ADVANCING ON THE RETREATT

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1 1 of 17 ADVANCING ON THE RETREATT Does Your Retreat Advance Your Firm? By Bruce W. Marcus The Marcus Letter Bay Street Group LLC

2 2 of 17 EXECUTIVE SUMMARY We're at the beginning of the retreat season. This Spring, accountants, lawyers, and consultants will assemble, dressed informally, at fine resorts throughout the nation, to explore the futures of their firms and what can be done to sustain their firms present status or to alter their futures. Good food, great weather, good golf and good sightseeing, and shopping for the wives, with a couple of hours of serious business built in. Recharging the batteries, and maybe, the minds. Maybe a speaker from outside to inspire, inform, and then all too often to forget. Or better yet, a speaker with the expertise to fuel a firm s reevaluation of its practice and destiny. A retreat can be a good time to relax, rest, and become reacquainted with your partners, even as it addresses the firm s mundane housecleaning efforts. It can be a better time, and a great opportunity, particularly in this era of economic turmoil and technological change, for real accomplishment. by recognizing new realities of the marketplace and professional environment, and calculating what must be done now to make the firm viable in the future.

3 3 of 17 THE PURPOSE-DRIVEN PARTNERSHIP For a partnership, which functions at least with the consent -- if not the management of the partners, the retreat offers the best opportunity to examine the most crucial questions a firm can ask of itself to test the premises upon which the current business model is based. As we function today, are we still capable of being relevant to the needs of our current and future clients? Can we serve a new environment with the traditional views and attitudes of the profession? Are we as professionally competitive as we can be? Are there better ways to do things tomorrow than there were today? Can we substantially improve our productivity? The world, of course, is always in a state of flux, and attrition and flux alter all institutions. But when the economic environment, technology, and the needs of the marketplace change at today s accelerated pace, and competition is at its keenest, the firm that merely resides in the false security of traditional professionalism lays itself open to being swamped by that very economy and marketplace. This is an era in which business change is acute. Shifting national and international markets, an aging population, technological connectivity all are changing profoundly.

4 4 of 17 McKinsey reports that almost a billion new consumers will enter the global marketplace in the next decade, increasing consumer spending power in emerging economies from $4 trillion to more than $9 trillion by 2015, affecting the world economy in all countries. We ve already seen extensive regulatory change and an increased scrutiny of corporations by the government and regulatory bodies. The firm, no matter what its size, that ignores these changes that doesn t assess its role in a new economic environment will simply watch its competition thrive. Experience tells us that poorly planned retreats leave participants with a sense of dissatisfaction a feeling that valuable time may have been wasted. A failed retreat can be avoided by two things a clearly delineated sense of purpose for the retreat, and an agenda built upon specific objectives. The ultimate objective is that, as a result of the retreat, something should change. It would be a rare firm, in today s competitive environment, that cannot anticipate some measure of change. Your market, after all, is changing rapidly. Your agenda, if it properly examines the premises of your business model, should be an exploration of those premises, with minds open to understanding the changes in your business environment and your firm s ability to address those changes. On the basis of that exploration, specific objectives can be delineated that serve as a foundation for exploration and consideration in the retreat.

5 5 of 17 Typical objectives might be Management structure. Finding the best structure for serving a growing business. Productivity. Finding the best methods to improve productivity for return on investment Client relations. Finding ways to improve them. Marketing. Exploring whether the current marketing program is equal to the firm s growth needs. Partner and staff structures. The two-tier structure and leveraging staff-partner relationships. Improving recruiting. Finding ways to better compete for the best talent.

6 6 of 17 SUBSTANCE COUNTS: HERE ARE 10 ISSUES YOU CAN T IGNORE In a retreat of substance, it s not just the questions the firm asks of itself, it s the substance of the questions. For example 1. Client relationships and retention. Today, no client can be taken for granted. Two external factors can alter the relationship with even your best client -- evolving client needs that your firm can no longer serve as well as can other firms, and strong competitive efforts by other firms. This, of course, is in addition to mistakes you can make from within your firm, such as not fully understanding the client s industry and business, or taking a client for granted. Another danger is the classic proprietary attitude of individual partners, in which a partner seems to be say to other partners, I love you Charlie you re a good friend and a good partner. But stay away from my client. Successful firms today are developing sophisticated client service teams. They work.

