THE CHALLENGE

The environment for professional services firms is changing faster than ever.

Clients' demands and expectations are changing, as are those of partners and staff. To win, firms need to deliver on these expectations while at the same time providing the sustainable returns on equity to attract and retain partners. 

THE OPPORTUNITY

The firms that take decisive action will generate disproportionate rewards.

Far from the industry commentators’ narrative of impending doom, this change presents real opportunities for the firm that can make explicit strategic choices and follow through on them. 

Amadeus Professional helps firms to make — and articulate — these strategic decisions, and align their culture, people, client and operating processes to that strategy.

THE TASK

The right strategy is not enough - leaders need to inspire behavioural change.

Professional service firms are generally risk averse - making bold moves and moving quickly will challenge partners.

Amadeus Professional helps firms through this change process - our commitment is to impact, and this means supporting leaders to bring the firm on the journey to deliver on the strategy. 

An integral part of the value we bring to clients is in helping them to clearly define the issues they are facing and determine how the firm’s leadership can achieve its goals. It is rare that on an engagement we would work together on a single defined “service” — however, common elements across engagements include:

Strategy is about choices. The market is forcing firms to be far more disciplined about making and following through on these choices – it is no longer sustainable to be “good enough” at a broad range of services, or to allow partners to find their own paths organically.

Amadeus Professional can help you to make informed decisions about your strategic path through a tailored process suited to your current position and strengths. This includes a rigorous, fact-based review of the internal and external strategic context and evaluating the options available.

The strategy development process is a “co-creative” one – it will need to be delivered by the partners, so the need to build ownership through the process is critical. We are highly experienced in this stakeholder engagement process, running partner interviews, consultation workshops and focus groups as required.

This process can often involve scenario planning - this process allows the firm to build broader understanding of the challenges it is facing and develop the agility to move between strategic responses. Amadeus Professional has run bespoke scenario planning sessions for firms, ranging from short workshops with the Board, to broad exercises involving multiple teams in a process that develops partner talent.

A key part of a successful firm strategy is in developing the clear narrative and measures of success. This can be challenging – and sometimes confronting. We have great experience in crafting the story with leadership to engage and inspire the firm, while ensuring that it does not shy away from the tough choices that strategy involves.

Case Study

We worked with a leading Australian firm, performing a rigorous analysis of performance and return on equity that gave new insights, and correlated that with partner and client feedback about market strengths. In parallel we conducted a two month scenario planning exercise where teams of partners, coached by leading external business people, developed future scenarios and potential strategies under each. This was consolidated at a Board workshop that identified several immediate investments regardless of the scenario, a refocusing of investment around market leading strengths, and a new market facing model that would allow rapid response to market opportunities in their sectors of focus.

A natural consequence of the way we work is that we often become a trusted advisor to the Managing Partner and/or Chair. It is a privilege to have such a relationship, and it is built on the values and deep care for the firm’s success that we demonstrate through our work. 

On occasion we provide this support on a standalone basis, playing a light-touch advisory role “behind the scenes”. This is often in the context of providing an independent thought-partner to a leader going through a strategic review process, helping to develop, challenge and articulate their thinking.

This leadership support can extend to a broader “Board advisor” role – often following a Board workshop we will support the Board at future meetings where strategic issues are discussed, challenging and ensuring the right questions are asked to facilitate robust governance and decision making.

Case study

We worked with the leadership of a leading Australian law firm that had several potential suitors, together with viable stand-alone strategic options and its own merger targets. We assisted the Board to develop a decision-making framework to evaluate and prioritise the options and went on to perform the initial assessment. This formed the basis for longer term support to leadership and participation at Board meetings as they reached a conclusion.

There is little that causes greater angst in a firm than the partner remuneration system. There are many reasons for this, most commonly a lack of trust between the partners and “management” over the implementation. However, this focus on the remuneration system misses the broader issue.

The task of leadership is to build a sustainable cohort of partners that will successfully deliver on the firm’s strategy. Remuneration is one part of this, but the broader system includes the partner admission, lateral hiring, exit and retirement process, the setting of a partner’s goals, the decision on what will be measured in assessing performance, the budget and target setting process that will determine remuneration expectations, the assessment process itself, and only then the remuneration system. Most critical of all is the implementation of the assessment process – this is where trust will be built.

Amadeus Professional has extensive experience in designing partner performance management approaches that are tailored to the firm’s strategy, desired culture, and the nature of “performance”. This includes performing a series of case studies on systems from firms around the world. The key insight from this exercise was that the nuances of partner performance system are not something that can be benchmarked or adopted wholesale from another firm. Our philosophy is that the system should be as simple as possible, with just a few influential structural elements specific to your firm, and tightly linked to your strategy.

This is one area in particular where consultation with the partnership at multiple stages is critical, and we have a number of engagement techniques to gather input. Often this will reveal underlying beliefs in the partnership that must be tackled or incorporated if the new model is to be a success.

