Our Performance team is regularly called in by clients to help in situations where the leaders of professional and financial service firms are looking to grow firmwide income. These conversations can go many ways ranging from strategic change and improving market and client relevance to specific operational improvements but the common factor is generally one of comparative performance. How can we stimulate growth ahead of our peers to be as competitive as possible?
Every one of these conversations is unique to the firm in hand but inevitably the question of what is good growth comes up. For some it will be defined by whether the income is ‘on strategy’, for others it will be simply a question of whether the margin for the work meets the business forecast. Answering these questions is rarely straightforward but we have found that analysing and interpreting market reported data in novel ways and applying our team’s insights from experience can pay dividends. This approach plays back the story of how a firm has achieved its results to date and often presents leadership teams with a view of their decision-making that they were not completely aware of.
The data behind the story
The data we use is frequently drawn from an amalgam of public sources plus information provided by the client firm. We present the resulting pragmatic analysis against the backdrop of relevant comparator firms on a national or international basis, or by drilling down into specific practice markets, plus offer suggestions as to where the firm might want to go next. We typically have these conversations with leadership teams at times when the direction and growth trajectory of the firm is the priority topic.
This data-led approach works well when trends are looked at over many years as it smooths out anomalies and also highlights factors that were seemingly beyond the control of leadership teams, such as the Covid-19 pandemic, and show how the firm responded to these events.
Examples of data comparisons and the lenses we apply between firms and years include:
- Looking at the growth in revenue against the growth in Profit per Equity Partner (PEP) between firms and year-on-year to pinpoint what might have acted as an accelerator or brake for performance
- Considering how changes to the equity structures across the market have impacted outcomes and yielded results. The increasing trend to slow down partner admission to equity is one that comes across in the data story and needs to be factored in to any comparisons based on PEP
- Noting strategic moves by firms to move into more profitable markets or to simply expand geographically irrespective of the impact on margins
- Understanding how the demographic changes in the talent pool for different markets influences performance. This is particularly evident in markets that rely on the availability of experienced professionals vs. those whose services are more standardised or process-driven
Improving results
Our client work on growing the top line can lead to many outcomes. Some recent examples include:
- Changing the approach to the overall client portfolio by ‘cutting off the tail’ of low revenue, high service cost work associated with many small jobs and focusing on higher value clients and matters.
- Reworking the strategy of the firm to focus on specific practices and geographies at the expense of others
- Aligning the partnership towards the commercial behaviours that lead to sustainable growth
- Educating fee earners and business services teams in the topics of efficient client relationship development and improved pricing disciplines
- Changing the people strategy to prioritise recruitment, retention, and development of those more suited to building business over those with only technical prowess
If you would like to find out more about how we help firms to grow and see your firm’s data story as we see it, please contact Clint or Derek.
Authors
Clint Evans
Clint focuses on strategic and operational change for organisations and transition coaching for individuals and leadership teams. He specialises in change driven from improving the value of intellectual assets including strategy, vision, values, culture, leadership, talent, business portfolio, and organisational design.
Derek Klyhn
Derek specialises in the areas of strategy, profit enhancement, business development and strategic marketing. He has developed several innovative interventions that help partners and leaders of professional services firms be more effective in achieving their goals.
Author