7 7 of Governance. Most good lawyers, and most good accountants, are not often good managers. Management is a full time business, and not something to be done between new business development and client management. That s why an increasing number of firms are retaining professional managers. But the smaller firm can still consider whether its traditional structure is adequate for growth. There are lessons to be learned from Peter Drucker, who led us to understand that the top down I m the boss management structure doesn t work for the firm as well as a structure that recognizes the talents and responsibilities of the staff the people who must make the firm s objectives a reality. It seems possible that the traditional partnership structure will ultimately be replaced by some other form, but until that form evolves, participatory management techniques should be explored.

8 8 of Internal communication. A law or accounting firm is either a collection of individuals who merely share the same office, or they are indeed a firm, sharing more than just profits. David Maister calls it the one-firm firm. The one-firm firm shares ideas, and information. It participates, where feasible, in serving all of the firm s clients, so that the client knows there s a full firm, with all it s talents and skills, behind each decision and each bit of advice. A successful firm knows that internal communication is more than just a newsletter or an internal web site of memos. It s information management. It s understanding how to gather and classify information, and how to parcel it out to those who need to know, without inundating those who don t need to know a particular bit of information with irrelevant stuff. A successful firm knows that the devices of communication aren t the communication itself. A good firm knows how to make information useful. A good retreat should devote a large measure of time to developing internal communications structures that emphasize the information to be communicated, and not just the communications devices.

9 9 of The partnership and staff. Hiring a professional manager doesn t absolve a firm s partners from participating in the firm s management. Too many firms are managed -- no, run by the same principles and practices used by managing partners at the turn of the century. The fact is that even for a partnership and a professional firm, there are almost as many management structures and styles as there are for a corporation. Today s economy demands a management style that s capable of fast decisions, of successfully competing for and managing -- good personnel, of rapidly establishing new practices to meet the changing needs of the marketplace, of constantly improving information management and communication, of developing and managing marketing strategies. Is the traditional partnership structure still viable? Maybe, but maybe not. Are practice groups viable? Only if they are seen for what they really are management structures predicated on a specific aspect of the practice. And only if they are well managed as quality control structures, as marketing structures, and as internal communications structures. In today s rapidly moving economy, it behooves a professional firm to constantly review its management structure. Will it be as useful next year as it was last year? Has the firm, or its practice, or its market changed to a degree that warrants a new approach to management to keep the firm competitive and viable in next year s marketplace?

10 10 of Fee structures. It s difficult to realize that the hourly billing structure is not venerable. It was a simple and appropriate answer to the cost accountants who objected to the simple Fee for Service bill. And while to many it seemed a nuisance at first, it did serve to show clients specifically what the firm was doing for them (or does it, in fact?). There are indeed a few advantages to the hourly billing structure. But there are disadvantages as well. Does the hourly billing structure reflect the value of a firm s activities in its client s behalf? Does it not put the focus on the wrong thing number of hours spent and not on the value of the effort to the client? Does it not impede marketing and even managing efforts by forcing the firm s professionals to concentrate on billable hours to the exclusion of time spent on the firm s growth and health? And when all firms tend to have such similar billing rates that one very smart law firm manager called the structure a virtual cartel, does it not open to ultimate questioning about whether the cartel is not so virtual after all?

11 11 of Productivity. Since the advent of today s technology, productivity improvement has depended upon new technology. Today, productivity must be improved by reassessing the roles of each person in your firm. Doing so invariably produces increasing responsibilities, an understanding of how procedures slow down, rather than improve, processes, how management practices help or impede productivity, the role of internal communications, and so forth. A growing trend to consider is outsourcing, which is now serving all professions effectively and cost effectively. Increased productivity means a more efficient and effective firm, and thereby, a more profitable and competitive one.

