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Article | Executive Pay Memo North America

Professional services: reimagining organizational models and values

By Paul Platten , Kenneth Kuk , Chris Hamilton and John M. Bremen | June 3, 2020

In the age of COVID-19, leading professional services companies will challenge the status quo regarding business organization and decision making.
Executive Compensation
Risque de pandémie

The need for businesses to operate more quickly is not a novel concept. A wealth of research before the COVID-19 pandemic has highlighted the importance of speed-to-market enabled by modern technology. For instance, in his world-renowned book The Lean Startup, Eric Ries introduced the Build-Measure-Learn loop that emphasizes speed as a key ingredient to customer development. Before the pandemic, these speed-to-market principles were mostly adopted in a product environment. But in the new normal, all will be different in professional services as well. To succeed in this new normal, professional services companies will need a more responsive organizational model.

The need to operate quickly and nimbly

As firms struggle to stay relevant and at the forefront of new and emerging issues such as right-shoring, artificial intelligence adoption and new product development under a cost-constraint landscape, we suspect that centralized programs of knowledge management, research, marketing, client relationship management and innovation will be mostly reactive and too slow to keep up with the speed of changes.

The pandemic is forcing professional services organizations to evaluate and rebuild work processes from the ground up, eliminating inefficiencies and emphasizing speed to market. This will be especially true at the beginning of the recovery as new consumer and business habits take shape.

Companies will need timely information to make good investment decisions about client direction and their response to clients’ strategic shifts and new products and services. The traditional feedback loop from the field to senior decision makers and back to the field on product and service development is simply too slow.

This may call for a new wave of “delayering,” where decision makers set out criteria up front and make intelligent investment, operational and strategic decisions through processing unfiltered information directly from clients. For example, what we are currently seeing in vaccine development, where cycles have been compressed, regulations streamlined and risks associated with moving to human trials mitigated quickly is a good example of the new environment.

Creating a responsive organizational model

To effectively develop an efficient business model, companies should consider the following:

  • A flatter structure and breakdown of hierarchical barriers can facilitate communication and provide unfiltered information, market trends and intelligence to senior policymakers.
  • A fluid and mobile environment with new talent can bring differing perspectives to existing problems through more adept talent rotation across roles.
  • Risk-taking enablement is crucial so that the organization doesn’t penalize calculated failures that facilitate learning. The key here is to ensure that risk is shared collectively by the organization or a team rather than borne solely by an individual. A healthy company culture is supported by a well-designed system that balances the risks and rewards for the individual, team and organization.
  • Additionally, this risk taking may involve making uncertain talent decisions as the profile for the successful client manager and consultant in the new world may be very different from what we are used to.

  • Decentralized decision making will be key to operating effectively. Those closest to the action often will be in the best position to identify the latest trends and try out new advice and solutions for clients. There will not be time to vet every decision, test every idea and receive approval as the speed of change accelerates.
  • Digital and technology enhancements will drive client interactions with online and virtual selling, meetings/webcasts, brainstorming (via virtual whiteboards and virtual breakout rooms), interviewing and final reporting. Companies would be well served to design a prototype virtual client engagement — from initial contact to project management to final report completion — with flawless technology and process steps.

A well-choreographed team process, working in sync remotely and with technology, will help bring a professional and polished look to the firm, as well as improve profitability through reduced missteps and rework. These concepts have been referred to in the management literature for decades as socio-technical systems. In fact, this is a prime example of how professional services companies could adopt a Build-Measure-Learn loop as they explore the path toward perfection.

What will it take to support the new organizational model and behaviors?

Different talent with an ability to understand new technology, thrive in virtual work, manage remote teams, make real-time decisions and pivot quickly to identify and solve client needs will be required to thrive and succeed in this new organizational model. Being effective in a more fluid, flatter, risk-tolerant organization will be key to gathering timely information and translating it into client needs.

Temporary assignments and rotating leadership positions may be the order of the day, with reward systems designed to allow for fluidity among roles and talent movement to best take advantage of an organization’s human capital. We believe that professional firms with the following attributes are best positioned to thrive:

  • A clearly articulated set of values and purpose: The values that organizations adopt with respect to decentralization, mobility, risk taking and problem solving need to be translated into the individual firm’s language, promoted and widely communicated so that everyone understands the challenges and direction. This then becomes part of the talent value proposition, which is critical in a professional services environment.
  • A healthy company mindset and culture: A culture that is driven by the company purpose and characterized by agility, tolerance for risk taking, innovation, safety (physical and psychological), wellbeing, dignity and inclusion is needed to support growth and high performance.
  • A reward system that promotes risk taking, flexibility and mobility, and that highlights the organizational values and purpose: Direct communication, proposing new solutions and having new voices at the decision-making table will be key to making sure the firm has the flexibility and decision-making muscle to be successful. Nothing is more compelling than a Total Rewards portfolio that embodies what an organization stands for.
  • New talent management systems to identify those who demonstrate the skills and competencies needed to thrive in a more unstructured and spontaneous environment: This also means the need for a comprehensive talent development framework that helps existing talent succeed in the new reality.
  • New management styles: The current crop of managers may have been successful in prior organizational structures where predictability, repetitive projects, technically-driven solutions, and command and control management styles were the prevailing models that worked in a steady and unchanging world. But new global operating realities require a more confident and decentralized style that requires a different set of skills. This new adaptive style should be made explicit, and those who can thrive within it should be identified, elevated and recognized.

An exciting future for companies that truly embrace change

Change is always exciting for the professional services industry, and to say that our world is changing rapidly would be an understatement. Over the past few months, we have published a few articles on how professional services firms should think about talent (“Professional services: Talent in the age of COVID-19,” Executive Pay Memo, April 21, 2020) and creating a vision for the future ("Professional services: Prospering in the new normal," Executive Pay Memo, May 14, 2020). In this follow-up and final piece of the series, we hope that our imagination of the future will inspire new thinking in the organization and management of professional services firms.

Authors


Managing Director, Work & Rewards (Boston)
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Senior Director, Work and Rewards
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Senior Director, Executive Compensation and Rewards Practice Market Leader (Washington, D.C.)
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Managing Director and Chief Innovation & Acceleration Officer
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