Case study

As part of a strategic review of large multi-disciplinary firm, it became apparent that although financial performance had been strong, market share had not grown. In fact, the underlying health of the firm was not strong – partners were left to pursue their own goals, and there were no incentives for performance. We helped the firm to establish a very simple framework for setting partner goals and reconciling those at the team level to ensure that together they would achieve the strategic plan. The assessment process was revised to incorporate sign off from the practice and sector leaders, ensuring that both elements were genuinely incorporated into the partners rating. The remuneration system itself was left largely intact with several important changes of emphasis, e.g., an underperformance penalty at each band became an in-year performance upside.

For most professional services firms, their culture is their strategy and their only real differentiator. A few individuals in the market may have distinctive expertise, some firms may have very specific IP that cannot be replicated, but the interaction between a firm’s people will determine how well they are able to win and deliver work, and how willing the client is to engage them.

Culture is simply “the way we do things around here” – it arises out of what has worked for the firm in the past. The task of leaders is to ensure that the culture evolves to work for the firm in the future, and aligns to the strategic direction they have chosen. With care and sustained effort, culture can be changed. The complexity in professional services firms is that this requires changing the behaviour of successful people, often with little incentive to make such changes.

Amadeus Professional has extensive experience in designing cultural transformation programs for firms. We tackle this complexity by integrating behavioural change aspects into every element of the strategy, ensuring that the overall implementation plan covers the fundamental narrative – “why should I change?”, provides people with the capability to change, ensures that the formal processes, incentives and environment support the desired change, and assist leaders to role model the new behaviours.

Case study

A large multi-disciplinary firm had realised that their strong performance over the previous 5 years had disguised an underlying “health” issue. Maintaining market share in a rising market had delivered strong incomes, but allowed partners to construct an internal narrative around their individual ability to win and deliver work, and that top line growth was the measure of success. The CEO anticipated headwinds, and we assisted him to put in place a holistic set of measures to drive four key behaviours around focus, collaboration, client centricity and performance. This involved new capabilities around client development, processes around budgeting and target setting, a new goal setting process and remuneration model, high profile signalling actions from the CEO, and leadership development to help partners shift some of their deep-seated mindsets.

Strategy in professional services firms is executed by the partners and staff. For the strategy to have impact, it needs to be translated into meaningful strategic action plans that people will commit to, properly allocate resources, and in toto deliver on the overall strategic aims.

This generally requires a collaborative strategic planning exercise that iterates the firm, group/division, industry/sector and individual plans. This ensures that each plan does not rely on the same few partners, and that individuals have a reference to set their goals for performance management. It will also highlight resource/capability gaps that may need to be filled, or require an adjustment to the strategic choices. We have run multiple strategic planning exercises to assist firms in this process, providing support in the process design, as facilitator, or coach to the group leaders.

Where the strategy involves inorganic growth, we also have extensive experience in transaction support at each stage of the process, from developing assessment criteria, conducting market scans, performing strategic due diligence and negotiation advice/support to leadership. Beyond the transaction itself, we have also assisted with post-merger integration – particularly the combined structure, processes, people engagement and cultural integration planning.

A firm’s structure can have a significant impact on its ability to generate revenue – both in terms of proper direction of client facing partners, and the opportunity cost of partner time spent in management roles. Minimising the partner time investment while also effectively driving performance is a delicate balancing act.

Amadeus Professional has deep experience in helping firms to effectively structure around the four dimensions of practice, sector, geography and client, reducing the complexity that commonly builds up. This often includes reducing the number of “titles”, while creating incentives and forums for the necessary collaboration to take place without a formal structure. At the same time, it may also involve reducing the power that a dominant dimension has over resources (usually practice or office).

We are able to tackle this complexity using a variety of data driven tools, including network mapping to find key influencers regardless of structure and blockers to collaboration. We also undertake reviews of the key decisions that are required in the organisation, role descriptions and committees.

This work also extends to reviewing the governance structure of firms including the Board and Leadership team. We generally focus on ensuring that there is a robust and unbiased decision-making process. What this looks like in different firms will vary based on the strategy and culture of the firm. We do not assess individuals in leadership roles or provide recruitment services as we believe this would compromise our ability to effectively perform our role.

The economics of most firms are relatively simple – there is only one primary source of revenue, and  only a few significant costs. However, there are a myriad of ways in which “leakage” can occur. While there is a lot of merit in a mechanical exercise benchmarking the different stages at which value is lost, this often hints at underlying issues without revealing the root cause behaviours underlying them, or the way to address those issues.

Amadeus Professional is able to work with you to interpret the data in the context of your particular firm’s strategy and prioritise the interventions that will have the biggest impact on your bottom line. This may involve straightforward financial discipline, or back office cost reduction, but there will often be a behavioural element or process issue to be tackled.

Case study

Leverage in one area of a client was significantly higher than benchmarks or other areas of the firm, but profitability was lower. When challenged this was usually explained as the result of client secondments. When this was adjusted for, utilisation was much lower than expected, yet everyone seemed busy. The underlying issue was one of effective performance management. Several long-term underperformers had been left with no work – or support to win work – and no-one had clear responsibility to deal with this issue. When the impact of this became clear and genuine developmental conversations were held, two of those individuals were much happier to move on, and one turned their performance around and was made partner within two years.