The importance of management in Effective client-adviser relationships 2012 In conjunction with: Robert Sawhney Regional Director MPF HK.

The importance of management inEffective client-adviser relationships 2012

In conjunction with:

Robert SawhneyRegional Director

MPF HK

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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

An overview of the 2012 StudyOnline poll and in-depth interviews with senior clients and advisers

569 Online Responses

14 In-depth Interviews

Road-show Presentation Written Report

Respondents45% from UK26% from North America18% from Asia Pac3% elsewhere

Sectors• Accountancy• Law• Property• Consulting

In conjunction with:

& Campaign Micro-site

64% management and fee earners at advisory firms36% owners and senior /mid level execs at client businesses

(16%) were CEOs or chairman

Key Research Question: what makes for effective client-advisor relationships? Compare

answers of advisors with clients

87% of advisers say they will need to develop a more commercial skill-set in addition to their technical competencies.

Advisers acknowledge the need to become more commercial Clients increasingly looking for more than technical expertise

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Choosing a law firm in Asia (Source: Asian Legal Business, In House Survey, 2008)

Clients want advisers to get under the skin of their businessFinancial 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%

7. New product launches 16%

“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

87% say they need to develop a more commercial skill-setYet 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?

Accountancy Legal

Property Consulting

Only 15% of clients rate management’s contribution as excellent

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 serviceBut clients perceive management is not performing

Linking employee reward to personal and team contribu-tion

Building the firm's brand, reputation and mystique

Shaping internal attitudes towards clients

Ensuring transparency of fee structures

Investing in technology and systems

Formal measurement of fee earner performance and client satisfaction

Defining the firm's specialist and sector focus

0% 10% 20% 30% 40% 50% 60% 70% 80%

16%

28%

41%

41%

44%

47%

69%

21%

50%

53%

44%

18%

24%

65%

Managing Partners / Senior Partners

Client CEOs/Chairman/MD/President

23%

% rating as ‘excellent’ against this criteria

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?

15%

9%

12%

15%

9%

18%

6%

32%

32%

14%

12%

21%

19%

Managing Partners Client CEOs

Priority actions Where and how can management provide the most support?

Plot your firm’s relative management prowess and your personal performance in the eyes of your clients and employees.

Pay attention to client CEOs and review the agenda for your conversations with them.

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.

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.

Ensure that your people keep their promises to clients and to each other.

Leadership and competitiveness is dead! – the wrong context

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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

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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

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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 performance4. Client satisfaction is a top priority at our firm5. We listen well to what the client has to say6. We keep clients informed on issues affecting their business7. We have a strong culture, if you don't fit in, you wont make it here8. This is a very demanding place to work9. I can generally decide for myself the best way to get work done10. People here enjoy interacting with clients, we’re not just interested in the

work we do for them11. People within our office always treat others with respect12. Management shows by their actions that staff training is important

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Moving in this direction? (Source: RSG Consulting)

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.

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Causes of failure and poor performance

• From: Why Smart Executives Fail (2003), Sydney Finkelstein (Tuck Business School)

1. Executive mind set failure2. Protective mechanisms and delusional attitudes3. Informational breakdowns

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Hence leadership and mind set is the first link in the profitability equation!

• Values• Management

Leadership• Financial• Non financial

Performance

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Maisters Model

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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

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.

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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)

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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

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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

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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 satisfactionFormal market research

Customer information systemsBenchmarking

Improve product and service qualityCross functional teams and internal knowledge sharingAdopt new technology and respond to market needs

Empower peopleManage alliances and partnerships

Market oriented pricing

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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

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?

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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)

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Cont’d

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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 e-

mail alerts and retrieval

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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

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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)

The Final Competitiveness Framework

• Values• Management

Leadership

• Learning• Strategy • Client Value• Innovation

Knowledge and market

orientation

• Financial• Non financial

Performance

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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

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Thank You!

• If you want copies of the any of the reports or research cited here, please don’t hesitate to contact me:

• [email protected], www.srchk.com• Blog: www.marketingasia.typepad.com• Twitter: http://twitter.com/robertsawhney • My books:

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