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Separate organizations focused Specialized business develop- Self contained practices with
on delivery, business develop- ment and service development single team of individuals
ment, and service development resources sharing delivery, business
Description development, and service roles
Marketing resources aligned Limited support functions
with delivery, BD with provided as shared service Limited support functions
customers provided as shared service

Some large systems IBM GS Accenture
integrators AMS”sales aligned with Booz Allen
Examples “ Lockheed Martin vertical industry practices AT Kearney
“ General Dynamics Sapient



Exhibit 9.1 Three Professional Services Organization Models



Each organization model has its strengths and weaknesses. Which is best
for a particular firm depends on the type of firm, what kind of services it
provides, and how it chooses to leverage its staff. Choosing between them re-
quires trade-offs primarily between economies of scale and degree of deliv-
ery staff involvement in customer relationship. Making the wrong choice can
have dire consequences, the worst of which is that the firm becomes non-
competitive. A firm cannot deliver what its clients need at the right cost
point if it chooses the wrong organization structure. The organization model
defines staffing structure, numbers of staff skill sets, and the cost and lever-
age model of staff, and drives hiring and promotion practices. If a firm™s
business involves large-scale technology implementation, for example, or re-
quires large numbers of staff to work at the client™s site for an extended time
period, it is illogical for the majority of employees to be senior staff with bill-
able rates. Instead, it is more practical and cost effective to have a smaller
number of senior staff to strategize, design, and oversee projects supported
by a large pool of staff with lower level people with commensurately lower
206 Attracting and Retaining the Best Professionals

billable rates who can perform the implementations”an example of a high-
leverage firm. Chapter 2, professional services firm benchmarking addresses
this issue in detail.
A firm that focuses on strategy requires a senior team that has the brain-
power to perform analyses, think through strategy, and design customized,
innovative business solutions for clients. For that firm, a smaller number of
recent undergraduates to assist with research and delivery is more cost ef-
fective. Choosing the right staffing model allows a firm to be more competi-
tive and dictates the arena in which the staff can play successfully.

Practice Model
The practice model, a group of self-contained practices, each with a single
team of individuals sharing delivery, business development, and service de-
velopment roles, is most commonly seen in management or technology con-
sulting firms, or professional services firms that provide services across a
broad set of industries and, in some cases, focus on more strategic issues.
Within each practice, a pyramid of people, senior and junior, have a specific
understanding of an industry or function. This makes it easier to create effec-
tive specialist teams, while offering the option of going outside the practice
to other practices for specialists in other functions or industries when
needed. Essentially, practices are smaller speciality firms within the larger
company while still being governed by overall firm guidelines that are im-
posed across the organization.
Specific definitions of practice groups vary across firms and industries.
They might be divided by substantive area, service line, or function. In con-
sulting, for example, functions might include operations, strategy, IT, HR,
change management, and business process management. In law firms, they
might include labor and employment, corporate, tax, securities, and mergers
and acquisitions. Other firms divide their practices by industry or client
group, such as technology, financial services, media, telecommunications,
and health care. Limited support functions such as finance, staffing, market-
ing, report production, research, and so on may be provided as shared ser-
vices across practices. Chapter 20 on office management discusses categories
of shared services that should be considered by the professional services
firm in more detail.
Firms choose a practice group structure because it has the potential to at-
tract a higher value of work and higher volumes of work from better clients.
Practice groups can most easily achieve superior market recognition of ex-
pertise in particular industries or functions, and more easily create innova-
tive intellectual capital and service lines. They also create cohesive units
across offices to better target and develop existing and prospective clients.
In addition, they can encourage and support the creation of cutting-edge
207
Organization Structure

products and services that differentiate a firm from its competitors and im-
prove its margins.
Practice groups can also make it easier for firms to:

• Improve client-service orientation and enhance performance due to
pooling of knowledge and resources and continuity through sale and de-
livery.
• Better leverage junior professionals through improved mentoring, train-
ing, development, and retention.

Organizing a firm by practice does have its drawbacks. It is common to find
that partners who function as practice group heads possess deep functional or
industry expertise but may lack requisite management or sales skills needed to
grow or expand the business. This is exacerbated by the way most firms focus
on developing employees™ hard industry or functional skills while neglecting
training in management and selling skills. Another drawback is that enter-
prisewide goals can be superceded by practice priorities.
To overcome these drawbacks, firms need should ensure that the organiza-
tion supports and rewards development of management skills in addition to in-
dustry or functional expertise. This requires the senior delivery team for each
practice to have strong business development competency. In addition, senior
delivery team members must play multiple roles along the service/function
and customer matrix. Regular cross-practice meetings putting together both
junior and senior staff can also help facilitate communication, idea sharing and
common business development tactics.

Functional Model
Firms that use the functional model have, in essence, created separate or-
ganizations focused on (1) delivery, business development, and sales and (2)
service development and marketing. Traditionally, marketing resources are
aligned with delivery while business development is aligned with customers.
Small firms or those specializing in supporting cross-departmental or indus-
try-independent functions such as operations or information technology
might have a tendency to be more functionally focused.
An important benefit of the functional model is that a staff specializing in
sales and business development can be very efficient in identifying and quan-
tifying new business opportunities. In addition, a single point of contact with
the customer allows for maximum control of customer activity.
At the same time, a generalist sales staff has less depth of expertise in its
customer ™s business needs and, it follows, brings less specific insight to the
table and is less able to provide the widest range of differentiated, custom
solutions.
208 Attracting and Retaining the Best Professionals

For firms operating under a functional model, it is important to build in
a structure that encourages delivery team involvement throughout the sales
and business development process, particularly in scoping. This is where
the importance of transparency and knowledge sharing comes in. Unless
sales and business development teams work with and share information
with delivery teams, potential clients will not be able to understand the full
possibilities and benefits of working with the firm. In addition, without
clear channels of communication between the sales and business develop-
ment team and the delivery team, it is impossible to present a united face to
the client or to ensure smooth handoff of new clients to those who will de-
liver services.

