level is knowledge integrated?
27
Quick case (Source: Knowledge Pays; evidence from a law
firm, J of KM, Vol 13, No 1, 2009)
• Study of the one of the three largest law firms in the world
• One KM staff to every 10 lawyers compared to industry norm
of 1:25
• Firm operates in the form of practice groups to allow for
specialization focused on certain industries/markets (matrix
structure)
28
Cont’d
29
Quick case – Allen & Overy (Source: Headshift, 2010)
• Based on business needs analysis, firm drew on 4 social
software components (E2.0) integrated within the firms IT
systems:
• Group-based weblog publishing and discussions
• Wiki-based collaboration and co-production
• Easy social bookmarking, tagging and retrieval of useful
information
• RSS-based information alerts and updates, combined with email alerts and retrieval
30
Cont’d
• Grew to more than 50 active groups (1200 users) in a range of
professional areas. Some groups also opened up to senior counsel
and knowledge leads in the firm's key clients.
• Lasting benefits included more efficient work practices and greater
business intelligence derived from the following:
• Increased self-service and people's awareness of the information
and expertise available to them
• Timely delivery of relevant information
• Improved "findability" of information
• Making content more dynamic and easier to update
• Increased contextual information exchange and easier identification
of expertise
• Capture of conversational knowledge in blogs and wikis, helping to
make tacit knowledge explicit
31
From a training focus to a learning focus (Source: An
empirical study of the strategic implementation of organizational
learning. Zai D and Duserick F, Alfred University)
32
The Final Competitiveness Framework
Leadership
• Values
• Management
Knowledge
and market
orientation
• Learning
• Strategy
• Client Value
• Innovation
Performance
• Financial
• Non financial
33
The Model of Change
Mind Set
• Value is everyone’s job
• Articulate the new meaning of value and how marketing,
strategy, leadership, and knowledge interact
Build
Structure
• Identify and develop the collaborative relationships and skills
that will be needed in this new culture and how working
processes are best structured
Practice What
You Preach
• The new ‘rules’ must be lived and breathed by everyone
involved
• Senior partners must be on board and committed
34
Thank You!
• If you want copies of the any of the reports or research cited
here, please don’t hesitate to contact me:
• bob@srchk.com, www.srchk.com
• Blog: www.marketingasia.typepad.com
• Twitter: http://twitter.com/robertsawhney
• My books:
35