Passion, People and Principles
Douglas Hamilton, of Concentris Limited, contributed this:
Fat Smokers? Figuratively and literally, I definitely know a few of these individuals! I am pleased to say I have recommended your paper and book to them.
I received a request recently to deliver some ‘strategy training’ for a group of Directors. There were alarm bells sounding in my head when I heard this, for a variety of reasons; as is my wont, off I went to do some research before offering an opinion. I was familiar with your earlier material on the professional services firm, and co-incidentally had seen an online advert for the ‘Fat Smoker’
It summarises very well what I have been trying to put across to these clients for some time – strategy is delivered through everyday specific behaviours. As I pointed out to the clients, it often involves a ‘lightbulb’ moment before this becomes clear, and the way to get it instilled as part of the organisation was by coaching the right behaviour amongst the staff.
Actually, I had mastered this myself as few years back when trying to lose weight. Identifying and tracking out the right behaviour was delivered by two means. First off, by describing the two behaviours needed; eating less than 1500 calories / day, and secondly carrying out three periods of 20 minutes exercise per week. One point per day for the eating, three points per week for the exercise, therefore a potential of ten points per week, and a leading behaviour which was easy to score.
The chart was posted on the fridge – instantly labelling me as ‘sad’ in the eyes of the family – and I weighed myself every week to check the trailing result. There were mini–reinforcements for each week I had scored well, and an overall one of looking better, feeling better, praise from my wife / family etc.
Coincidentally, I was also using this example of behaviour change throughout the period in question, with a group of clients. Every fortnight, I had to post my weight loss chart in front of the clients. Talk about consequences of practicing what you preach!
But it worked; I have put some weight back on, but am still about 14 lb lighter than when I started off originally. The spreadsheet tells the story, I hope. Note the mid season slump in behaviours – I wouldn’t have known to change unless I had measured them.
Now, whenever I consult on behaviour change, I use this example. It tells a story far more powerfully than any bald theory.
Best wishes to you, and keep up the excellent work
post # 502 — February 18, 2008 — a Managing post
Michel-Adrian Sheppard on www.SLAW.CA writes:
“Many people may remember the “meme” that went around the blogosphere about a year ago, something called Five Things You Didn’t Know About Me. The idea was simple: reveal 5 pieces of information that people might not know about you and then contact other people to contribute. A bit like a chain letter. But much more fun in terms of time wastage.
“Well, there is a new meme zipping around the Net: open the nearest book to page 123, go down to the 5th sentence and type up the 3 following sentences. Then, pass the message along to other people you want to invite to contribute to the game.”
I don’t want to obligate others, but it sounded fun so here goes:
(From EPIC CHANGE: How to Lead Change in the Global Age, by Timothy R. Clark, which was sent to me by his publicist to review)
“In almost every case, change must be handed off for implementation. Unless there is broad-based action by many people, change won’t take place. Change usually affects far more people than those who identify it as a need”
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An interesting experiment. You can also imagine providing this quote as an examination question, followed by the instruction: “Discuss”
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Anyone else want to join in either on their own blog, or in the comments here? Closest book to you, page 123, start at 5th sentence, and type the following three sentences.
I’m pleased to report that the Russian language edition of STRATEGY AND THE FAT SMOKER has just been published.
It can be obtained from www.mann-ivanov-ferber.ru (whose telephone number is 495-792-43-72)
The ISBN number is 978-5-902862-73-4
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Although no further deals have been signed yet, the book is under consideration for translation by publishers in The Netherlands, Japan, Korea and Spain.
The fourth episode of my new podcast series, Strategy and the Fat Smoker, is now live and available for download.
It is dedicated to exploring the themes found in my new book by the same name. Each chapter will be accompanied by an executive summary ebook covering the same material. I encourage you to forward these to friends and associates who may be interested in the topics covered. If you are already a subscriber to my podcast feed, this pdf will be available in your itunes.
Are We In This Together?, the fourth episode in this series, focuses on disparate preferences amongst players within the same firm. All too often, firm-wide strategy assumes firm-wide consensus. However, it is rarely the case that all players within any given firm are team oriented. We will discuss some of the widely held player preferences and prescribe alternatives in dealing with them.
