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?
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