The tasks of leadership

Leadership in professional firms really matters.  In a long career tracking the performance of professional practices, I have repeatedly seen great leaders improve the performance of previously mediocre practices.  And I have occasionally seen weak leaders damage the performance of previously high performing practices.  Having the right leaders perform the right tasks really matters.

Leaders in professional firms have many tasks.  As soon as someone has been elected to the position of managing partner, there is a queue of requests for meetings from people inside the organisation.   These meetings aim to convince the new boss to make some particular issue their focus.  “Please prioritise diversity”.  “Please prioritise communicating our values”. “Please prioritise work-life balance”.  “Please prioritise reducing our carbon footprint”… and so the list of meetings and requested tasks goes on.

This problem will be familiar to managing partners.  And their practiced response is to say a warm yes to most things.  There is no need to offend people and each of the requested items is typically important and valuable.  Indeed, no professional firm could afford to say no to diversity, values, work-life balance, addressing climate change and many other things.  But are they the most important task of the leader?

The good news is that each of these requested tasks is deliverable in some way.  By delegating and communicating, the boss can make each of the requested tasks happen.  Progress may not be everything their internal sponsors want, but progress can be made by direction and monitoring.  The boss can tell people what to do (or, more typically, agree to their requests for resources to do things).  The monitoring and review may not always thorough, but many of these tasks will be done and some progress will be made.  But is the bosses’ job just to make these things happen?

Most managing partners know that their most difficult task is to deliver growing profits to partners in the face of a competitive market.  This task may not be openly discussed, but managing partners know that failing to deliver it will see them voted out of office.  Perhaps more important to them personally, they will lose the respect of their fellow partners if they cannot deliver financial performance.  But this is often the hardest task to deliver.  No amount of exhortation or direction will deliver higher profits.  Indeed, the boss who focuses too obviously on growing profits may be dismissed as “managing by spreadsheet” or “not being strategic”.

I like to think of the managing partner’s tasks in two parts, the other leadership tasks and the hardest task.

The Hardest Task

Delivering higher profits in a competitive market requires most parts of the firm to be delivering above average performance.  This needs co-operation and collaboration.  And it needs motivated partners across the business.  But you cannot tell partners to be motivated.  Indeed, it is a paradox of the professional world that the more you seek to manage and control partners, the more they feel micro-managed.  And being micro-managed tends to de-motivate partners and reduce accountability.  If you are telling me what to do, then any failure to perform must be your fault.  And partners typically hate being told what to do.  They hate being told how to do it even more.

We have known for a long time that what drives motivation is mastery, autonomy and purpose (explored in detail in Daniel H. Pink’s Drive: The Surprising Truth about What Motivates Us.)  It is worth considering each of these in turn.

Mastery is all about having partners who are experts in their field.  This is the essence of a great professional and almost every firm invests in knowledge and training.  This is relatively easy to deliver and is a minimum standard to be expected in any firm.  And mastery feels good for partners.  It is great to be at the top of your game.

Purpose is less common.  A sense of purpose is increasingly recognised as a vital part of success in the commercial world.  Younger professionals increasingly want to work somewhere that provides meaning beyond earning.  And clients typically respond well to a firm with a clear commitment to a particular purpose. Ranjay Gulati’s book The Heart and Soul of High-Performance Companies explores this well.

Autonomy is the paradox.  Providing partners with autonomy can be counter-intuitive for management.  When faced with a challenging market, the instinctive reaction of most bosses is to control more.  The urge to increase control is an understandable response to stressful times.  By reporting and controlling more variables, and doing so more frequently, the boss may feel able to control the financial outcomes.

But more control means less autonomy.  Less autonomy means less motivated partners, which quickly translates to reduced motivation.  Poor financial performance soon follows.  So how do you provide autonomy and yet maintain control?  And can you do so while instilling a sense of purpose in the firm?

Just Letting Go?

Will results really improve if you control less and provide more autonomy to your partners?  I think the answer is nuanced.  Simply letting go altogether (and focusing just on the other leadership tasks) will produce better financial results than over-controlling your practices and partners.  In other words, doing nothing is better than actively damaging your firm’s financial performance.

But there is an even better answer.  There are some leadership tasks which will enable high performance while avoiding micro-management.  This involves working on the firm’s culture.

