post # 257 — Friday, December 8, 2006 — a Strategy, General post
What's A Professional Firm?
I just received an email from Atta-ur Rehman in Pakistan, who writes:
Many times in your podcasts you refer to "Professional Firms". I've not been able to understand what exactly you mean by the term. Aren't all businesses like professional firms? Could you please clarify it for me or refer to me some definition that you might already have on your website?
Great question, Atta. I had a stronger opinion twenty years ago what the term meant, but nowadays I’m not so sure.
Of course, many years ago, the term “profession” or “professional” had a sociological, cultural or class meaning – there were only a certain number of ‘learned’ professions (medicine, the law, the religious ministry). A lot of effort went into defending membership in this privileged group – doctors, lawyers and priests were special (they claimed) but everyone else was in BUSINESS (Yuck!) or were a lesser breed (nurses, for example).
Part of their claim was that they had a superior commitment to service instead of commerce, but very few people believe that any more. Nevertheless, a great deal of time and money has been spent by other industries trying to get recognized as ‘real’ professions.
When I began my work in the early eighties, I used the term “professional service firm” to mean businesses that (mostly) gave advice – not only law, medicine and priests, but including consulting, accounting, advertising, public relations, engineering, executive search, financial advisors of all kinds.
The central thing that these industries have in common is that (in principle) they do CUSTOMIZED work – they do not sell the result of standardized processes. They hire “knowledge workers” (although not everybody thinks that’s synonymous with professional workers) to apply education and training to create different outcomes for different clients.
However, even this definition gets “fuzzy.” What happens when so-called professional firms start taking a process-intensive approach and create customized outputs with a standard process? At the commodity end of many professions, it doesn’t take an advanced degree to produce really valuable outputs – just some good systems, databases, training and a high-school degree. Is that still a professional service?
Then comes the challenge that you hint at, Atta. Many of us think that being a professional has nothing to do with what degrees you have, what industry you are in, or what position you hold. Maybe the REAL meaning of professionalism is close to what the priests, doctors and lawyers were SUPPOSED to have, except that it applies to ALL of us in all industries: a moral commitment to be of service and to run our organizations to high standards based on unwavering values.
Viewed this way, maybe Atta is right. Aren’t ALL industries like professional firms? Does the term professional business mean anything anymore? Does it mean anything to say some people are to be categorized as professionals and some as something else?
What do the rest of you think? Have we outlived the usefulness of “professional service firm” or “professional business” as a helpful categorization?
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Bill Peper said
I do think that the category of "professional services firms" is useful and contines to be relevant for several reasons — although, as an attorney, I make no pretense at objectivity on such topics.
Given the special responsibilities that they undertake, governmental agencies regulate these professions much closer than general businesses. In many cases, the professions enjoy a specal privilege from divulging information shared excpt under rare circustances.
These professions have an explicit, mandatory higher standards of conduct and ethics. If violated on a serious matter, the individual is no longer allowed to serve in these capacities. I think of Bill Clinton as a perfect example. The Senate allowed him to remain President of the USA for lying under oath and obstructing a legal proceeding, but he had to surrender his Arkansas law licence for the same actions to avoid being disbarred (and that would have happned.) The government checks the criminal background and character of every licenced professional.
While all businesses should adhere to the higher ethical standards of the professions, they certainly do not have to do so. That make a huge difference.
On a practical level, professional firms gerally operate as a traditional partnership irrespective of technical legal classification. Many of the issues faced are different — how to inspire workers, lack expertise on routine business practices, and an aversion to overseeing another professional much worse than in the non-professional sector).
I have had the privilege of serving in many different sectors during my career. I have practiced law, served a general counsel to a large non-profit, held a senior administrative position at a prestigious law school, ran my own business, acted as a consultant, and I currently work as a business consutant for General Motors. Having encountered thousands of organizations in various capacities, I can attest to the fact that a professional service firm is a unique entity. I think the classification is still important.
posted on Friday, December 8, 2006