Tag Archives: The difference leadership makes to performance

Billable hours, the not so Holy Grail of professional service firms

When monthly billable hours are up everyone is happy, especially the partners. Managers and staff who are billable high performers are the ones that get ahead; they are the firm’s high potentials. Over many years and in several countries we have seen this across numerous firms. When this focus on billable hours becomes dominant we have also seen the following problems that have resulted in poor financial performance and even the demise of a firm.

  1. Who does the work? Partners, and senior associates, in order to meet their own billable hours targets, are doing work that is below them, they are doing work that should be performed by more junior staff. This is detrimental to staff development and even more crucially firm profitability.
  2. Short term client focus.       There is more concern for next month’s billable hours than next years. This can lead to customer relationships being more transactional and transient in nature, in todays more competitive landscape this is a flashing red light for many firms.
  3. Siloed mentality. Partners and managers have little practical or intellectual concern for the firm as a whole instead focussing solely on their own division. In this case the firm exists only to provide some administrative economies of scale for its divisions that then operate as independent business units.

There is no dispute that billable hours are important, however billable hours will only ever be a lag measure. The most successful firms are the ones that focus on next years clients and how best to meet their needs. There are two keys actions they take to do this.

Talent and succession management. They develop and promote partners who can think strategically, work collaboratively and inspire their key stakeholder to achieve great things together. One firm we have worked with to achieve this went from being a top 20 English firm to a top five global firm over a 10 year period.

Client focus. They develop a real value for clients and all things relating to client needs in the immediate to mid and long term. Managers and staff are empowered to make decisions that benefit their clients. Client’s needs are anticipated so solutions thinking is pro rather than reactive.

In todays environment firms that focus on having the best client focused leadership will succeed ahead of their competitors. Firms in the mid tier that are large enough to have critical mass but smaller enough to be flexible are in the best position to do this. All too often it is also these mid tier firms that are most likely to fall into the short term billable hours trap.

By Simon Tedstone

Director – Leading Change Consulting

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Narcissism and confidence, it can be a fine line

The more narcissistic a CEO the more likely it is their organisation’s share price will lag behind their competitors.  This was the finding of the Macquarie School of Management after reviewing 18 months performance through to March 2013 (reported in last weeks Australian Financial Review).

These finding surprised some who feel that, particularly in more challenging environments, a leader who has a strong ego is essential to success.  When the interviewer Andrew Denton asked the former Australian Prime Minister Bob Hawke “How important is it to have a healthy ego? Hawke responded “Well look if you haven’t got confidence in yourself how in the hell can you expect other people to have confidence in you?”  Hawke makes a very good point but the key to understanding this is when does confidence become arrogance and then narcissism.  The answer lies in the leaders motivation, is it all for themselves or is it for overall success?

Narcissistic leaders have a common focus with leaders who are at the other end of the scale, i.e. those who are afraid.  The number one priority for both is a concern for how they will be perceived by others (see table below).  It is this personal priority that will derail their impact on organisational performance.  They will do things for the wrong reasons and they will not be trusted by others; two key issues that will hamstring their ability to add value.  While it is easy to weed out leaders who are afraid it is more challenging to identify the narcissists, particularly in business scenarios that require strong and confident leadership.

Frame of Mind

Afraid

Confident

Narcissistic

Main area of concern

Themselves

The organisation and others

Themselves

Score

1

5

10

A confident leader will not be afraid of taking a stance for the wider good, they will seek the input of others, they will be happy to explain themselves and when they do get it wrong, they will have the confidence to admit so.  The old adage that a good leader will talk about themselves when addressing poor performance and the collective when referring to successes is always a good indicator.

By Simon Tedstone

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A tale of two firms

Take two, well established, financially secure firms with aspirations for growth.  The Managing Directors of each firm realises their own leadership ability, and that of their fellow Directors, is critical to success.  Their first need is to understand what leadership capability is required, the second need is to understand the level of current ability and the final need is to close the gap between the two.  To do this they both draw on the expertise of Simon Tedstone, Managing Director at Leading Change, specialists’ in organisational leadership. 

Simon develops a leadership model for each firm and assesses the current performance of all Directors against this model.  Confidential development feedback is provided to each director and the results for each director group is collated to identify collective strengths and weaknesses.  Both sets of Directors are strong strategically and inspirationally, both sets of Directors are also poor at collaboration and communication.  Here the similarities end.

Firm A grasps the information and commit to closing their leadership gap.  Individual Directors focus on leadership development that relates to their unique needs and challenges.  The firm as a whole works with Simon to develop a succession management and high potential program based on the current and potential leadership of its Senior Associates and Managers.  Firm A not only closes their leadership gap but they also put in place actions to keep it closed.

Firm B cannot agree among the Director group the importance of this information and its ramifications.  Instead they prefer to blame the poor results on one another.  There they stop.  There is no development of Director’s leadership capability, let alone identifying and developing the firm’s future leaders. 

Fast forward 10 years.  Firm A has gone from being a significant local player to a global player many times its original size.  Firm B is a fraction its original size and has fallen into obscurity. 

Sadly for Firm B, this tale is in fact a true story.

What is evident from this example is that all firms operate in a dynamic environment that requires change and evolution; those that adapt better than others will be more successful.  Change and evolution requires decisions and actions i.e. it requires leadership.  An organisation’s leadership is therefore its greatest predictor of future performance. 

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