12 12 of Marketing strategy. The tools and mechanics of marketing a professional service are now well known, and variously used by most firms. But when all competitors in a profession have the same tools, and when the need for credibility deters professionals from competing by saying, We do better audits. Or We write better briefs, residing merely in the devices of marketing is no longer sufficient. As marketing budgets get bigger, more press releases, glossier brochures, or more newsletters are not sufficient competitive devices. Thus, we now enter the era of strategy. How do we define the market we serve or should serve, in terms of their needs and our ability to meet those needs? How do we define our firm and services in terms of the needs of those we serve? Which marketing tools will best serve us to bring the best of what we are to the prospective clientele we want and need? And how do we manage the marketing effort to maximize the value of our efforts what are the tactics we need to make the strategy work? The firm that doesn t devote a good part of its retreat to this subject, will ultimately freeze into a Daumier-like print.

13 13 of Competitive intelligence. Of all the elements new to the contemporary professional practice, none seems more alien than competitive intelligence understanding what your competitors are doing. Competitive intelligence is not industrial spying it s basic market research, using publicly available sources. It means watching, listening, and analyzing. Your retreat should consider the skills needed to do it, and it should be included in your management plan.

14 14 of Recruiting. The competition for talent, no matter the size of the firm, is growing faster, it seems, than the supply. The traditional help wanted approach no longer works. The successful recruiting method is to explore what you have to offer not just salary and benefits, but growth opportunities, educational possibilities, a contemporary technology structure, a web site and a transparent firm, and a firm that considers its staff s personal lives. Compensation structures count, but not as much as they used to. There s a general feeling that they may have topped out, which puts a greater burden on other means of attracting talent. It is what you have to offer, rather than what you want, that attracts the best talent. With this concept at the core, recruiting advertising becomes a different, more effective, process.

15 15 of Technology. The growth of technology in just a few yeasts, and its continued improvement, not only increase productivity in a firm, but offer marketing and recruiting opportunities that had never before existed. The burgeoning use of cell phones, for example, quickly moved them from luxury to necessity. No firm today can compete without a web site, and in many cases, an extranet. Blogs are now a mature communication and marketing device, going well beyond trade gossip to replace industry newsletters. No firm today can do without the technology to manage data and other forms of knowledge, to communicate, to market, and to manage.

16 16 of 17 MAKE SOMETHING HAPPEN Today s generation of young lawyers and accountants, as well as today s clients, are well versed in the latest technology. They all demand it of their professional firms. Your retreat, then, can be either a routine litany of mundane business surrounded by leisure and food, or it can be an opportunity to move the firm more solidly into the future. Something should happen as a result of your retreat. Something, in today s environment, should change. Something should improve. Otherwise, your retreat is just that a retreat... from growth.

17 17 of 17 Bruce W. Marcus is a Connecticut-based consultant in marketing and strategic planning for professional firms, the editor of THE MARCUS LETTER ON PROFESSIONAL SERVICES MARKETING, ( the co-author of CLIENT AT THE CORE (John Wiley & Sons, 2004), and a member of the Bay Street Group LLC. He can be reached by at marcus@marcusletter.com. BAY STREET GROUP LLC Bay Street Group provides actionable information, strategic insight, and resultsdriven solutions to the professional tax, accounting and finance communities -- and the vendors who serve them. Services include: Business development planning Interactive marketing Strategic communications Custom publishing and media property development Specialized research and business intelligence White papers and case studies Conference and speaker services Executive meeting facilitation and partner retreats Rick Telberg is president and chief executive of Bay Street Group. He is a veteran analyst, commentator, publisher, editor, and media professional. As Editor At Large for the AICPA Insider, he is the profession s most widely-followed commentator. He is also editor of [CPA TRENDLINES] at which provides Bay Street Group news and analysis. Bay Street Group LLC 13 Atilda Ave. Suite 200 Dobbs Ferry, N.Y USA Rick Telberg President, Chief Executive Phone: 1 (914) efax: 1 (425) rtelberg@baystreetgroup.com