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IFRS AND ISA
+ IFRS and Canadian GAAP
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+ Chronological resumes
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By Ève Laurier
Illustration: Ryan Snook
Growth sometimes leads to divisions, but for professional service firms it’s important to present a united front
Professional service firms are a special breed when it comes to their organizational structure. As the firms’ professionals gain experience in their field and master their craft, the firm grows, resulting in the need for a new organizational structure. In an accounting firm, auditors are often grouped with auditors, tax specialists with tax specialists, consultants with consultants. This is commonly referred to as creating silos and slabs. The silos are the vertical lines in an organizational chart; the slabs are the horizontal lines. As a firm grows, so do the silos, and as that happens, there is less interaction between the various divisions. But creating silos hurts three stakeholders: the professionals, the firm and the clients.
With the growth of silos, professionals might find it difficult to keep up with information. Knowledge sharing becomes difficult. Silos are like walls, making it hard for professionals to share best practices, leadership insights and ideas. The silos can also cause disengagements. From a management point of view, it becomes more challenging to circulate important corporate messages within the organization. Furthermore, professionals are competitive and self-driven; recognition of their talent and the value they bring to the table is an important source of motivation. As the silos strengthen, they can shift the competition from the marketplace to the organization. While competition is a great way to get professionals to put forth their best efforts, internal competition and a gap between the various divisions of an organization can turn healthy competition into negative performance competition. The concept of the “one-firm firm” as described by David Maister in a Sloan Management Review issue, which promotes collective behaviour within a firm rather than an individualistic one and where professionals are focused on the firm’s collective success, on collaboration and engagement, makes healthy competition a goal hard to achieve.
From a business development point of view, there is a danger lurking in silos. Partners from different divisions or different teams in the same division may step on each other’s toes, unknowingly, to land the same client. Of course, client relationship management (CRM) software helps, but precautions are not always taken. Professionals can be so busy that it is impossible to keep up with who is working on what file and who is targeting what business for their pipeline. The wider the gaps between the divisions and the bigger the silos between teams of the same divisions the more likely it is that such a situation will happen, creating conflict and damaging the unity of the firm.
Professional-service firms work hard to capture the attention of the market. Getting prospects’ attention is time-consuming and can be costly. The old Pareto law of the 80-20 rule, where 80% of your business is generated by 20% of your clients, is still true today; yet most actively look for new leads. However, clients are not always informed of the relevant services the firm offers (referred to as cross-selling), a missed opportunity both for client retention and the bottom line. A firm is responsible for facilitating information sharing and the flow between the practices.
Professional firms offer clients services that add value to their business. They want clients to hold the reins of their business while providing technical expertise, bringing in financial backing and guiding them through important strategic decisions. But how can firms do this when they are confined by silos and professionals working independently?
Another negative impact of silos on clients occurs when a firm is successful at bundling services and offering different areas of expertise. In large organizations, this can become a source of tension between the client and the professionals; clients are serviced by many professionals, but in different ways. As the firm grows, the standardization of service gets weaker and can become nonexistent. Each partner, team and silo service their clients in a unique way, hence different billing practices, response times or reporting mechanisms emerge. However, the one-firm firm and a standardized service should always be as close as possible to what the client is used to.
There are many strategic initiatives taken by organizations to minimize the effect of silos and maintain growth without conflicts and disjointed client service.
Firms could establish a lunch time or a happy hour for employees to socialize. Giving staff a chance to interact without an agenda helps bridge the gap between divisions and allows them to chat about their challenges. Easy-to-execute ideas such as pizza Fridays, wine-and-cheese Thursdays and coffee and fruit in the morning may seem a waste of billable hours and unprofessional but they work.
Break the slabs
Slabs are physically represented by floors in a building, e.i., one floor each for audit, tax, consulting and support staff. As floors are not easy to cut through, one of the best practices is to mix professionals from each division on every floor. Having various departments share public areas or the print room helps increase communication.
The adhocracy style
Any project that brings professionals and employees together, especially one that eliminates hierarchy, will help break silos. For example, RSM Richter Chamberland holds an annual community day in which approximately 80% of its members collaborate on community projects. This has been a success both from a feel-good point of view and because it eliminates titles and generation gaps, as employees, support staff, professionals and partners interact for a common purpose. It is a good way to break through the silos and slabs. Projects outside of the day-to-day activities of a firm act as adhocracies. They have a beginning and an end and get people with various skills together. Other projects can include green committees, social committees, social- responsibility committees or sports committees.
The client-centric approach
Traditionally, firms let each partner go into the market and do his or her own business development. Others, however, adopt the real one-firm firm approach and process new mandates through a client-centric committee. In most cases, clients are serviced by the partner who brought them into the firm and by the team managed by that partner. Although this is not wrong, the client is in a silo. The best practice in place for this client, and the challenges and learning from this file, remains in the silo. Having a client-centric committee ensures that a client’s needs will be met by proposing the services of the individuals who fit these perfectly, whether it be from a personality, technical or even cultural background.
Multidisciplinary teams working together increase interaction between professionals and silos disappear; knowledge is shared amongst the members of the organization and the client gets the best team for its needs. The client-centric team also results in higher revenue per client, as an array of services can be proposed more easily.
Most firms have intranets, but they may not be used to their full potential. Many information technology service organizations have embraced the intranet 2.0 models, which enable employees to break down silos, the barriers to innovation, and connect with employees, content and communities. The intranet should be as interactive as possible so best practices and ideas can be shared by all members of the firm. Blogs can be used internally so that practitioners of one division can ask questions of other professionals. Wikis serve a similar purpose.
The intranet can be great for sharing firm and technical information, but one of the most popular sections on a firm’s intranet is the employee profile. For example, every two weeks an employee shares facts about his or her personal life such as hobbies, favourite books or restaurants.
The intranet and the activities that go into recognizing the professionals of the firm also help in increasing their engagement level, a key success factor for any firm that wishes to retain its best professionals.
Find the glue. Strengthen the culture
Professionals are often independent workers. They spend years attaining expertise in their field. However, leveraging their individual strengths and getting them to share knowledge and ideas are huge value drivers for an organization. Unfortunately, the way most mid-sized to large firms operate and are structured today has put many barriers in place, and they are now confronted with an obvious loss of potential.
The solution is simple. Remember how things were before growth, when the firm was more fluid, interaction easier and collegiality greater. There should be no trade-offs between growth and a collaborative work environment. Tools such as CRMs, knowledge-sharing platforms and 2.0 intranets are available. But ultimately, finding ways in which people can interact in a nonperforming manner is the glue that unites the talent and positions a firm as an innovative and driven business partner.
Ève Laurier is vice-president, strategic relations, at RSM Richter Chamberland in Montreal
Technical editor: Stephen Rosenhek, FCA