The Culture Solution

Most people in business have heard the phrase “culture eats strategy for breakfast”.  And I certainly understand the point.  But culture, like strategy, is an ill-defined concept and this phrase doesn’t tell you what to do as a leader.

Indeed, a great culture with a poor strategy is not a good solution.  It is also true that a great strategy and a poor culture will not get you very far.  You really want the right strategy and the right culture.  I won’t dwell on strategy in this article, but there is value in unpacking what strategy really is and articulating a good strategy. For a good summary of what makes a good strategy, see Richard Rumelt, Good Strategy, Bad Strategy.  His subsequent book, The Crux, defines a process for producing a good strategy. For our current purposes, culture is the key.

I think the best definition of culture in a business context comes from Clayton Christensen in his book titled How Will You Measure Your Life.  Christensen describes culture as a combination of priorities and processes.  Priorities means “what is important around here” and processes means “how things get done around here”.  Your clients will see your culture every day in the way they are treated by the firm and the way their matters and projects get done.  Everything from pitching to invoicing is a reflection of the priorities the firm has and the processes it uses.

The leader can direct the culture directly by deciding what is important and by deciding “how things get done around here”.  The leader needs to create a culture that expects high performance and that prioritises client service.

The key tasks for the leader include setting very clear priorities for the firm.  The leader should articulate the purpose of the firm, including which markets, services and sectors the firm will prioritise.  Defining the firm’s purpose means explaining why the firm exists.  Without this clarity the firm’s partners will pursue countless opportunities and the firm will drift and lose focus.

It is also important for the leader to articulate the profitability expectations of the firm.  Given the clients and market the firm serves, there is a level of profitability necessary to operate successfully.  All firms compete in two markets: firstly, the market for partners and staff and secondly the more obvious market to win clients and work.  If you cannot earn sufficient returns to retain the right people, you will not succeed in satisfying the clients you seek to serve.

In this sense profit for the professional firm is more like a constraint than an objective.  Much like breathing, a certain level of profit is necessary.  But, to quote Peter Drucker “if you think the purpose of life is breathing, you are missing something”. This is where the articulation of a wider purpose provides a sense of meaning to your people and your clients.

Having articulated the purpose of the firm and its profitability requirements, the managing partner should then leave space for each practice leader to define what their part of the business will contribute.  Each practice leader should be given the time and space to articulate what their practice will focus on and how it will deliver the required level of profitability.

After a reasonable period (typically two to three months), each practice leader should report back to the managing partner on what their plans are.  This back-briefing process is essential to check that the practice has not gone off the reservation, either in terms of the markets, services and sectors it is serving or the required levels of profitability.  Any course corrections can be made at this point, by mutual agreement.

Back-briefing is the process that NATO forces use when planning military action.  The commanders set out the objectives and the constraints.  The officers on the ground then decide how to implement and back-brief their commanders before implementing.  This gives the commanders the overall control they need, while allowing the leaders on the ground the room they need to decide and act for themselves.  Local accountability and authority are an essential part of a flexible fighting force.  Inevitably the situation on the ground changes quickly in battle and the commanders on the ground need flexibility, within the overall constraints, to respond and re-direct the battle.  Large modern firms are no different.  The fight to win business and deliver require agile and responsive teams on the ground, operating with clear overall objectives and constraints, but minimum interference. (For a clear explanation of this leadership model and its link to military history, see Stephen Bungay’s The Art of Action).

This leadership process is a crucial part of creating a constructive culture in the firm.  It provides very clear direction and purpose to practices, but also allows them the room to define how they will build their businesses as part of a coherent and cohesive professional firm.  It is a blend of priority setting and management processes which create a successful culture.

Subsequent reviews of practice and partner performance can be held against the backdrop of clear practice plans that were defined by the practice leaders.  This gives them autonomy within a culture of accountability and within a framework of high-performance expectations.  Of course, the style of the leader also impacts the success of the firm, but I will leave it to other articles to cover leadership styles.

By leading in this relatively light touch way, the leader will create space in his or her diary for all of those “other leadership tasks”.  While knowing that their most important task is being delivered by the partners in the firm.

Author
Jason Haines
Jason is a qualified accountant with decades of experience working in the finance and legal sectors. He has held senior roles with Andersen Worldwide, PricewaterhouseCoopers and most recently as Global CFO and Operations Director at Allen & Overy.
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