Hybrid Practice Model
As the name indicates, hybrid practice models integrate practice and func-
tional models to take advantage of the strengths of both types. They are di-
vided into practices, but unlike strictly practice-based models, they include
specialized business development and service development resources dedi-
cated to each practice. Limited support functions are provided as a shared
service. The hybrid model provides several benefits. With a staff dedicated
to sales and business development, there is less chance of having troughs be-
tween engagements the practice models sometimes face. Because sales staff
is dedicated to each practice, the staff members are more closely linked to
the delivery team, therefore overcoming one of the drawbacks of the strictly
functional model. With sales and business development staff linked so closely
to the delivery team, the firm can gain increased credibility with customers
and an increased ability to offer differentiated services. It can also offer bet-
ter pricing and performance management.
This is not to say that the hybrid model is without challenges. One draw-
back of this model is that it comes with a higher cost structure due to staff
redundancies and duplication of efforts across practices. Firms employing
this model can also run into problems if their practices do not align well with
customers and customer segments. The firm must, as with other models, see
that the organization structure is frequently audited against the marketplace
to be certain that it is of relevance to customers and is effective at develop-
ing new business and sharing knowledge internally. It is also a model that is
most applicable to larger professional services firms”the matrix structure of
the hybrid model may not make sense for smaller firms with a limited num-
ber of service lines, industry expertise areas and geographies.

Geographic Model
Some firms choose to use a geographic model. In this model, the firm is or-
ganized by region or country around vertical industry segments covering all
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Organization Structure

functions. This can enable better focus on local and /or regional customer
needs and market requirements. In addition, it supports better business de-
velopment opportunities by facilitating stronger local relationships. It also
allows for greater staff cohesion and promotes the development of office
cultures. Staff lifestyles are improved because travel is minimized. Finally,
cutting down on travel reduces overall costs to the firm.
As with all models, this one has some very real drawbacks. With a geo-
graphic model, if a firm is not careful it can wind up with what is essentially
a portfolio of companies based on geography with a silo mentality organiza-
tion that does not leverage the scale, knowledge, and expertise of the enter-
prise. Further, a strictly geographic organization can have difficulty in
adequately serving the complex needs of multinational clients or successfully
competing against more integrated rivals.
Firms can mitigate this challenge by developing and implementing
firmwide knowledge management and information sharing mechanisms
across office and geographic boarders. It is important to clearly articulate
enterprisewide core values and to develop processes, including common
training and professional staff development, that apply equally to all regions
and offices. It can also be very effective to overlay a practice model on top of
a geographic one so that the firm looks at not only the profitability of geo-
graphic regions but also the revenues of specific practices. This creates an
incentive for people to share knowledge and expertise across regions, as well
as to support sales and business development efforts on a firmwide rather
than strictly geographic basis.


Role of Support Staff
No matter how good professional staff is, no firm can operate without a
strong support staff to assist various engagement teams and practice
groups. Support staff also perform necessary corporate functions such
as finance, human resources, information technology, systems, and facilities
management. Although support staff are not client-facing in the precise
sense of the term, they are a vital part of the process that delivers value
to clients. Chapter 20 discusses the role of administrative professionals
as well.
Specific roles and titles may vary from firm to firm and from industry to
industry, but all firms have some form of senior support staff that perform
the role of firm administrators. These staff members run the day-to-day op-
erations of the firm, in tandem and accordance with the wishes and prefer-
ences of the partners or managers. One of their key roles is to manage the
remaining support staff. They play an important role in helping manage and
mitigate the perception of second-class citizen status that many support
staff feel.
210 Attracting and Retaining the Best Professionals

FUNCTIONAL HYBRID PRACTICE
MODEL MODEL MODEL

• Staff specialized in • Staff specialized in • “True experts”
sales/business devel- sales/ business involved in selling
opment more efficient development makes most
in identifying and compelling value
• Sales staff focused
qualifying new busi- statement”best
on particular prac-
ness opportunities positioned model for
tice facilitates closer
growth
• Single point of con- linkage to delivery
Advantages
• Better pricing and
tact with customer • Increased credibility
performance man-
account for sale with customer/ dif-
agement due to con-
across all practices” ferentiation
tinuity through sale
allows for maximum
• Better pricing and
and delivery
control of customer
performance man-
activity
agement

• Generalist sales peo- • Need to support • Senior team needs to
ple have less depth of higher cost structure carefully balance use
expertise in cus- of dedicated business of time; can lead to
tomer™s business development and higher cost structure
needs or potential product management • More complex cus-
Disadvantages
solutions • More complex cus- tomer interface, if
• Sales bring less tomer interface, if practices do not
insight needed to practices do not align align with
identify need and with customers/ customers/
provide differentiated segments segments
custom solution
• Sales and B&P pro- • Senior delivery team • Senior delivery staff
cess needs to ensure members paired team members must
delivery team with customer- have strong business
involvement aligned business development
throughout”particu- development competency
larly in scoping • Tools to track alloca- • Senior delivery team
• Clear interface and tion of time and members play multi-
Key Success smooth hand-off resources among ple roles along ser-
Factors between sales/ BD delivery, business vice/function and
teams and delivery development and customer matrix
teams capability develop- • Tools to track alloca-

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