New Challenges in Leading Professional Services

Professional service firms are being challenged as never before—by clients, associates, and the competition, just for starters. But old-style PSF leaders are not equipped to respond, says Harvard Business School professor Thomas J. DeLong. He discusses his new book When Professionals Have to Lead. Plus: Book excerpt. Key concepts include:
  • Today's leaders of professional service firms are being overwhelmed by demanding clients, human capital challenges, lack of organizing strategies, and perhaps most of all, unrealistic expectations of the task itself.
  • There is also on ongoing trend to focus on the development of only the highfliers and ignore a vast number of very competent professionals who are the heart and soul of the firm.
  • The integrated leadership model is built on 4 specific dimensions: setting direction, gaining commitment to the direction, executing on the direction, and setting a personal example.
by Sean Silverthorne

Professional service firms—law firms, financial services firms, money management firms, private equity firms, hedge funds, management consultants, advertising agencies—are the most challenging and exciting organizations to lead, maintain the authors of a new book, When Professionals Have to Lead: A New Model for High Performance

But lately the challenges for professional service firms (PSFs) have been growing in size and complexity, and the excitement is more the type you need a stomach antacid to control.

The dilemma, says HBS professor Thomas J. DeLong, is that the entire PSF landscape is in upheaval. Associates are harder to recruit and keep; competition for clients is increasing from boutiques below and global firms above; the clients themselves are more demanding; and management time is focused on short-term issues rather than long-term strategy.

As DeLong puts it, "In the past, the work of PSFs was a gentleman's game—and now it's blood sport."

Adding to the problem is the fact that many current leaders are overwhelmed trying to balance their dual roles of producer and manager. What's needed, DeLong and coauthors HBS professor emeritus John J. Gabarro and Robert J. Lees argue, is a new approach to leading PSFs.

The book's "integrated leadership model" is built on 4 management activities: setting direction, gaining commitment to the direction, execution, and setting a personal example.

We asked DeLong to discuss their research for the book and the current state of professional service firms.

Sean Silverthorne: Why is a new definition of leadership needed in professional services? What has changed?

Thomas J. DeLong: Professionals in professional service firms are reporting greater frustration, unmet needs, lack of shared purpose, poor morale, etc.

PSFs promise one thing [to clients] and deliver another; clients are asking for more for less. The firms are becoming more global and more complex to lead. The professionals entering these organizations have higher expectations and more suspicion that leaders will treat them like cogs in the wheel.

So leaders in PSFs have been calling for a new way of thinking about leadership in their organizations.

Q: What differentiates leadership requirements in professional services from leadership in other professions?

A: PSFs are flatter organizations, can be highly leveraged, and attract very smart professionals with a very high need for achievement. Few want to make a career of working in the firm. These variables are different from regular organizations.

The economic model is different as well. And the service expectations are different in a total client-driven atmosphere.

Most important, professionals attracted to these firms want to practice their expertise, not necessarily to become managers and deal with human challenges. They have different goals and motives.

Q: What is the integrated leadership model you have developed, and how is it different from the traditional "bifurcated" model?

A: The new model (Editor's note: see book excerpt below) was developed by getting under the skin of these organizations and observing, collecting, and then responding with what emerged through our research. It is the combination of the 4 parts of the model that make it work.

Also, in the past, few leaders in PSFs took the time to gain commitment to the direction of the firm—they only talked about vision and then executed on it.

Q: You note that senior partners have often preferred to respond to challenges and opportunities as they arose, rather than plan for them. Why is strategic thinking more important today?

A: The competition is greater, clients are informed enough to be dangerous, and they ask for more for less.

In the past, the work of PSFs was a gentleman's game—and now it's blood sport. You cannot wait for clients to knock on your door. Now you must go and sell the business. And most firms are competing for the same kind of clients: large, complex, and global.

Q: You spend a lot of time in the book discussing high achievers, but also underscore the importance of "B" players in the success of any organization. How should PSF leadership be thinking of their B players?

A: These solid citizens are invaluable and underappreciated. Because they don't demand attention they often go unnoticed. The highfliers soak up all the sun. When leaders only have a finite amount of time they often focus just on the top professionals.

Leaders need to reach out in small ways and acknowledge the contribution of the largest portion of their workforce. Solid citizens don't demand much but the return will be enormous in terms of renewed commitment, output, and overall firm performance.