29 May Current Challenges in Leading Professional Service Firms
In recent years the core business model of the Professional Service Firm (PSF) has changed dramatically. Globalization and constant competition is reshaping the business landscape. PSFs are unique by the nature of the different services they offer and also differing their structures, employees, organizational culture and management. Accordingly, leadership in PSFs is also different. It requires unique experience, skills and knowledge and presents unique challenges.
Over the years, the leaders of PSFs have developed distinctive leadership practices, roles and identities that fitted the professional identity of these firms and their unique form of governance – the partnership. However, these traditional leadership roles have come under pressure in the face of changes, a faster pace of business, as well as the ease of doing business across continents. As PSFs become larger, their leaders are required to coordinate and control much greater complexity and dynamism. They must grapple with new tasks and duties, quite different from the ones they performed in the past.
Several features of PSFs make the task of leading such firms especially challenging compared with the leadership of other, non-professional services firms. Firstly, the primary assets of PSFs are specialised knowledge and their people. Consequently, leadership – which requires dealing with people, their direction, and the maximization of their intellectual and social capital – acquires utmost significance in these firms.
Secondly, PSFs are typically partnerships, in which senior professionals (‘partners’) own and manage the firm and lead client engagements. This means that the management of PSFs involves less formal power, direction and instruction than in many other firms. Instead, there is far more emphasis on shared decision-making and collaboration. PSF leaders must adjust their leadership style to this unique form of leadership.
Lastly, and no less important, PSFs are characterized by unusually high levels of ambiguity and uncertainty. This is related to the intangible nature of their products and services: since PSFs offer services that are often difficult to measure and to assess, much depends on elusive, ambiguous processes such as reputation management and impression management. These elusive processes influence status and promotion within PSFs, on the one hand, and their relationship with clients and other stakeholders, on the other hand. PSF leaders must learn to operate, therefore, in a state of chronic ambiguity.
To help PSFs navigate new challenges and opportunities, the EIMF is offering a uniquely designed four day hands-on programme – Leading the Professional Services Firm. The Programme is accredited by the Chartered Management Institute (CMI) and will be delivered by Fiona Stuart-Wilson and Gwyn Thomas, both of whom have numerous years of experience in training and coaching PSF leaders. To lean more about the programme please click here.