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Passion, People and Principles

Client Responsiveness and Compromised Quality

post # 528 — April 16, 2008 — a Client Relations, General post

A question from Joseph A. Heyison of the Legal Department at Daiwa Securities America Inc.

“David, a thought sparked by April 11’s WSJ front page, describing Moody’s alleged move to client-friendliness and possible debasing of its ratings process.

“This is a repetitive theme in professional services: the most rigorous firm builds its reputation but is considered client-unfriendly. Then a new management enters, vowing to be more responsive to customers, and the partners learn that yes, their incomes rise and they get better client relationships by bending a little. Then a lot. Examples: Arthur Andersen, KPMG (tax shelters), various law firms, lobbyists (Cassidy & Co.), etc.

“Question One: How do we differentiate client responsiveness from compromising the quality of our work, and what other than moral suasion works? (Tyrannical regulators? In theory, an internal incentive process would be best, but I’ve never seen it done workably. Despite your advice, I think that firm culture in most cases is simply too weak to rely on.)

“Question Two: How does this affect the economic “gatekeeper” theory? (Firms maintain standards to establish a brand which effectively vouches for the client and thus have sufficient economic incentives to police fee-earners against dropping standards for short-term gain). Is that realistic in an environment where fee-earners are mobile and short-term oriented? Or is the only way to maintain gatekeeper standards the threat of regulatory and criminal action, or ruinous civil lawsuits?”


What think you all?


Jo said:

We need a “mental model” of our firm and service that guides our actions and our discussions with each other. Incentives without a mental model are like gas in the tank without having transmission. Sometimes, it is true, people have managed to ascend by copying behaviors and services and have little understanding or the service they offer (or inkling that there is anything to understand). This happens a lot in firms such as HR consultancies where there are low barriers to entry.

What other than moral suasion works? Not getting into a garbage can model of decision making (where we have a solution looking from a problem). This is a classical negotiation situation. We need to step back and ask what are the interests? Why was this solution proposed? And then, what are the alternative solutions?

Clients will buy in when we attend to their interests and show our expertise in the solutions we offer.

How did we get these massive institutional failures? That is a political analysis. People ‘in the game’ knew of the conflicts of interest as early as 1990 – anyone else know of them even earlier? We’ve had a long period of ‘inbredness’ where people have not been accountable. Put it down to the democaratic profile of too many baby boomers and too few Gen X. That is changing now as Gen Y comes on stream at the same time as better communication via 2.0 and the increasing economic challenges from other geographical regions.


It seems to me that the USA can continue to do ‘business as usual’ and hope for the best; or it can use the confluence of forces as a toehold for developing a rennaissance.

posted on April 16, 2008


In 1955 I learned a major lesson that I have remembered and fostered throughout my entire working career in public accounting and management consulting. “Only small greed succeeds”. When parties forget or violate this simple principle in business or in their private life, you will see major problems or repercussions arise. Being too greedy will always come back to haunt you eventually.

posted on April 16, 2008

Connie Kuhlman said:

Q: How do we differentiate client responsiveness from compromising the quality of our work, and what other than moral suasion works?

A: Picking the right clients will certainly help. Easier said than done. But in many of the well-known cases an outside, objective look at the relationship between the client and professional firm makes one question why the professional firm ignored warning signs that this is not a client worth having. Again, easier said than done to drop a client.

posted on April 16, 2008

Ford Harding said:

Please enter your comment

Too often firms increase the incentive to increase revenues without simultaneously increasing the controls needed to ensure that revenue is generated by legal or ethical means. If you increase one, you must increase the other.

Too often firm management pushes people to sell more by boosterish talk complementing those who sell, without also reminding people that sales must be in the client’s best interest and must be made in ethical and legal ways. Boost one and you must emphasize the other.

Ford Harding

posted on April 16, 2008

Bryan I. Schwartz said:

Response to Post #528


We just had a meeting on the issue of excellence vs. “pleasing clients”. It is becoming more difficult for us to say we cannot give you that document in an hour and we do not want to. There are times that our senior partners can tell the difference between want the client needs or wants from an efficiency standpoint and times that they cannot. I am concerned about “hipshooting” to please a client or be efficient.

Like all things client, it is about communication. If you cannot have a dialouge about what the client wants, what you can do to please the client and what you will not do relative to diminishing your reputation for excellence, I think one gravitates towards lopping off the excellence part of the equation, i.e. chooses short term over long term. As a leader of a professional service firm, our awareness of this issue is raised to the max. I no other solution but to raise the issue early and often in professional service firms and discuss what you are going to do (or should do) when faced with this dilemma. A dilemma is not a problem. A problem can be solved but a dilemma is something you manage. This issue of excellence vs. expediency or efficiency is a dilemma.

posted on April 16, 2008

mazafer iqbal said:

I have spent my entire career in professional services. I have worked for the big accountancy-consulting companies, I have worked for IT services companies and latterly I have worked for a digital marketing consulting/services company.

In over 20 years I have learned/experienced one simple truth: as soon as a professional services company makes ‘making money’ the primary goal then the first things to be sacrificied are standards and ethics; anything goes as long as it rings the cash tills.

Strategy and life is essentially about choosing to do somethings and choosing not to do other things. One of the fundamental choice that professional services firms are faced with is the choice between ‘making money’ and ‘adhering to standards/ethics’. The other key choice is between ‘putting clients interests first’ and ‘putting your personal often revenue driven interests first’. In my experience the vast majority of companies make the wrong choices and later wonder why they are treated simply as ‘vendors’.

posted on April 19, 2008

David (Maister) said:

Thank you, Mazafer. Perfectly said!

posted on April 28, 2008

Mark M said:

I personally do not agree with Joesph’s remarks above. Why is there an assumption that an inverse relationship between revenues and client service exists?

I can think of plenty professional service firms that are incredibly successful and profitable BECAUSE of the service they provide their clients.

Isnt that the basis of the entire field? That service and constant value-added knowledge are a necessity for professional service firms to remain competitive?

posted on April 30, 2008