Anyone who has worked in a professional service setting knows how important collaboration is. Yet why is it that so many professional service organizations struggle to have their professionals collaborate?
Benefits of collaboration
Research by Heidi Garner, published in the March 2015 Harvard Business Review, shows what professional collaboration is actually worth.
As an example, at one law firm the average annual revenue per client is around $200K when 4 practice groups are involved. This increases to about $600K when 6 practice groups are involved, and is even higher, $900K, when 7 practice groups are involved.
Perhaps even more importantly, clients like it when a professional service provider is able to solve their problem, instead of asking them to go from one group to the next, as when each can only address one particular aspect of the issue at hand.
Why is collaborating difficult?
Why, then, is collaboration so difficult? Typically the following things stand in the way:
- Organizational structure
- Compensation terms
Most professional service firms favor individual contributors over team players. Rainmakers are celebrated and incentive structures favor their individual contributions—probably because individual contributions can seem simpler to assess and evaluate objectively than teamwork, and can allow for transparent promotion criteria. However, as this kind of incentive structure kills collaboration, it is neither good for the firm nor for its clients.
How to make collaborating easier
Fortunately, nowadays it has become much easier to assess an individual’s network and the impact that network has on firm revenues. For example, most companies will be able to differentiate between associates whose billable hours are mostly within the same group of partners and within the same practice group (= a Close Network), and those who have a similar number of billable hours but instead collaborate with many partners across many practice groups (= a Broad Network).
Not surprisingly, the associates operating in a close network are more effective in the short term. They work with fewer people, who get to know them better. And as these people tend to be within his or her discipline, they will favor promoting him or her above the one with a broad network, with whom they have had fewer interactions and whom they know less well. Paradoxically, however, Garner’s research shows that over the long term the revenue generated by the second person will be significantly higher.
Without data and awareness of a performance bias toward people working in a close network, you will have great difficulty rewarding true collaborators and encouraging their success, and they are likely to leave.
How to ensure collaboration:
- Understand that collaboration is not the goal—higher value work is, which can only be achieved through collaboration.
- Set the example as a leader. Go after high-value work, involve others, and share the credit.
- Use metrics that assess collaboration effectiveness (not just participation).
Metrics that assess participation in collaboration, such as the number of referrals and multi-practice pitches, can easily be gamed, so using them to reward a professional is counter-productive. It is better to reward the outcomes of effective collaboration, for example, the variety of billable contributions a person made to the work of colleagues in other disciplines.
Needless to say, innovation offers great opportunities for collaboration. It offers the opportunity to work out high value offerings and foster collaborative teams. In addition it helps you find novel ways to address the unmet needs of current clients, leading to new revenue streams.
Interested to learn how your firm, can obtain higher value work and create a culture for collaboration through innovation? Please contact us at info”at”organizing4innovation”dot”com. To learn more, visit our website at www.organizing4innovation.com.
Gardner, H.K., When Senior Managers Won’t Collaborate: Lessons from Professional Services Firms. Harvard Business Review, 2015. 93(3): p. 75-82.