NOTES FOR THE EPISODE:
00:37 – Introduction
04:23 – 4 types of individual and firm wide practice preferences
09:00 – Are we in this together?
11:13 – Bridging the gap: organizational strategies managing a broad range of preferences
17:23 – Conclusion
You can download Are We In This Together? or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. My seminars are always available for download at no cost.
Today’s papers report the 2007 financial results of law firm Latham &Watkins, which became the first law firm to break the $2billion revenue barrier, with profits per partner rising to $2.27 million from $1.86 million a year earlier. As the firm’s managing partner said, these results were accomplished without a merger or large lateral acquisition or any major contingency award.
I try to avoid commenting on individual firms, for fear of being seen to “play favorites” but it’s reassuring to receive confirmation that one of the firms I identified in my 1985 article “The One-Firm Firm” continues to shine.
In 1985, I identified the policies of the one-firm firms as:
- A “grow your own” people strategy as opposed to heavy use of laterals, growing only as fast as people could be developed and assimilated
- Intensive use of training as a socialization process
- Rejection of a “star system” and related individualistic behavior
- Avoidance of mergers, in order to sustain the collaborative culture
- Selective choice of services and markets, so as to win through significant investments in focused areas rather than many small initiatives
- Active outplacement and alumni management, so that those who leave remain loyal to the firm
- Compensation based mostly on group performance, not individual performance
- High investments in research and development
- Extensive intra-firm communication, with broad use of consensus-building approaches
In STRATEGY AND THE FAT SMOKER, I include a chapter which revisits these firms, and find that, while they are not still “pure” on these principles (some of the one-firm firms have done small mergers or hired lateral partners) the core approach of emphasizing teamwork and intra-firm collaboration remains.
In my consulting work, I find that many firms like to “claim” that they are one-firm firms, (it sounds good) but it’s my view that they underestimate what it really takes. There is a huge temptation (and seemingly obvious benefit) in creating a culture that attracts, rewards and retains “stars.”
Firms try to have the benefits of both systems (a star system and a one-firm firm) but I believe now what I believed 23 years ago – the two systems are fundamentally incompatible, and a choice has to be made.
Does anyone else have a view?
post # 498 — February 6, 2008 — a Client Relations post
Bob Sutton, author of the fabulous book “THE NO-ASSHOLE RULE” has developed an amazing quiz to rate your client(s.)
You’ve GOT to check this out!
post # 497 — February 4, 2008 — a Managing post
R Sigrid van Roode, from th Netherlands writes in with the following question:
“Our company will start improving our consultancy using the input of your book True Professionalism. I have carefully read the book (as have all my colleagues) and I have found a situation in my work that to me seems paradoxical.
“In achieving happiness and fulfillment in work, you encourage the professional to start and change himself first, take initiative, show enthusiasm. It is not advisable to wait for the company itself to change: that will never happen. It is also not advisable to ‘blame’ the management: that turns the professional into a victim of his surroundings (which a real professional would never allow to happen).
“The paradox is: professional and company/management are, in my view, interdependent. They fulfill each others needs and in a way facilitate each others existence. What is the role of the management in a professional organization, specifically when it comes to encouraging and stimulating the professionals?
“Actively seeking a positive attitude towards work and client is obviously the main responsibility of the professional himself. How can the management of a company pick up on that positivity, that initiative? If the initiative of the professional is not met and answered by the management, the incentive to try and improve oneself, to walk that extra mile for the greater good of the company, will simply be non-existent. The professional will most likely leave and try to find that reciprocal relation elsewhere. In short: how does one manage a professional?
“Any light you could shed on that interesting subject would be greatly welcomed! Could you for example perhaps point me in the direction of literature I could read on that subject?”
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The role of management in my view is to:
(a) Provide a clear purpose for the organization, so that the individual can decide whether that purpose is one they can believe in and contribute to.
(b) Help the individual find his or her passion, providing alternatives, encouragement, support during rough times
(c) Provide clear and honest feedback
(d) Enforce common standards so that the individual is part of a community of like-minded people of whom the individual can be proud.
Does anyone else have different answers?
post # 496 — January 31, 2008 — a Managing post
I received a multi-part question about law firm management, which questioned the “traditional” model which many firms use. Here’s the question:
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My premise is that the traditional system is not only antiquated, it is the cause of many of the problems and issues facing large law firms today.
I am referring to (a) the whole process of law school recruiting, (b) the “class” system for associates, (c) the “up or out” progression to partner and (d) the concept of being a partner inclusive of lockstep compensation.
(a) Law school recruiting / summer program:
This is very expensive from both an attorney time and a financial perspective. Typically the first year class is larger than needed due to a high number of departures over the first three years.
Classes 1 to 3 are, from an actually working perspective, an unknown commodity and are being trained. They typically start by earning $160,000 plus bonus. Many are looking to only pay off their law school loans or aren’t even committed to practicing law and often treat this period as a career determining step which accounts for the high turnover. Considering all the firm investment in these attorneys they aren’t usually profitable to the firm till the third year by which time many have already left. In addition, a growing number of clients are refusing to pay for these associates as their billing rates far outstrip the level and often the quality of work they perform.
Proposed solution: First, maintain a pool of staff attorneys and document analysts to perform the low level routine (years 1-3) type work. Made up of part-timers, those wanting a home/life balance (1,800 hour requirement with bonuses paid for hours in excess) and those from second and third tier law schools but with previous work experience. Hired laterally with no pretense for marked advancement thus there being reduced expectations. Provides a well paying prestigious job for attorneys otherwise not able to work at large major firms likely resulting in dramatically reduced turnover than currently exists with law school recruits. Treated as paralegals are treated, quasi administrative/quasi professional staff. Paid less than 1 to 3 year associates and bill out at less as well which makes clients happy.
Also, hire laterally attorneys with 3 years experience with excellent backgrounds and slot them into “levels” 1 through 5. Let someone else recruit and train them! Once an attorney has 3 years of experience they are a much more stable and valuable asset. We will pay greater than market as well as guarantee partnership. Therefore, we will target only “A” quality attorneys. We will also be able to command top dollar for these attorneys since they are all top rated and will be more stable since they are being paid more than market and guaranteed partnership. This appeals to clients knowing that they will likely be dealing with the same attorneys and not incurring transition costs associated with having to bring in new attorneys on their deals in mid stream when others leave.
(b) The “class” system. Even though people mature and progress at different rates, under the traditional system people advance strictly based on the passage of time. Poor performers are asked to leave but decent and average performers advance at the same pace as the excellent performers. This causes an inequity in the allocation of work, both the type and amount, which ultimately leads to disgruntled attorneys further adding to turnover.
Proposed solution: Progression from level to level is earned based on performance as evaluated on a semi-annual basis. The intention is that each attorney will “graduate” from level 5 in a 5 to 7 period when joining at level 1. Unlike the current “class” system, attorneys will progress from levels 1 through 5 based on performance, not merely the passage of time. A minimum of 3 years experience is required for level 1. The purpose of promotion to the next level is the continued growth and development of the attorney with increased training, responsibility and client contact. Since partnership upon “graduation” from level 5 is guaranteed, this level ascension is viewed as more than just annual salary and rate increases but as partner building. Since we’ll be starting with “A” quality associates with at least 3 years experience, the success rate should be quite high.
( c) Up or out.
For the vast majority who don’t make partner for one reason or another after 8 or 10 years, they are typically either asked to leave or invariably leave on their own if given the inauspicious title of “special counsel”. This then results in the firm’s loss of investment for after training and mentoring all those years these people take their human capital elsewhere. Sometimes to a competitor.
Proposed solution. Upon “graduation” from level 5, partnership would be guaranteed. This will lead to low leverage which has worked quite well at a firm such as Wachtell with leverage of just 2.51 in 2006 as per the American Lawyer and was the model in the 60s, 70s and 80s when leverage at large New York firms averaged less than 2 to 1 as per the National Law Journal.
Clearly over time partnership ranks will expand at a rate either equal or possibly in excess of our level based associate ranks. However, this is viewed as a benefit and will enhance retention and overall performance. The theory is that most partners will perform at a high level given their background and mentoring. In addition, since there will be a large pool of staff attorneys not eligible for partnership the makeup of our attorneys will be the opposite of a bell curve with large numbers of staff attorneys performing the first through third year type work, relatively few level based associates and a large partner group.
(d) Partner comp.
In the traditional model, the lucky few who make partner are then compensated on a lockstep or modified lockstep basis. Almost certainly every year a handful of new partners are made. This results in the firm’s need to exponentially grow to maintain the same leverage. In addition, by simply converting associates to partners, there is a dilution of the profits per partner (barring an increase in business and/or rates.) Here again there is client backlash against the ever rising billing rates forcing more law firms to grant discounts and write-offs. Finally, lockstep or modified lockstep is becoming more difficult to maintain at most firms with rainmaker partners either wanting a greater share of profits at their current firms or willing to go to the highest bidder.
Proposed solution. Two-tiered partnership compensated based on a meritocracy. Since we are starting with “A” quality associates and providing partner building training and mentoring, the idea is that the vast number of those attaining partnership will be worthy. In addition, since we will be a two tiered partnership compensated based on merit, all partners will be compensated in proportion to their firm contribution.
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OK, folks. What’s your reaction to my questioner’s analysis and proposed solutions?
The third episode of my new podcast series, Strategy and the Fat Smoker, is now live and available for download.
It is dedicated to exploring the themes found in my new book by the same name. Each chapter will be accompanied by an executive summary ebook covering the same material. I encourage you to forward these to friends and associates who may be interested in the topics covered. If you are already a subscriber to my podcast feed, this pdf will be available in your itunes.
“It’s Not How Good You Are But How Much You Want It” looks at how so many business career paths seem to be made up of sensical, well thought out steps to a pre-determined, ultimate position and how this is most often not the case. They are more often a conglomeration of experiments seen through by the drive and determination to find the next great challenge. The key is to sustain that drive and determination for a lifetime.
![](http://davidmaister.com/images/QTholder.gif)
NOTES FOR THE EPISODE:
00:43 — Introduction
00:51 — A brief recount of my early career choices
06:11 — Finding your passion is sometimes a very long search
11:09 — Lifelong drive and determination: The key ingredients in career success
12:48 — Rebounding from failure and renewing efforts
15:34 — Conclusion
You can download It’s Not How Good You Are But How Much You Want It or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. (Click here for step-by-step instructions on how to subscribe.) My seminars are always available for download at no cost.
post # 495 — January 28, 2008 — a Managing post
What’s the latest view on paying sales commissions in professional organizations?
I’m generally not a fan, because paying a commission:
- Fails to distinguish between revenue and profit. It can reward bringing in work that the organization loses money on (or at least makes less money than other alternative uses of its scarce resources.)
- Fails to distinguish between on-strategy and off-strategy work. The organization ends up with an “if it moves, shoot it†mentality.
- Over-rewards the person who makes the final sale (the transaction), and under-rewards activities (for example, seminars, articles, speeches) that “court†the audience and lead them into conversations that result in sales. Consequently, it encourages an impatience that may backfire in building business.
- Encourages salespeople to think of their own rewards (the commission) rather than truly helping the client, and hence creates an uncaring market image that may backfire.
- By overstressing individual commissions, can prevent the cooperative teamwork necessary to execute a full coordinated marketing program. Instead, the sales efforts are no more than the (weakened) sum of a lot of individual efforts, none of which has the impact to make a big difference.
In spite of these concerns, sales commissions are still common in a lot of professional businesses. In some, such as real estate brokerage or headhunting, it’s at the core of how individuals are paid (X% of all revenue generated to the individual, the remainder to the firm.)
And, as firms (in, say, law and accounting) try to get their junior professionals involved in generating business, I see them experimenting with paying those juniors a percentage of what they generate.
What do you think about all this? Are sales commission systems good in a professional business context? If not, why are they common?